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Facts
The assessee filed an appeal against the order of the CIT(A) which had dismissed the appeal in limine due to non-payment of self-assessment tax. The assessee later deposited the self-assessment tax before the completion of appellate proceedings, explaining the delay due to shortage of funds.
Held
The Tribunal held that the provision of Section 249(4)(a) is directory and not mandatory. Since the assessee had paid the due and admitted tax after the initial delay, the appeal should be admitted and decided on merits.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal in limine for non-payment of self-assessment tax, when the tax was subsequently paid before completion of appellate proceedings.
Sections Cited
249(4)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA BENCH: AGRA
(ASSESSMENT YEAR: 2020-21) Asst. CIT, Datia Vishvanath Trading Central Circle, Company, Vs. Gwalior. Sheetla Ganj Indergarh, Datia-475675 Madhya Pradesh. PAN-AFVPA3319N (Appellant) (Respondent) Assessee by Shri Arun Gupta, Adv. Department by Shri Shailendra Srivastava, Sr. DR Date of Hearing 22/05/2025 Date of Pronouncement 29/05/2025 O R D E R [ PER MANISH AGARWAL, AM: This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-3, dated 04.03.2025 in Appeal No. CIT (A)-3, Bhopal/IT-11562/2019-20 for Assessment Year 2020-21.
From the perusal of grounds appeal, it is seen that besides challenging the additions made by AO, assessee challenged the appellate order where the appeal of the assessee is not admitted for Datia Vishvanath Trading Company vs. ACIT non-payment of self-assessment tax of Rs. 1,66,61,030/- along with the return of income. Since the ld. CIT(A) has dismissed the appeal of the assessee in limine thus we first decide the issue of maintainability of the appeal of the assessee. So far as the non- maintainability of assessee’s appeal on account of non-payment of self-tax, we find that the ld. CIT(A) invoked the provisions of section 249(4) of the Act which reads as under: “(4) No appeal under this Chapter shall be admitted unless at the time of filing of the appeal, (a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or (b) where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him: Provided that, in a case falling under clause (b) and on an application made by the appellant in this behalf, the Commissioner (Appeals) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of that clause.”
During the course of hearing, Ld. AR of the assessee stated that assessee has deposited self-assessment tax on 21.02.2025 and placed copy of challan. It is submitted by Ld. AR that tax was paid, thus, Ld. CIT(A) ought to have admitted the appeal of the assessee and decide the same on merits.
4. In the present case, admittedly self -assessment tax was not paid upto date of filing appeal before Ld. CIT(A), however, the same was finally deposited on 21.02.2025 i.e., prior to the completion of appellate proceedings. The reasons for delay in deposit the tax was explained as shortage of funds. The Hon’ble Karnatka High Court in the case of CIT vs. K. Satish Kumar Singh [2012] 209 taxmann 502 Datia Vishvanath Trading Company vs. ACIT (Kar.) has held that if the admitted tax return income is paid, then appeal of the assessee has to be admitted for adjudication by the Ld. CIT(A) on merits. This order is further followed in case of PCIT vs. Abdul Zahid [2017] 397 ITR 727 (Kar.).
The provision of section 249(4)(a) is directory provision failing which no penal consequence follows. However, in case of mandatory provisions, non-compliance exposes the assessee with penal provisions. Thus, omission to comply a mandatory requirement renders the action void whereas, omission to comply with directory requirement makes it defective or irregular which can be validate after removal of defect. Once the assessee has paid the due and admitted tax there is no reason to shut the doors of justice. In the present case, assessee has finally paid the due and admitted tax thus the appeal of the assessee should be considered as valid and should be decided by Ld. CIT(A) on merits. This view is further supported by the decision of Co-ordinate Bench of ITAT, Banglore in the case of Annapoorneshwari Investment Vs. DCIT reported in 177 ITD 717 (ITAT Banglore).
Accordingly, in view of above discussion, we set aside the order of the CIT(Appeals) and restore the same to his file with a direction to dispose appeal after considering the merits of the case. Needless to say, the CIT(Appeals) shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee. The Ground of appeal No.1 of the assessee is partly allowed for statistical purposes.