1995-VIL-198-ITAT-DEL
Equivalent Citation: ITD 052, 661,
Income Tax Appellate Tribunal DELHI
Date: 19.01.1995
GOPAL CHAND KHANDELWAL.
Vs
ASSISTANT COMMISSIONER OF INCOME-TAX.
BENCH
Member(s) : G. D. AGARWAL., VIMAL GANDHI.
JUDGMENT
Per G.D. Agrawal -- This appeal by the assessee is directed against the order of the CIT(A)-XII, New Delhi.
2. The facts of the case are that the assessee had filed the return on 23-11-1992 declaring an income of Rs. 8,03,980. The AO completed the asst. at Rs. 17,71,520 vide his order dated 30th March, 1993. Against the said order, the assessee preferred appeal before the CIT(A). The CIT(A) observed that the assessee has not paid the tax due on the income returned and, therefore, the appeal cannot be admitted as per provisions of section 249(4). Therefore, he dismissed the assessee's appeal in limine. Against the order of the CIT(A), dismissing the assessee's appeal in limine, the assessee has preferred appeal before the ITAT.
2.1. At the time of hearing before us, the id. DR raised objection in admitting the appeal against the above order of the CIT(A). He submitted that the order of the CIT(A) is u/s. 249(4) of the Income-tax Act and not u/s. 250 and, therefore, appeal to the Income-tax Appellate Tribunal is not competent. He submitted that u/s. 250, the CIT(A) can pass the orders as provided in section 251 i.e. he may confirm, reduce, enhance or annul the assessment order or he may set aside the assessment or refer the case back to the AO. He submitted that the order of the CIT(A) is not an order confirming, reducing or enhancing or annulling the assessment or setting aside the assessment and, therefore, it is not an order u/s. 250 of the Income-tax Act and, therefore, not appealable before the Income-tax Appellate Tribunal. In this respect, he relied upon the decision of the Hon'ble Supreme Court in the case of CIT v. Mtt. AR. S.AR. Arunachalam Chettiar [1953] 23 ITR 180. He further submitted that even when there is an order u/s. 250 of the Income-tax Act, the appeal to the ITAT is competent only if the order passed by the CIT(A) is substantive order. In this respect, he relied upon the following decisions:--
Girdher Javar & Co. v. CIT [1953] 24 ITR 540 (Bom.)
Lalji Haridas v. CIT [1968] 67 ITR 213 (Guj.)
He submitted that the order passed by the CIT(A), in this case, is not a substantive order and accordingly, no appeal lies to the Income-tax Appellate Tribunal. He further supported the order of the CIT(A) on the ground that when no tax was paid on the income returned, the CIT(A) was justified in dismissing the assessee's appeal in limine. He also submitted that the seized cash can be adjusted against the tax liability only as per provisions of section 132(b), read with rule 112(c) and, therefore, the cash seized could not be treated as tax paid by the assessee.
2.2. On the other hand, the Id. counsel for the assessee submitted that the assessee had filed an appeal, before the CIT(A), against the order of the AO u/s 143(3) of the Income-tax Act. The order of the CIT(A) dismissing the assessee's appeal amounts to order u/s. 250 of the Act and, therefore, the appeal to the ITAT is competent. In this respect, he relied upon the following decisions:--
CIT v. Kalipada Ghosh [1987] 167 ITR 173 (Ori.),
Mela Ram & Sons v. CIT [1956] 29 ITR 607 (SC),
CIT v. Nanhibai Jaiswal [1988] 171 ITR 646 (MP).
Regarding the payment of tax he submitted that there was search at the premises of the assessee on 8-11-1990. In the search cash amounting to Rs. 5,50,000 was seized. The assessee on 27-11-1990 requested the DDI to adjust the cash seized against the tax liability. The assessee again in the computation of the income filed alongwith the return requested to treat the cash seized as tax paid. The assessee again on 19th January, 1993 requested to adjust the cash seized against the tax liability of the assessee. The revenue ultimately adjusted the sum of Rs. 5,50,000 against the tax liability of the assessee on 8-11-1993. He submitted that the cash seized from the assessee and which was adjusted against the tax liability of the assessee on 8-11-1993 was more than the tax due on the income returned, hence there was no default committed by the assessee within the meaning of section 249(4) of the Income-tax Act. Therefore, he submitted that the appeal filed by the assessee to the CIT(A) was competent. He also relied upon the decision of the Income-tax Appellate Tribunal, Delhi Bench "D" in the case of Bharat Commercial Corpn. v. ITO in IT Appeal Nos. 5207. 5439/DEL. / 1985.
3. We have carefully considered the arguments of both the sides. The first issue to be decided is whether this appeal before us is maintainable or not? A similar issue had come up before the Hon'ble Madhya Pradesh High Court in the case of Smt. Nanhibai Jaiswal . In that case, the assessee had filed an appeal against the assessment order. The assessee had also filed an application u/s. 249(4) seeking exemption from the provisions of section 249(4)(a). The Commissioner (Appeals) rejected the application for exemption and dismissed the appeal in limine. On appeal, the Tribunal allowed the assessee's appeal and remanded the matter to the CIT(A) with a direction to dispose of the appeal afresh in a reference before the Hon'ble Madhya Pradesh High Court, the revenue contended that the order passed by the CIT(A) was not an order u/s. 250 but an order u/s. 249(4) and, therefore, the appeal to the Tribunal was not maintainable. The Hon'ble High Court rejecting the revenue's reference held "That since the appeal was not admitted on the ground that the amount of tax as contemplated by clause (a) of section 249(4) had not been paid, the order passed by the Commissioner amounted to an order disposing of the appeal u/s. 250 and, therefore, the appeal preferred by the assessee before the Tribunal was maintainable".
3. 1. The Hon'ble Orissa High Court also had the occasion to consider the similar issue in the case of Kalipada Ghosh and held :
"That the order of the Appellate Assistant Commissioner dismissing the appeals for non-compliance with section 249(4) of the Act came within the ambit of section 250 and was appealable before the Tribunal under section 253. The Tribunal, therefore, committed no illegality in entertaining the appeals and in condoning the delay, and remitting the case to the Appellate Assistant Commissioner for disposal on merits."
3.2. The Hon'ble Supreme Court in the case of Mela Ram & Sons considered the issue when the AAC dismissed the appeal on the ground that it is barred by limitation whether the appeal to the Tribunal against such dismissal is maintainable or not. Their Lordships held as under:
"An order by the Appellate Assistant Commissioner holding that there was no sufficient reason for excusing delay under section 30(2) of the Income-tax Act and rejecting the appeal as time-barred is an order passed under section 31 and an appeal lies from that order to the Appellate Tribunal. It makes no difference whether the order of dismissal is made before or after the appeal is admitted."
3.3. We may mention that the provisions of the Income-tax Act, 1961 relating to filing of appeal before the first appellate authority and second appellate authority are similar to the provisions of I.T. Act, 1922. Even the Id. DR has conceded to this position.
3.4. The ld. DR has relied upon the decision of the Supreme Court in the case of Mtt. AR. S. AR. Arunachalam Chettiar . But we find that the facts of that case and the issue involved before the Hon'ble Supreme Court were altogether different than the issue under appeal before us.
3.5. Similarly, in the case of Girdher Javar & Co. and Lalji Haridas the facts were altogether different. In these two cases the first appellate authority had issued the direction to the AO for making further enquiries pending the disposal of appeal before him. The assessee had moved an appeal to the Tribunal against such direction. On these facts, it was held by their Lordships that the appeal to the Tribunal is competent only against the substantive order of the first appellate authority. Since in these cases there was no final order from the first appellate authority, the appeal to the Tribunal was held to be not competent. The facts in the appeal before us are quite different. Here the order passed by the CIT(A) is final order and, therefore, it is a substantive order and not an interim order. In view of these facts and legal position, we have no hesitation to hold that the order passed by the CIT(A) dismissing the assessee's appeal in limine on the ground of default u/s. 249(4) was an order u/s. 250 of the Income-tax Act and, therefore, the assessee's appeal to the Income-tax Appellate Tribunal is competent.
4. We, now, proceed to examine whether the CIT(A) was justified in holding that there was default u/s. 249(4) by the assessee. There was search operation u/s. 132(1) of the income-tax Act at the premises of the assessee on 8-11-1990. As a result of such search cash amounting to Rs. 5,50,000 was found and seized. The assessee wrote a letter to the DDI on 27-11-1990. Copy of this letter was also sent to DG (Inv.), CCIT, DI (Inv.), CIT and ITO. Relevant portion of para 5 of this letter reads as under :
" .... Taxes due on income so surrendered may be appropriated out of cash seized and the balance amount may be refunded to him immediately."
The assessee did not receive any refund out of the cash seized neither any communication from the authorities in the matter. The assessee filed a return of income on 23-11-1992. In the statement of total income, filed along with the return of income, after the computation of income at Rs. 8,03,980 there was a working of taxes as under :
Income Tax Surcharge Total
Tax on : Rs. 5,00,000 2,27,600 27,312 2,54,912
3,03,980 1,51,990 18,239 1,70,229
-----------------------
4,25,141
-----------------------
Taxes paid
(a) Cash seized on search on 8-11-1990 5,00,000
(b) Cash found of 8-11-1990 but shown as seized on 12-11-1990 50,000 5,50,000
-----------------------
Refundable : 1,24,809
-----------------------
However, the revenue adjusted on 8-11-1993 the seized amount of Rs. 5,00,000 against the tax payable by the assessee for the asst. year under appeal.
5. From these facts it is clear that the assessee requested soon after the search that whatever tax was due on the income surrendered be adjusted out of the amount seized from him and the balance should be refunded to him. No refund was granted and, therefore, while filing the return, the assessee treated the entire cash seized as tax paid by him. The amount of cash seized was ultimately adjusted against the tax liability of the assessee for this assessment year. The tax due on the income returned was Rs. 4,25,241 while the cash seized from the assessee and ultimately adjusted against his tax liability was Rs. 5,50,000. Therefore, on these facts it cannot be held that the tax was not paid on the income returned so as to debar the assessee from filing of appeal as per section 249(4). If there was delay by the revenue in adjusting the seized amount as 'tax paid' by the assessee, the assessee cannot be blamed for such delay. 'he assessee had applied soon after the search for adjusting the seized cash against his tax liability. If it was not so adjusted, the assessee cannot be held responsible.
5.1. The ld. DR has submitted that the cash seized can be adjusted only as per provision of section 132B read with Rule 112C. He submitted that these provisions laid down certain procedures and the tax can be adjusted only when the case of the assessee falls within such parameters.
5.2. We have gone through the provisions of section 132B and Rule 112C. Such provisions empower the revenue to apply the assets seized and retained against the tax liability of the assessee unilaterally. But when the assessee himself requested for treating the cash seized as the "tax paid" by him, there is no necessity of application of section 132B. The only purpose of the assets seized by the revenue u/s. 132(1) and retained u/s. 132(5) is to utilize the same against the tax liability of the assessee whenever it may arise. Therefore, when the assessee himself requests that the amounts seized may be treated as tax paid by him, we believe that there cannot be and should not be any objection to the revenue in accepting such a request. In view of the above, we hold that the CIT(A) was not justified in holding that the assessee has committed the default within the meaning of section 249(4). Accordingly, we set aside the order passed by the CIT(A) and restore the matter back to his file for disposal of appeal afresh on merits.
6. In the result, the appeal by the assessee is deemed to be allowed for statistical purposes
DISCLAIMER: Though all efforts have been made to reproduce the order accurately and correctly however the access, usage and circulation is subject to the condition that VATinfoline Multimedia is not responsible/liable for any loss or damage caused to anyone due to any mistake/error/omissions.