VIKAS VERMA,DELHI vs. ACIT, NEW DELHI

Briefly the facts of the case are that the assessee filed return of income declaring income of Rs. 1,18,21,664/- on 30.03.2011. The assessee in appeal before the Ld. CIT(A) mentioned in Form No. 35 that the tax due on the returned income has been paid in full, however, the Ld. CIT(A) noticed that an amount of Rs. 57,34,310/- is payable by the assessee. The Ld.CIT(A), therefore, noted that assessee has not paid the full demand on the returned income. The assessee was informed of this fact that the taxes due on the returned income have not been deposited by the assessee at the time of filing the appeal u/s 246A of the Act. The assessee submitted that assessee was depositing the demand now. The Ld. CIT(A), therefore, noted that the assessee has not deposited the entire amount of tax due on the returned income before or at the time of filing of this appeal, therefore, appeal of assessee was not admitted u/s 249(4)(a) of the Act. The appeal was accordingly dismissed.

Ld. Counsel for assessee submitted that letter dated 01.12.2015 was filed before the Ld. CIT(A) prior to passing of the impugned order to show that tax due on returned income have been paid. He has also mentioned in the same letter that entire taxes have been paid on returned income and copy of the bank statement is filed with the same letter. He has, therefore, prayed that Ld. CIT(A) may be directed to decide the appeal of assessee on merits. On the other hand, Ld. DR relied upon the impugned order.

We have considered the rival submissions. ITAT ‘Mumbai Bench’ in the case of Bhumiraj Constructions vs. Addl. CIT 131 ITD 406 in para 9 held as under: “9. The objective behind section 249(4) is to ensure the payment of tax on income returned before the admission of appeal. If such payment after the filing of appeal but before it is taken up for disposal validates the defective appeal, then there is no reason as to why the doors of justice be closed on a poor assessee who, could manage to make the payment of tax at a later date. The stipulation as to the payment of such tax ante the filing of first appeal is only directory and not mandatory. Whereas the payment of such tax is mandatory but the requirement of paying such tax before filing appeal is only directory. When the defect in the appeal, being the non-payment of such tax, is removed, the earlier defective appeal becomes valid. Once we call an appeal as valid, it is implicit that it is not time-barred. It implies that all the consequences which follow on the removal of defect are that the validity is attached to the appeal from the date when it was originally filed and not when the defect is removed.” The Tribunal further held in this case in para 12 as under: “12. Adverting to the facts of the instant case we find that the assessee paid the tax due on income returned albeit after the disposal of appeal by the Ld. CIT(A). On such payment, the defect in the appeal due to non- compliance of a directory requirement of paying such tax before the filing of the appeal, stood removed. Ex consequenti this appeal should have been revived by the Ld. First Appellate Authority. Under such circumstances we set aside the impugned order and restore the matter to the file of the Ld. CIT(A) for disposal of the appeal on merits.”

According to the submissions of the assessee the tax on the returned income have been paid and even intimation was given to the Ld. CIT(A) prior to passing of the impugned order. Therefore, such facts should have been verified by the Ld. CIT(A) and in case the tax on returned income have been deposited then Ld. CIT(A) shall have to decide the appeal on merits. Considering the facts of the case in the light of the order of the Tribunal in the case of Bhumiraj Constructions (supra), we set aside the order of the Ld. CIT(A) and restore the appeal of the assessee to his file with direction to verify the payment of taxes on returned income and in case the amount have already been paid, Ld. CIT(A) shall decide the appeal on merits as per law by giving reasonable sufficient opportunity of being heard to the assessee.

In the result, the appeal of assessee is allowed for statistical purposes.