Vildirect: IncomeTax-caselaws-2004-VIL-257-ITAT-HYD

2004-VIL-257-ITAT-HYD

Equivalent Citation: TTJ 093, 927, [2005] 2 SOT 321 (HYD.)

Income Tax Appellate Tribunal HYDERABAD

I.T. (S.S.) APPEAL NOS. 26 TO 33 (HYD.) OF 2000

Date: 30.12.2004

SHAMRAJ MOORJANI.

DEPUTY COMMISSIONER OF INCOME TAX.

BENCH

Member(s) : N. D. RAGHAVAN., J. SUDHAKAR REDDY.

JUDGMENT

All these appeals have been filed by the assessees directed against separate but identical orders of the CIT(A)-II, Hyderabad, dt. 27th Oct., 2000, IT(SS)A No. 31/Hyd/2000 is filed by a partnership firm consisting of three partners. The appellants in all the other appeals are family members and three of them are partners in the partnership firm referred to above. As the issue arising in all these appeals is the same, for the sake of convenience, these appeals are clubbed together and disposed of by way of this common order.

2. The sole issue that arises in all these appeals is whether on the facts and in the circumstances of the case, the CIT(A)-II, Hyderabad, was justified in dismissing the appeals of the assessees as infructuous on the ground that the assessees had not paid the taxes as per the admitted income, by invoking the provisions of s. 249(4)(a) of the IT Act, 1961. The facts of the case are as follows.

3. Shri Shamraj Moorjani, Shri Devraj Moorjani and Shri Vishnukumar Moorjani are brothers. Along with their families they were residents of Dubai, UAE, from the year 1973, where they were carrying on business of general trading under the name and style of "Moorjani General Trading Establishment" dealing in plastic granules and raw gold. The father of these brothers was a retired CID Inspector of Police and was residing at Hyderabad. During their stay in Dubai, the brothers remitted money through legal channels to their father, who from time-to-time acquired immovable properties and also made deposits in banks. In the year 1995, Shri Shamraj Moorjani and Shri Devraj Moorjani shifted to Hyderabad while the third brother Shri Vishnukumar Moorjani along with his family carried on the business in Dubai.

4. On 3rd Jan., 1995, Shri Shamraj Moorjani and his nephew Shri Lalitkumar Moorjani were arrested by the DRI authorities on the ground that they were involved in an illegal activity of narcotics trade, as they had assisted one Mr. M.K. Abdullah in taking on lease a residential house at Banjara Hills, Hyderabad. The DRI had not found any material in the house of Shri Shamraj Moorjani during the raid. It had found certain tablets in the house of Mr. M.K. Abdullah who was introduced to the landlord of the premises at Banjara Hills by Shri Devraj Moorjani. It was the case of Shri Shamraj Moorjani that he had come to know Mr. Abdullah only recently and that he never knew his activities, that Mr. Abdullah had requested him for help in taking a house on lease at Hyderabad as he wanted to marry and settle down in Hyderabad, that he had stood as guarantor and helped Mr. Abdullah in taking the house on lease, that the DRI found that Mr. Abdullah was involved in narcotics trade and that though the lower Court convicted Shri Shamraj Moorjani along with Mr. Abdullah and others, the Hon’ble High Court of Andhra Pradesh, on the basis of evidence adduced, held that Shri Shamraj Moorjani had only helped Mr. Abdullah in taking a house on lease and that he had no other role to play and acquitted him by judgment dt. 26th April, 2001. Thus, it was pleaded that Shri Shamraj Moorjani and Shri Vishnukumar Moorjani were innocent and not involved in narcotics, etc., and that this fact was proved by the judgment of the Hon’ble Andhra Pradesh High Court. The fact remains that Shri Shamraj Moorjani was in prison from 3rd Jan., 1995 to 26th April, 2001, i.e., for a total period of 6 years and 4 months.

5. The IT Department searched the premises of the assessee under s. 132 on 22nd Aug., 1997, consequent to the search by DRI officials. Notice under s. 158BC dt. 9th Dec., 1997, was served on Shri Shamraj Moorjani on 22nd Dec., 1997. The assessees filed block returns of income on 11th Oct., 1999, declaring net income of Rs. 75,16,763. The tax payable on this income returned amounted to Rs. 43,12,708, i.e., 60 per cent of Rs. 75,16,763. Along with the block returns of income, the assessees had filed letters stating that they did not have any liquid funds to pay the taxes on the undisclosed income. The assessments were completed on 29th Oct., 1999. The total income assessed in all these cases including protective additions amounted to Rs. 3,87,91,053.

6. On 28th Nov., 1997, i.e. three months after the search operation, all the immovable properties of these assessees were attached under s. 281B of the IT Act, 1961. On 23rd Nov., 1999, Shri Shamraj Moorjani had filed a petition for stay of the disputed demand for the block period. In that letter, it was submitted that Shri Shamraj and his nephew Shri Lalitkumar Moorjani, S/o Vishnu Kumar Moorjani, were imprisoned and only Shri Devraj Moorjani was the person looking after the matters, that all the investments of the family were in immovable properties, by way of advance for properties and in shares in Integrated Thermo Plastics Ltd., that the only income for the entire family was income from M/s Gruhalakshmi Super Market and that this income was not sufficient for their day-to-day maintenance. In short, it was pleaded that they had no liquid funds and were not in a position to pay the admitted tax on the undisclosed income.

7. On 29th Nov., 1999, the assessees filed first appeals before the CIT(A)-II, Hyderabad, against the block assessment orders. Along with the appeals, they filed a copy of the letter dt. 23rd Nov., 1999, referred to in the preceding paragraph. On 14th Dec., 1999, the TRO issued notice of demand requiring the assessees to pay the outstanding demand within 15 days and also prohibiting the assessees from dealing with the immovable properties. To this notice, Shri Shamraj Moorjani sent a reply dt. 31st Dec., 1999, requesting the TRO to keep the collection proceedings in abeyance without taking any coercive steps for collection, and stating that he was requesting the AO for grant of collection of taxes and allowing him to dispose of the properties and pay the admitted and agreed tax immediately.

8. On 11th Jan., 2000, the assessee addressed yet another letter to the Dy. CIT, Circle 3(2), Aayakar Bhavan, Hyderabad, which was received by the latter on 12th Jan., 2000, wherein the assessee sought permission to sell a certain property for enabling him to pay the tax arrears. On 2nd June, 2000, the TRO attached all the immovable properties by his order of attachment of immovable property in Form No. I.T.C.P.-16 dt. 2nd June, 2000. On 2nd Aug., 2000, the assessee addressed a letter to the TRO-III, Aayakar Bhavan, Hyderabad, bringing to his notice his earlier representation before the Dy. CIT, wherein he had requested for permission to sell certain immovable property so as to enable him to pay the tax. It was also stated in the said letter that the Dy. CIT informed them that necessary permission would be given for selling the property and directed them to search for purchasers. He once again reiterated that they were ready to sell the immovable property and that the sale proceeds would be deposited towards both capital gains tax arising out of the sale and arrears payable arising out of the block assessment, without utilising any amount out of the sale proceeds for other purposes. He requested the TRO for necessary permission so that the immovable property could be sold immediately and had also enclosed a photocopy of the sale deed of the said property for the reference of the TRO.

9. On 17th Aug., 2000, the TRO, in execution of Certificate No. ---, dt. 14th Dec., 1999, fixed 25th day of August, 2000, for drawing up the proclamation of sale and settling the terms thereof for the immovable property of the assessee. On the same date, i.e., 17th Aug., 2000, yet another order of attachment of immovable property in Form No. I.T.C.P.-16 was issued prohibiting the assessee from selling certain other properties.

10. On 4th Sept., 2000, the assessees approached the CIT, Andhra Pradesh-I, Hyderabad, bringing to his notice the facts of this case and pleading that the CIT should advise the TRO to postpone the sale proclamation till disposal of the first appeals and also requesting that, failing the same, permission may be accorded for selling the property by private sale. The assessee also assured the CIT that the entire sale proceeds to the extent of tax dues would be immediately remitted to the Department. On 18th Sept., 2000, the Chief CIT, Andhra Pradesh, Hyderabad, laid down certain conditions and subject to the same directed that the sale may be permitted by the TRO by lifting attachment of immovable properties.

11. The CIT(A)-II, Hyderabad, issued a letter dt. 19th Oct., 2000, calling for objections as to why the appeals should not be dismissed for non-payment of admitted tax as per the provisions of s. 249(4)(a) and also posted the case for final hearing on 25th Oct., 2000. By letter dt. 24th Oct., 2000, Shri Devraj Moorjani replied to the CIT(A) and submitted that he was not having any liquid funds. He also brought to the notice of the CIT(A) the entire sequence of events. He further stated that the Chief CIT had finally permitted the sale of the property and that the admitted taxes would be paid very shortly, that Shri Shamraj Moorjani and Shri Lalitkumar Moorjani were under trial since 1995, that during the pendency of the trial, nobody helped them either financially or morally, that the family was disturbed because of this humiliation and that they suffered a lot in their life. The CIT(A), by his orders dt. 27th Oct., 2000, rejected the plea of the assessees and dismissed the appeals as infructuous.

12. On 15th Feb., 2001, the assessees sold the immovable property and had paid the taxes on admitted income as well as interest under s. 220(2) as also capital gains tax arising out of the sale of that immovable property. The main plea of the assessees is that they had only immovable properties and no liquid assets, that this fact is clear from the material seized during the course of the search, that; the Revenue had attached all the immovable properties and prevented the assessees from selling the same, that the assessees had a just and sufficient cause for not being able to pay the admitted taxes as their hands were tied, that consequent to the permission given by the Chief CIT, the assessees sold the immovable property and paid the tax and that the CIT(A) was unjustified in dismissing the appeals as infructuous.

13. The learned counsel for the assessees submitted that the appeals against the orders of the CIT(A) are maintainable and for this proposition he relied on the case of CIT vs. Smt. Nanhibai Jaiswal (1988) 67 CTR (MP) 210 : (1988) 171 ITR 646 (MP), wherein the Hon’ble Madhya Pradesh High Court held that such an order passed by the CIT(A) amounted to an order disposing of an appeal under s. 250 and, therefore, the appeal preferred thereon to the Tribunal was maintainable. For the same proposition he also relied on the judgment of the Hon’ble Orissa High Court in the case of CIT vs. Kalipada Ghose (1987) 60 CTR (Ori) 96 : (1987) 167 ITR 173 (Ori), and the decision of the Delhi Bench of the Tribunal in the case of Gopal Chand Khandelwal vs. Asstt. CIT (1995) 52 ITD 661 (Del).

14. The learned counsel vehemently contended that the assessees had sufficient and cogent reasons for not being able to pay the tax on the admitted income before the date of filing of the appeals before the CIT(A). He referred to the chronological events and submitted that from the beginning till the end, the assessees were practically prevented from disposing of immovable properties which were under attachment by the Department and that only after the Chief CIT permitted private sale by lifting the attachment, the assessees were able to sell immovable property and pay the tax on the admitted income in full. He drew the attention of this Bench to the fact that the main persons of this group, Shri Shamraj Moorjani and his nephew Shri Lalitkumar Moorjani, were behind bars from 3rd Jan., 1995 to 26th April, 2001, i.e., six and half years, and that consequent to the acquittal by the Hon’ble Andhra Pradesh High Court they had been released from jail. He also drew the attention of this Bench to the fact that during the course of search and seizure operation under s. 132, the income-tax officials had not found or seized any cash or jewellery, that all that was found were documents relating to immovable properties and that this would indicate that the assessees had no other means to pay the taxes on the admitted income except by selling some of the immovable properties which were under attachment by the Department. He submitted that the assessees, even while filing the block returns, addressed letters to the AO, that the fact that all the investments were in immovable properties and that the assessees had no liquid assets was not controverted by the Revenue, that all the facts narrated above show that the Revenue had delayed granting permission to the assessees to sell property and discharge the tax liability and that after enormous correspondence and interaction with the Revenue, the Chief CIT had granted permission to sell the property, through his letter dt. 18th Sept., 2000. He specifically drew the attention of the Bench to the fact that on the granting of permission, the assessees were able to sell immovable property situated at Krishna Nagar, Jubilee Hills, Hyderabad, and the buyer of the property directly made over the entire sale consideration to the Department by way of demand draft which was towards payment of tax on admitted income as well as interest under s. 220(2) and also towards tax on capital gains arising out of the sale of the said property.

15. The learned counsel stressed on the facts of the case and pleaded that the assessees were prevented by sufficient cause from paying the admitted tax on the returned income and that the CIT(A) was wrong in dismissing the appeals as infructuous under the provisions of s. 249(4)(a) of the Act.

16. On the legal position, the learned counsel relied on the judgment of the Hon’ble Supreme Court in the case of CIT vs. Filmistan Ltd. (1961) 42 ITR 163 (SC), and submitted that the words "no appeal shall lie" meant that the appeal would not be held to have been properly filed until the tax is paid and that the appeal would be taken as properly filed on the date when the taxes were paid even though the memorandum of appeal was presented earlier and within the period of limitation, and that the only question that has to be decided is whether there was sufficient cause for condonation of the delay. He further relied on the judgment of the Hon’ble Karnataka High Court in the case of T. Govindappa Setty vs. ITO & Anr. (1998) 144 CTR (Kar) 28 : (1998) 231 ITR 892 (Kar), for the proposition that sub-s. (4) of s. 249 is to be elaborately construed coupled with sufficient cause for non-payment of tax on admitted income. He also relied on the decision of the Delhi Bench of the Tribunal in the case of Gopal Chand Khandelwal vs. Asstt. CIT, wherein reliance was placed on the following cases:

(i) CIT vs. Kalipada Ghose;

(ii) Mela Ram & Sons vs. CIT (1956) 29 ITR 607 (SC); and

(iii) CIT vs. Nanhibai Jaiswal.

He submitted that the case of the assessees is identical as all the immovable properties were in the custody of the Department and the request of the assessees for permission to dispose of one of the immovable properties to pay the taxes therefrom was not granted and that under these circumstances the payment in this case should have been treated as constructively made. He also relied on the judgment of the Delhi Bench of the Tribunal in the case of Anil Sanghi vs. Asstt. CIT (2003) 79 TTJ (Del)(SB) 517 : (2003) 85 ITD 73 (Del)(SB), specifically at para 27. He also relied on the decision of the Ahmedabad Bench of the Tribunal in the case of J.K. Chaturvedi vs. Asstt. CIT (2004) 82 TTJ (Ahd) 284. He also relied on the decision of the Amritsar Bench of the Tribunal in the case of Ravinder Singh vs. Asstt. CIT (2003) 80 TTJ (Asr) 224 : (2004) 89 ITD 477 (Asr).

17. He referred to the reliance placed by the Revenue on the decision of the Mumbai Bench of the Tribunal in the case of Bharat Kumar Saksaria vs. Dy. CIT (2002) 77 TTJ (Mumbai) 769 : (2002) 82 ITD 512 (Mumbai), which is in favour of the Revenue on the very same issue and submitted that the decision of the Ahmedabad Bench of the Tribunal in the case of J.K. Chaturvedi and that of the Amritsar Bench of the Tribunal in the case of Ravinder Singh are in favour of the assessee and that the Bench should follow the judicial discipline enunciated by the Hon’ble Bombay High Court in the decision reported at K. Subramanian & Anr. vs. Siemens India Ltd. & Anr. (1983) 36 CTR (Bom) 197 : (1985) 156 ITR 11 (Bom). He further submitted that this decision of the Hon’ble Bombay High Court was quoted with approval by the Hon’ble Andhra Pradesh High Court in the case reported in State of Andhra Pradesh vs. CTO (1988) 169 ITR 564 (AP) at pp. 569 and 570 and that this Bench should follow the decisions of the Ahmedabad and Amritsar Benches of the Tribunal.

18. The learned counsel concluded his arguments by submitting that in view of the facts and circumstances of this case and also in view of the legal position, the Tribunal may be pleased to hold that the appellants had sufficient cause for non-compliance of the provisions of s. 249(4)(a) and that the matter should be set aside to the CIT(A)-II, Hyderabad, with a direction to admit the appeals by condoning the delay and for deciding the appeals on merits.

19. The learned Departmental Representative, on the other hand, vehemently opposed the contentions of the learned counsel for the assessees and submitted that there was clear default by the appellants as they had not complied with the provisions of s. 249(4)(a) and that there is no infirmity whatsoever in the orders of the CIT(A)-II, Hyderabad, as on the date of the orders the assessees had not paid the admitted tax.

20. While agreeing that the assessees’ properties were provisionally attached under s. 281B, the learned Departmental Representative submitted that in the correspondence made by the assessees with the Departmental authorities, the assessees had only requested for releasing of properties. He submitted that the Department also cannot sell the properties till the demands are raised on completion of the block assessments and until the statutory due date for the assessees to pay the demand is over as per the demand notice.

21. The learned Departmental Representative vehemently contended that the assessees were only interested in the release of the properties and not in paying the taxes as per the returns of income filed. He submitted that the assessees had never requested the Department to appropriate the properties towards the taxes. He vehemently contended that the assessees had not paid the admitted taxes even to date. He gave his own computations, which are at pp. 3 and 4 of his written submissions. According to the learned Departmental Representative, there is still a deficit of Rs. 6,95,898 to date as tax payable on admitted income. He specifically argued that the amount paid towards interest under s. 220(2) cannot be treated as tax paid on the returned income.

22. The learned Departmental Representative relied heavily on the order of the Mumbai Bench of the Tribunal in the case of Bharat Kumar Sekhsaria vs. Dy. CIT, and submitted that there is nothing wrong in the orders of the CIT(A), that the language of s. 249(4)(a) is very plain and without any ambiguity, that the intention of the legislature is very clear and that the CIT(A) was right in dismissing the appeals. He also referred to the decision of the Hyderabad Bench ‘B’ of the Tribunal in the case of Smt. Ch. Nivedita Reddy, Prop. Nischint Constructions, Hyderabad, vs. Dy. CIT in IT(SS)A No. 90/Hyd/2003 and C.O. No. 15/Hyd/2003, dt. 14th Nov., 2003, and submitted that the Tribunal had set aside the appeal to the file of the CIT(A) in that case for consideration and that that case is not applicable to the facts of this case as in that case the assessee had paid the taxes while in the present case the taxes are yet to be paid.

23. We have heard both sides and read all the papers on record as well as the orders of the authorities below. We have carefully considered the facts and circumstances of the case and the case laws relied upon by both parties. The undisputed facts that emerge are that the assessees had no liquid assets whatsoever to discharge their liability towards taxes. It is also not disputed that all the immovable properties that were available with the assessees were under attachment either by the DDI or by the AO or the TRO, thus effectively preventing the assessees from selling any of these properties so as to obtain funds to discharge tax liability. It is also not disputed that the main persons of the family were in jail for a total period of 6 years and 4 months, i.e., from 3rd Jan., 1995 to 26th April, 2001, and that they were not in a position to generate liquid funds from other sources to meet their tax obligation. It is not the case of the Revenue that the assessees had other sources of income or were holding liquid assets which they have not used to discharge the tax liability. All the immovable assets were attached on 28th Nov., 1997, under s. 281B and only on 24th Oct., 2000, the Chief CIT permitted sale of a particular immovable property subject to certain conditions. The CIT(A) passed orders dismissing the appeals for non-payment of admitted taxes on 27th Oct., 2000, i.e., three days after the day on which the permission was granted by the Chief CIT.

24. The subsequent events demonstrate that the assessees have, in pursuance of the permission granted by the Chief CIT, sold the immovable property and paid all the admitted taxes as well as interest under s. 220(2) and also tax on capital gains that arose out of the sale of that particular immovable property. The assessees’ repeated letters to the Revenue from the year 1999, requesting for permission to dispose of immovable property so as to enable them to pay the taxes, were acted upon by the Revenue only on 18th Sept., 2000. On the above facts, this delay cannot be attributed to the assessee. Thus, we have necessarily to hold that the assessees were prevented by sufficient cause from paying the admitted taxes. This being our view on facts, we examine the law on this issue.

25. The first arugment is as to whether an appeal lies against the order of the CIT(A) wherein the appeal was dismissed for non-payment of admitted tax on returned income. This issue stands concluded in favour of the assessees.

26. Hon’ble Supreme Court, in the case of Mela Ram & Sons vs. CIT, held as follows:

"An order by the AAC holding that there was no sufficient reason for excusing delay under s. 30(2) of the IT Act and rejecting the appeal as time-barred is an order passed under s. 31 and an appeal lies from that order to the Tribunal. It makes no difference whether the order of dismissal is made before or after the appeal is admitted.

An appeal presented out of time is an appeal and an order dismissing it as time-barred is one passed in appeal."

Hon’ble Orissa High Court followed this judgment of the Hon’ble Supreme Court in the case of CIT vs. Kalipada Ghose, and held as follows:

"The assessee filed appeals for the asst. yrs. 1974-75 and 1975-76. The AAC held that the appeals were incompetent as the assessee had not paid the admitted tax for the years as required under s. 249(4) of the IT Act, 1961, and accordingly rejected the same in limine. The Tribunal, considering the facts that the assessee subsequently deposited the admitted tax and that the provision was a new one, not well known to all concerned, directed the AAC to admit the appeal for being disposed of on merits. The Revenue contended that, since the appeals were dismissed in limine by the AAC, the decision of the AAC was not one under s. 250 and, therefore, the said order was not appealable under s. 253. On a reference under s. 256(2):

Held, that the order of the AAC dismissing the appeals for non-compliance with s. 249(4) of the Act came within the ambit of s. 250 and was appealable before the Tribunal under s. 253. The Tribunal, therefore, committed no illegality in entertaining the appeals and in condoning the delay and remitting the case to the AAC for disposal on merits."

Similar is the judgment of the Hon’ble Madhya Pradesh High Court in the case of CIT vs. Smt. Nanhibai Jaiswal. Thus, we hold that the orders of the CIT(A) are appealable orders as they are orders disposing of appeals under s. 250 of the IT Act, 1961.

27. That brings us to the second issue viz. whether the CIT(A) has erred in. holding that the appeals are infructuous as the admitted taxes had not been paid on income returned as required under s. 249(4)(a). The earliest of the case laws on this issue is the decision of the Hon’ble Supreme Court in the case of CIT vs. Filmistan Ltd.. In that ease, it was held as follows:

"Sec. 30(1) of the IT Act provides for appeal to the AAC from certain orders of the ITO. The first proviso to that section provides that "...no appeal shall lie against an order under sub-s. (1) of s. 46 unless the tax has been paid":

Held, that the meaning of the words "no appeal shall lie" in the first proviso to s. 30(1) of the IT Act is not that no memorandum of appeal can be presented. All that the proviso means is that the appeal will not be held to be properly filed until the tax has been paid. If, for instance, the memorandum of appeal is filed on the 20th day, i.e., 10 days before the period of limitation expires and the tax is paid within the rest of the 10 days, the appeal will be a proper appeal; it will be within time and no question of limitation will arise, but if the tax is paid after the period of limitation has expired, it will be taken to have been filed on the day when the tax is paid even though the memorandum of appeal was presented earlier and within the period of limitation. The question will then have to be decided whether there was sufficient cause for condonation of delay."

Applying this case law, Hyderabad Bench ‘B’ of the Tribunal in the case of Smt. Ch. Nivedita Reddy, Prop. Nischint Constructions, Hyderabad, vs. Dy. CIT in IT(SS)A No. 90/Hyd/2002, vide order dt. 14th Nov., 2003, held as follows, at para 9 of the order proposed by learned JM:

"Suffice it to say that in the light of the decision of Filmistan Ltd., which was explained succinctly by the Tribunal Bombay "B" Bench in the case of Umesh Papatlal Shah & Ors. [IT(SS)A No. 42/Mum/2000], we are of the considered opinion that the learned CIT(A) ought to have given the assessee an opportunity of explaining the reasons for non-payment of tax and the date of payment of tax should have been taken as the date of filing the appeal so as to exercise the power vested in 249(3) of the Act with regard to the condonation of delay."

In a separate but concurring order in that case, the learned AM held at paras 1 to 16 as follows:

"1. This is a case where an apparent favour done by the CIT(A) by way of the admission of the appeal without payment of the undisputed tax seems to have caused hardship to the assessee.

2. The plea taken by the learned Departmental Representative is that the order of the CIT(A) is non est because it is violative of the provisions of s. 249(4). He further pleaded that the CIT(A) was not under any statutory duty to call on the assessee to show cause why the appeal should not be dismissed because the undisputed tax had not been paid. It is argued that the payment of undisputed tax is a precondition for the admission of the appeal in terms of s. 249(4) and as, admittedly, the undisputed tax was not paid at the time of filing of the appeal, the CIT(A) should not have admitted the appeal, and as he had admitted it, which is in gross violation of the provisions of s. 249(4), his order is non est and so, the present appeal filed by the assessee before the Tribunal should be dismissed in limine. He tried to distinguish the decision of the apex Court in the case of Filmistan (1961) 42 ITR 163 (SC) on the ground that the apex Court was considering the provisions of s. 30 of the 1922 Act, whereunder the proviso prescribed—

‘Provided that no appeal shall lie against the order under sub-s. (1) of s. 246 unless the tax has been paid.’

3. It is stated that the said proviso enables appellant to pay the tax at any time. On the other hand, s. 249(4) of the IT Act, 1961, mandated the payment of the undisputed tax at the time of filing of the appeal. In other words, according to the learned Departmental Representative, the said proviso to s. 30 of the 1922 Act is much more liberal to the appellant than s. 249(4) of the IT Act, 1961.

4. I find this contention unacceptable. It has been clearly held by the apex Court in Lakshmiratan Engineering Works Ltd. (1968) 21 STC 154 (SC) that the memorandum of appeal or the presentation of appeal is totally different from the other stages like admission of the appeal or the entertainment of appeal. The relevant portion of the headnote of this decision reads as under:

'The expressions 'appeal' and 'memorandum of appeal' are used to denote two distinct things. It is not proper to make 'appeal' the equivalent of 'memorandum of appeal'. The appeal is the judicial examination: the memorandum of appeal contains the grounds on which the judicial examination is invited.

By the word 'entertain' in the proviso is meant the first occasion on which the Court takes up the matter for consideration. It may be at the admission stage or if by the rules of that Tribunal, the appeals are automatically admitted, it will be time of hearing of the appeal.

The words 'no appeal shall be entertained' in the proviso to s. 9 do not denote the filing of the memorandum of appeal but refer to the point of time when the appeal is being considered......’

5. In the case of Lalta Prasad Khinni Lal vs. Asstt. CIT (Judicial) Sales-tax (1972) 29 STC 201, the apex Court considered the provisions of s. 9 of the U.P. Sales-tax Act (15 of 1948) which had a proviso analogous to s. 249(4) of the IT Act. The proviso to s. 9 of the U.P. Sales-tax Act reads as under:

‘Provided that no appeal against an assessment shall be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due, or of such instalments thereof as may have become payable.’

Reversing the decision of the Hon’ble Allahabad High Court that the delay in the payment of the tax could not be condoned, the apex Court observed as under:

'We are wholly unable to comprehend and appreciate the above reasoning or the conclusion of the Allahabad High Court on the point under consideration. It is true that an appeal filed under s. 9 of the Act cannot be entertained by the appellate authority unless satisfactory proof is adduced of the payment of tax admitted by the appellant to be due but in a case where the amount of admitted tax is deposited after the period of limitation has expired, all that will happen is that the appeal will become entertainable only on the day on which satisfactory proof of payment of that amount is produced. In other words, the appeal will be deemed to have been properly filed on the date on which the amount of admitted tax is paid. If that is beyond the period of 30 days, the appeal will be barred by time. Sec. 9(6) will immediately become applicable to that appeal and it will be open to the appellant to apply for condonation of delay under that provision. We are wholly unable to follow the argument that the deposit of the amount of admitted tax must be made within 30 days even though the delay in filing the appeal can be condoned under sub-s. (6). A proper and correct reading of s. 9 cannot justify such an approach. If a petition of appeal has been filed without proof of payment of tax accompanying it, that appeal can be said to have been preferred only when proof of payment of tax is furnished. Such furnishing of the proof may take place within the time prescribed for preferring the appeal or after the lapse of that period. If the proof of payment of admitted tax is furnished within the period prescribed, the appeal must be entertained. If the furnishing of that proof is done after the expiry of the period of limitation, the question will arise whether the appeal should be entertained or not. In such cases s. 9(6) will come into operation and the question will arise whether there has been sufficient cause for not preferring the appeal within the statutory period. The correct approach is to treat the appeal as having been preferred on the date on which proof of payment of the tax was furnished and then to see whether under sub-s. (6) of s. 9 there was sufficient cause for excusing the delay in preferring the appeal. The decision of the Kerala High Court in Gangadharan Pillai vs. STO (Reserve), Ernakulam, is to this effect and we entirely agree with the reasoning and the conclusion therein. In Raja of Venkatagiri vs. CIT (1955) 28 ITR 189 (AP), a Division Bench of the Andhra Pradesh High Court consisting of Subba Rao, C.J. (as he then was) and Bhimasankaram, J., had to consider the provisions of the Indian IT Act, 1922, similar to s. 9 of the Act. According to the proviso to s. 30(1) of that Act, no appeal lay against an order under sub-s. (1) of s. 46 unless the tax had been paid. Sub-s. (2) of. that section provided that the appeal was to be ordinarily presented within 30 days but the AAC could admit the same after the expiration of the period if he was satisfied that the appellant had sufficient cause for not presenting it within that period. It was held that the payment of the tax was a condition precedent to the maintainability of the appeal. If an appeal was filed, though after the prescribed period of time, the Asstt. CIT had the jurisdiction to hear the appeal after the tax due was paid. The only possible objection that could have been raised was that the appeal was barred as having been filed beyond the period prescribed by s. 30(2). But the appellate authority had the jurisdiction to excuse the delay. The ratio of this decision is that, even though the payment of tax was a condition precedent to the maintainability of the appeal, the delay could be condoned under s. 30(2) thus treating the appeal as having been filed when the amount of tax was paid.'

6. I am of the view that the above decision squarely covers the issue raised before us. The learned counsel for the assessee has also filed before us two decisions, which have held that in a situation like the present one where the admitted tax has not been paid on the date of filing of the appeal, the CIT(A) has a duty to issue show-cause notice calling upon the assessee to explain why he should not decline to admit the appeal, and if the assessee makes good the defect, i.e. he pays the admitted tax, he should consider it as delayed appeal and exercise his discretion to condone the delay, if found fit in the circumstances of the case. These are the decisions of the Hyderabad Bench ‘A’ of the Tribunal dt. 20th Oct., 2000, in the case of Khaitan Tibrewala Electricals Ltd. vs. Asstt. CIT in IT(SS)A No. 283/Hyd/1997; and of the Bombay Bench ‘D’ dt. 7th April, 2003, in the cases of Umesh Popatlal Shah vs. Dy. CIT, and two others, in IT(SS)A Nos. 42 to 44/Mum/2000 for the concerned periods.

7. These two decisions have discussed the issue in detail and they are squarely in favour of the assessee. The undisputed tax, admittedly, has been paid only after the appeal has been filed by the assessee before the Tribunal. The assessee has filed affidavit dt. 15th Oct., 2003, stating that the failure to pay the undisputed tax was entirely because of ignorance of the provisions of s. 249(4) of the Act. The counsel who advised him during the relevant period, viz. Shri Srinivasachary, has also filed an affidavit dt. 15th Oct., 2003, stating that somehow he lost sight of the provisions of s. 249(4) and did not advise the assessee in the matter, and the CIT(A) also, somehow, admitted the appeal ignoring the said provision, and so, he (the counsel) did not become aware of it till the matter reached the Tribunal.

8. So far as I can see, there is no reason to disbelieve either the assessee or his counsel on this point. The learned Departmental Representative argued that the assessee was asked to pay the undisputed tax by the AO, but the same was not paid. The assessee and his counsel explained that they were not aware of the consequences of non-payment of admitted tax and they thought that they could apply for stay of the demand and proceed with the filing of the appeal. That is how they mentioned in Form No. 35 filed before the CIT(A) that they were seeking stay of the entire demand. According to them, this action proved their bona fides. I see no reason to take exception to it. No taxpayer would risk rejection of an appeal in limine if he were aware of the consequences of the non-payment of undisputed tax. So, I am prepared to accept the version of the assessee that the failure to pay the entire demand was only because of ignorance or oversight. The Hon’ble Supreme Court has observed in the case of Motilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh & Ors. (1979) 118 ITR 326 (SC), as per the relevant portion of the headnote, as under:

'(ii) There is no presumption that every person knows the law. It is often said that every one is presumed to know the law, but that is not a correct statement there is no such maxim known to the law.'

9. On the question of the statutory duty of the CIT(A) to issue show-cause notice, it is argued by the learned Departmental Representative that when there is failure on the part of the assessee, and the non-admission of the appeal is due to such failure, there is no duty cast on the CIT(A) to issue any such show-cause notice before such non-admission. In this context, it is relevant to remember the exhortation of the apex Court in the case of S.L. Kapoor vs. Jaganmohan & Ors. (1980) 4 SCC 379 that the canons of natural justice have to be observed when even an administrative action entails civil consequences. If that is the principle even in respect of administrative action, I am of the view that this observation holds good all the more in the context of a quasi-judicial proceedings, which undoubtedly the proceeding before the CIT(A) is.

10. In the case of C.B. Gautham vs. Union of India & Ors. (1993) 110 CTR (SC) 179 : (1993) 199 ITR 530 (SC), in the context of provisions of Chapter XX-C of the IT Act, relating to compulsory acquisition of property, the apex Court held that opportunity of being heard should be read into the relevant provision, even if it is not explicitly so provided. The relevant portion of the headnote of the said decision reads as under:

'The requirement of a reasonable opportunity being given to the concerned parties, particularly, the intending purchaser and the intending seller, must be read into the provisions of Chapter XX-C. That the time frame within which the order for compulsory purchase has to be made is a fairly right one is not such as would preclude a reasonable opportunity of being heard or to show cause being given............

The Courts have generally read into the provisions of the relevant sections a requirement of giving a reasonable opportunity of being heard before an order is made which would have adverse civil consequences for the parties affected. This would be particularly so in a case where the validity of the section would be open to a serious challenge for want of such an opportunity.’

11. So, simply because s. 249(4) does not provide explicitly for a show-cause notice to be issued by the CIT(A), it does not mean that such a notice can be dispensed with. Right of appeal is an invaluable right, and a taxpayer cannot easily be dispossessed of it. He should at least be made aware of his default before his appeal is rejected.

12. There is no question that the memorandum of appeal filed by the assessee is valid and in time. The failure to pay the admitted tax is a curable defect. In the light of the decisions of the apex Court mentioned above, it must be held that the appeal is filed on the date such defect is cured. Under s. 249(4) payment of undisputed tax is a precondition only for the admission of the appeal, and so, "the Revenue is correct in arguing that the appeal cannot be admitted unless the admitted tax is paid. That does not mean that, if the tax is not paid at the time of the filing of the appeal, the assessee loses the right of appeal automatically. It must be construed that the appeal is filed on the date of payment. So, a case of delayed payment of undisputed tax is only a case of delayed filing of appeal, and a delay in the filing of appeal can always be condoned by the CIT(A) in exercise of his powers under s. 249(3). Sec. 249(3) should be read in harmony, as contended by the learned counsel for the assessee, with the provisions of s. 249(4).

13. If any other construction is placed upon the scope of ss. 249(3) and 249(4), it may create an anomalous situation as contended by the learned counsel for the assessee. There can be an assessee who files the return subsequent to the limitation period and pays the admitted tax on the same day and applies for condonation of delay and possibly gets it condoned; whereas an assessee who has filed the appeal before the limitation period but pays the tax subsequently cannot apply for condonation of delay. So the only logical construction to be placed upon s. 249(3) r/w s. 249(4) is that while the CIT(A) cannot admit an appeal without payment of admitted tax, he has a duty to consider the appeal as having been filed on the date of payment of such tax and consider the request for condonation of delay.

14. Now the question is whether the matter has to be remanded to the CIT(A) for considering the condonation of delay in the filing of the appeal. Courts and Tribunals under similar circumstances have remanded the matter because the appeal was not considered on merits. But, here is a case where the CIT(A) considered the issues on merits, and actually, sustained all the additions made by the AO. I am actually surprised that even in a case where the CIT(A) sustained all the additions made, the Revenue thought it fit to contend that his order is non est. It is a moot point whether the order of the AO got merged with the order of the CIT(A) and so, if the order of the CIT(A) is non est, the order of the AO also becomes non est. Otherwise, it means, simply because the CIT(A) gave an unwarranted favourable decision, all appellate scrutiny is barred because the assessee has no remedy against the order of the CIT(A).

15. I find it is only an idle formality to remand the matter to the CIT(A). The said doctrine of idle formality has been discussed by the apex Court in the case of Aligarh Muslim University vs. Mansoor Ali Khan (2000) 7 SCC 529 and M.C. Mehta vs. Union of India (1999) 6 SCC 237. In the light of the contents of the affidavits of the assessee and his counsel that the failure to pay the admitted tax was entirely because of oversight, I do not see how any CIT(A) can really decline to condone the delay. Assuming that it is not condoned, that action is again appealable and the matter would come back to the Tribunal, and the Tribunal has necessarily to condone the delay. So, I would have liked to proceed with the disposal of appeal on merits. Actually, we have heard the case on merits at length.

16. But such condonation of delay may give rise to a technical flaw. In the present case, the admitted tax is paid after the CIT(A) has disposed of the appeal. So, the appeal has to be construed as having been filed on the date of payment of admitted tax. So, there is an anomaly in the sense that the order of the CIT(A) preceded the date of filing of the appeal. To avoid this technical flaw or anomaly, I go along with my learned brother and agree to the remand of the matter to the file of the CIT(A) with a direction to consider the aspect of condonation of delay, and redispose of the appeal on merits in the light of the above remarks."

Similar are the decisions of the Delhi Bench of the Tribunal in the case of Gopal Chand Khandelwal vs. Asstt. CIT, the Amritsar Bench of the Tribunal in the case of Ravinder Singh vs. Asstt. CIT, and the Ahmedabad Bench of the Tribunal in the case of J.K. Chaturvedi vs. Asstt. CIT.

28. The sole decision that is in favour of the Revenue is that of the Mumbai Bench of the Tribunal in the case of Bharat Kumar Sekhsaria vs. Dy. CIT. That case is distinguishable on facts as it was not the case of that assessee that he was prevented by the IT Department in discharging his duty for payment of tax.

29. The Delhi Bench of the Tribunal in the case of Anil Sanghi vs. Asstt. CIT, while dealing with first appeal to the Tribunal for the block period, in para 27, held as follows:

"We are also in agreement with the learned counsel for the appellant when he contends that a distinction was to be kept between the regular assessment proceedings and the block assessment proceedings, since in the latter the availability with the Department of seized assets in the form of movables and immovables was likely to be strong and in fact a certainty and under such circumstances it would be improper and in certain circumstances nigh impossible for an assessee to pay taxes on the returned income pertaining to the undisclosed income for the block period."

30. In the light of the decisions cited above, the judicial view appears to be that the appeals before the CIT(A) should be considered as having been properly filed on the date of payment of admitted taxes on returned income, though the memorandum of appeal was presented within the time and all that remains for consideration before the CIT(A) is whether the delay can be condoned or not.

31. The argument of the learned Departmental Representative that the admitted taxes on the returned income have not been paid even till today is factually incorrect. The returned income of the entire group is Rs. 75,16,763. 60 per cent of the same amounts to Rs. 43,12,708. The assessees had paid this amount. They had paid a further amount of Rs. 10,34,870 as interest under s. 220(2). Thus, the tax due on the income returned by the assessees as contemplated under s. 249 has been paid.

32. Now we consider the question whether the issue should be remanded to the CIT(A) to condone the delay. The learned AM, in his order in the case of Smt. Ch. Nivedita Reddy, has referred to the doctrine of idle formality as discussed by the apex Court in the case of Aligarh Muslim University vs. Mansoor Ali Khan (2000) 7 SCC 529, and in the case of M.C. Mehta vs. Union of India (1999) 6 SCC 237. We have already stated that the assessees were prevented by sufficient cause on the facts and in the circumstances of the case from paying the admitted tax on the returned income. We have also given a finding that it was the IT Department, which was the cause for such delay. Under these circumstances, we are of the firm opinion that the delay in this case has to be condoned as the CIT(A) has to take the date of filing of appeals as 15th Feb., 2001. Thus, we condone the delay in filing of the appeals before the CIT(A) and remand the matter back to the file of the CIT(A) with a direction to dispose of the same on merits after giving opportunity of being heard to the assessees.

33. In the result, these appeals are allowed.

N.D. Raghavan, VICE PRESIDENT:

34. I have carefully gone through the order proposed by my learned Brother. After doing so and duly considering the various aspects of the issues involved and after a very long and due deliberations amongst us, giving meticulous care and attention on the complexities involved while closely analyzing the facts and circumstances of the instant case roped with the issue in adjudication before us, however much I persuaded myself to dissent from the view proposed by my learned Brother I failed very often in succeeding to dissent so because of the erudition reflected in the order proposed by my learned Brother. While I was, therefore, contemplating as to whether a separate order is necessary by me to be written as below, I could not resist my temptation in writing so because of the tremendous efforts put in by the learned representatives for the assesseess and the Department presenting before us their respective stands in their own inimitable style highlighting the various papers filed on record and copious case laws showering non-stop like torrential rain thus inundating us to sail over and reach our destination of decision which we are rendering hereby.

35. It is not disputed before us that by letter dt. 24th Oct., 2000, Shri Devraj Moorjani replied to the CIT(A) submitting that he was not having any liquid funds and bringing to his notice the entire sequences of events, highlighting that the Chief CIT finally permitted the sale of the property and that the admitted tax would be paid very soon and further that Shri Shamraj Moorjani and Shri Lalitkumar Moorjani were under trial since 1995 and that nobody helped them either financially or morally during the pendency of the trial by resulting in disturbance, suffering and humiliation of the family a lot in their life. While so, the CIT(A) three days afterwards on 27th Oct., 2000, rejected the plea of the assessee and dismissed the appeals as infructuous.

36. The main stand of the assessee is that the assessee had only immovable property and no liquid assets which fact is clear from the material seized during the course of search and that the Revenue had attached all the immovable properties and prevented the assessees from selling the same and that, therefore, the assessee had just and sufficient cause for not being able to pay the admitted tax as their hands were tied and that consequent to the Chief CIT’s permission, the assessee sold the immovable property and paid the tax and that therefore, the dismissal of the assessees' appeals as infructuous by the CIT(A) is unjustified.

37. The assessees seem to have been prevented from disposing of the immovable properly under attachment by the Department and only after Chief CIT’s permission for private sale by lifting the attachment, the assessees were able to sell the immovable property and pay the tax on the admitted income in full. Further, Shri Shamraj Moorjani and his nephew Shri Lalitkumar Moorjani were behind the bars from 3rd Jan., 1995 to 26th April, 2001, i.e., for six and half years and were acquitted by the Hon’ble A.P. High Court by release from jail. Further, during the course of search and seizure operation under s. 132, the Department had not found or seized any cash or jewellery except documents relating to immovable properties all of which indicate that the assessees had no other means to pay taxes on the admitted income. It is also not disputed by the Revenue that the assessees’ investments were in immovable properties, having no liquid assets. The Department delayed granting permission to the assessees to sell the property and discharge the tax liability. Permission granted by the Chief CIT to sell the property by his letter dt. 18th Sept., 2000, seems to have been also after enormous correspondence and interaction by the assessee and the Department. After such permission, it appears, the property at Krishna Nagar, Jubilee Hills, was sold by the assessee and the purchaser of the property directly made over the entire sale consideration to the Department by DD towards the assessee’s payment of tax on admitted income as well as interest under s. 220(2) and also towards tax on capital gains arising out of the sale of the said property. Therefore, there is every justification for the assessee to plead that the assessees were prevented by sufficient cause from paying the tax on admitted income and that the CIT(A) was consequently wrong in dismissing the appeal as infructuous under s. 249(4)(a) of the Act.

38. If is, therefore, clear that the Revenue’s submission that the assessees were not interested in paying the taxes as per return of income filed is erroneous; equally so, the Department’s submission that the assessees never requested the Department to appropriate the properties towards taxes.

39.1 In the case of Smt. Nanhibai Jaiswal cited supra and relied upon by the. assessee, the Hon’ble Madhya Pradesh High Court has :

"Held, that since the appeal was not admitted on the ground that the amount of tax as contemplated by the cl. (a) of s. 249(4) had not been paid, the order passed by the CIT amounted to an order disposing of the appeal under s. 250 and, therefore, the appeal preferred by the assessee before the Tribunal was maintainable."

39.2 The Delhi Bench of the Tribunal in the case of Gopal Chand Khandelwal cited supra and relied upon by the assessees, held that the order passed by the first appellate authority dismissing the appeal in limine on the ground of default under s. 249(4) is an order under s. 250 and that, therefore, the assessee’s appeal to the Tribunal is competent. In the cited case, when the CIT(A) refused to admit the assessee’s appeal against the assessment order on the ground that the assessee did not pay the tax due on income returned thus attracting provisions of s. 249(4), the Tribunal held that in view of the fact the assessee had applied soon after search for adjusting seized cash against his tax liability, it could not be viewed that the tax was not paid on the income returned so as to debar the assessee from filing appeal as per s. 294(4).

39.3 In the case of T. Govindappa Setty cited supra and relied upon by the assessee, the Hon’ble Karnataka High Court held as below:

"What is contemplated by cl. (a) of s. 249(4) of the IT Act, 1961, is that when there is an undisputed liability, the appeal filed by the assessee in respect of the disputed liability cannot be admitted unless the assessee pays the admitted liability. The object of s. 249(4)(a) is not to entertain the appeal where the assessee fails to pay the undisputed tax liability. Sec. 294(4) has to be construed in the backdrop of the right to appeal provided to an assessee under s. 249 of the Act. Under these circumstances, while interpreting s. 249(4) of the Act, the Court will have to keep in mind the object of s. 249(4) of the Act and also the right to prefer an appeal guaranteed to an assessee. In that view of the matter, sub-s. (4) has to be liberally construed to serve the object of the right provided to an assessee to prefer an appeal. When the very liability is disputed, the right guaranteed to the assessee to prefer an appeal cannot be deprived by taking the view that the assessee has failed to pay the tax due on the income shown in the return filed."

39.4 The Ahmedabad Bench of the Tribunal in the case of J.K. Chaturvedi cited supra and relied upon by the assessee, held as below:

"It is undisputed proposition of law that appeal is a continuation of the original proceedings and right of appeal is not an inherent right but it is a statutory right. It is open to the legislature to give or not to give a right of appeal against decisions made by authorities. The right of appeal wherever conferred by statute has to be exercised strictly in conformity with the statutory provisions which create it. If the statute put any restriction then, such right would be available along with such restrictions. It is also not disputed that assessee had made the payment of agreed tax during the pendency of these appeals. A plain reading of sub-s. (3) of s. 249 shall reveal that if the assessee showed sufficient reasons for late filing of his appeals, then such delay can be condoned and controversy would be silenced on merit. Similarly for sake of explanation, if an assessee did not have sufficient funds for complying with the requirement of s. 24(4) and has not filed the appeal within the time provided under s. 249(2), subsequent to expiry of limitation, he made compliance of s. 249(4) and filed the appeal with a prayer of condonation of delay then it would be in discretion of the first appellate authority to see whether sufficient reasons for late filing of appeal exist or not. If the CIT(A) arrived at a conclusion that sufficient reasons exist, then again the controversy would be decided on merit. Thus, on conjoint reading of sub-ss. (3) and (4), it is inferred that defect arising due to non-compliance of s. 249(4) is a curable one and in a given case if the Tribunal is satisfied that there exist sufficient reasons for curing such defect after expiry of limitation, it would be in the realm of Tribunal’s discretion to restore such matters to the file of the CIT(A) for deciding the controversy on merits because sub-s. (1) of s. 254 provides wide powers to the Tribunal for passing such orders thereon as it thinks fit in the interest of justice. The assessee has discharged the huge tax liability of more than Rs. 75 lakhs in installments. Thus it would be totally unfair for not providing an opportunity to him for disputing the additions made by the AO on merits. The details submitted by the assessee reveals that assessee kept on making the payment of tax along with interest in installments. Had the assessee was having sufficient fund with him, then no prudent businessman would allow to swell the liability of interest in such a way. It clearly indicates that assessee was not having sufficient funds at the relevant time for compliance of s. 249(4), which rendered the appeals of the assessee as defective one. In the interest of justice, these appeals deserve to be allowed by setting aside the impugned order of the CIT(A) and restoring the same before the first appellate authority for adjudication on merits— Hukumchand Mills Ltd. vs. CIT (1967) 63 ITR 232 (SC), CIT vs. Assam Travels Shipping Service (1993) 199 ITR 1 (SC) and CIT vs. Kalipada Ghose (1987) 60 CTR (Ori) 96 : (1987) 167 ITR 173 (Ori) relied on."

39.5 In the case of Ravinder Singh cited supra and relied upon by the assessee, the Amritsar Bench of the Tribunal has held as below:

"Further, there was merit in the alternative contention of the assessee that the CIT(A) should have condoned the delay in filing the appeal under s. 249(3). The assessee submitted that from day one the assessee had requested the Departmental authorities that whatever tax was due may be realised out of the assets seized and the refunds due to him. Ultimately, the Department made the adjustments in the month of April, 2000. It was clear that the due taxes had already been paid by the assessee before 27th April, 2000, on which date, the appeal of the assessee was dismissed by the CIT(A) in limine. There was merit in the contention of the assessee that the CIT(A) ought to have condoned the delay in filing the appeal, particularly keeping in view the facts and the circumstances of the instant case as well as the ratio laid down by the Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji (1987) 62 CTR (SC) 23 : (1987) 167 ITR 471 (SC).

The assessee was facing extreme financial stringency due to fall in business and seizure of substantial assets and withholding of substantial refunds. In that view of the matter also, it could be said that there was sufficient cause for the delay, if any, in filing the appeal and the CIT(A) should have condoned the delay in filing the appeal."

39.6 The Hon’ble Bombay High Court in the case of K. Subramanian, ITO cited supra and relied upon by the assessee has held that the AO is clearly bound by the decision of a single judge or a Division Bench of the Court within whose jurisdiction he is operating as well as a decision of the Supreme Court and the mere fact, that an appeal has been preferred against such decision or is pending, can make no difference whatever to the binding nature of that decision so far as the AO is concerned. The decision of the single judge, though appealed against, would continue to be binding on all ITOs operating within the jurisdiction of the particular High Court for the purpose of making provisional assessments under s. 7 of the Companies (Profits) Surtax Act, 1964, unless a contrary view was taken by a Division Bench of that High Court or the Supreme Court.

39.7 The aforesaid decision of the Bombay High Court has been agreed with by the jurisdictional High Court in the case of State of A.P. vs. CTO cited supra and relied upon by the assessee as below:

‘The Tribunals functioning within the jurisdiction of a particular High Court in respect of whom the High Court has the. power of superintendence under Art. 227 are bound to follow the decisions of the High Court unless on an appeal to the Supreme Court, the operation of the judgment is suspended. It is not permissible for the authorities and the Tribunals to ignore the decisions of the High Court or to refuse to follow the decisions of the High Court on the pretext that an appeal has been filed in the Supreme Court which is pending or that steps are being taken to file an appeal. If any authority or the Tribunal refuses to follow any decision of the High Court on the above grounds, it would be clearly guilty of committing contempt of the High Court and is liable to be proceeded against."

40. It is superfluous to state, the decisions of the Supreme Court are binding on all the authorities in India as per Art. 141 of the Constitution of India. In the absence of any such decision on a particular issue, the decision of the jurisdictional High Court is binding on all the authorities in that particular State. In the absence of both the decisions, the decision of any High Court has to be followed by all the authorities in the country, having that at least persuasive value until a decision of jurisdictional High Court or apex Court would be rendered. In the event of any conflicting decisions of the same forum, that decision which is in favour of the assessee has to be followed, as per jurisprudence.

41. In regard to whether or not the matter has to be set aside to the CIT(A) for condoning the delay, I do opine, as my learned Brother opined, that it is not necessary to do so in accordance with the doctrine of ‘useless formality theory’ enunciated by the Hon’ble apex Court in the case of Aligarh Muslim Varsity and as discussed in para 15 of the Tribunal’s order dt. 14th Nov., 2003, in the case of Smt. Ch. Nivedita Reddy in IT(SS)A No. 90/Hyd/2002.

42. To sum up, three questions that could be said to have arisen in these appeals are:

(a) Whether an appeal lies against the order of the CIT(A) wherein the appeal was dismissed for non-payment admitted tax on returned income.

(b) Whether the CIT(A) erred in holding that the appeals are infructuous as the admitted taxes were not paid on income returned as required under s. 249(4)(a) of the Act.

In accordance with the principles of tax jurisprudence, judicial discipline and propriety, besides in the light of the case laws shed hereinabove and on the totality of the facts and the entirety of the circumstances of the instant case, I agree with my learned Brother for the reasons assigned by him in his order proposed besides for my reasons assigned above in this concurring order, by answering the first two questions in affirmative and the third question in the negative, thus all the three answers going in favour of the assessee.

43. Therefore, the order impugned herein not admitting the appeal of the assessee is quashed, besides remitting to the CIT(A) to decide the issue on merits after giving reasonable opportunity of being heard to the assessee and if necessary to the AO too and also duly considering any relevant material that may be relied upon in support of their stands before passing a speaking order in accordance with law.

44. In the result, the appeals of the assessees are allowed accordingly.

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