TMI Blog1993 (5) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... urned by the assessee-company was not paid as per the provisions of sub-section (4) of section 249 of the Income-tax Act, 1961. In reply to the show-cause notice the explanation of the assessee was that the Assessing Officer had not adjusted refund due in earlier years. The learned CIT(A) held that this contention was not established and there was no provision for adjustment of refund of past years against tax payable under section 140A. He, therefore, did not admit the appeal and dismissed it as such. The assessee filed an appeal before the Income-tax Appellate Tribunal and it was contended that there was no tax liability due at the time of filing of the appeal before the CIT(A) as the assessee was entitled to refunds equivalent to or more the tax alleged to be due under section 140A. The assessee had paid taxes amounting to Rs. 12,39,781 between12-10-1987and2-7-1988as against tax due of Rs. 8,37,440 under section 140A on the declared income of Rs. 13,39,240. The assessee filed the copies of the various letters to the ITO requesting for adjustment of the refund due and other correspondences with the income-tax authorities and TRO regarding the demand and its stay and the paper sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced by the company during the period under consideration due to operations of a new plant ' Bichhouna ' on the fact and figures of sales earlier and subsequent years and it was prayed that due to the severe financial crisis faced by the company, it was not in a position to pay any self-assessment tax for the impugned assessment year and, therefore, the assessee be exempted from the operation of provisions of section 249(4) of the I.T. Act. After receiving this application, the CIT(A) himself examined the financial position of the assessee for assessment year 1984-85 from the balance-sheet of the company and he observed as under : "After analysing the financial position of the Appellant it is seen that up to the AY 86-87 there is substantial increase in purchase, sales as well as profits. It is also seen that throughout this period the appellant has been also making additions by purchase of assets. It is also seen from the chart that the appellant was having bank balances of substantial amount with him. It is also seen that throughout this period the appellant has also earned profits. It is also seen that the appellant has made a provision for taxation. It is also seen that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the decision of the Supreme Court in the case of CIT v. Filmistan Ltd. [1961] 42 ITR 163 which was delivered in context of provisions of the first proviso to section 30(1) of the Indian Income-tax Act, 1922 where the words " no appeal shall lie " were appearing. Taking the analogy of that decision it was submitted that even if the tax was paid after the period of limitation had expired. If the assessee had a reasonable and good cause for not paying the tax at the time of filing the return, then the delay can be condoned. Our attention was invited to the fact that this decision was given in reference to section 9 of UP Sales-tax Act, 1948 which is clear from the Commentary of Chaturvedi and Pithisaria, IV Ed, Vol. V at page 5215. Reliance was also placed on the decision of the Supreme Court in the case of Collector, Land Acquisition, v. Mst. Katiji [1987] 167 ITR 471 where the Hon'ble Supreme Court had made observation, " When substantial justice and technical considerations are pitted against each other, the case of substantial justice deserved to be preferred, for, the side cannot claim to have vested right in injustice being done because of non-deliberate delay ". In order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Filmistan Ltd. is distinguishable on the facts itself because the Hon'ble Supreme Court in the case of Mst. Katyi stating that under section 5 of the Limitation Act the expression sufficient cause was appearing. Therefore, while interpreting that expression the decision was given. For this provision, there is no such word, therefore, the ratio laid down in that case cannot be applicable. It is pointed out that even at the time of filing the return, the admitted tax is not paid, an appeal cannot be admitted. There is no question of adjusting refund against the tax due under section 249(4). It is also pointed out that the refund belongs to the director. Therefore, it cannot be adjusted against the tax payable by the company under provisions of section 249(4) of the IT Act. However, it was submitted that this request for adjustment of tax by director of the company in view of the specific mention of adjustment against tax payable under section 140A of the IT Act due against the company could be adjusted against the tax demand of company resulted after completion of assessment order in which total tax payable was computed at Rs. 88,40,408. It is further submitted that no specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have application, as to the payment of the tax on the returned income etc. before the period of limitation for filing the appeal or make an application under the provisions of section 249(4) for exemption from the operation of the provision of the main sub-section. On failure of the assessee to comply with either requirement the first appellate authority is competent not to admit the appeal. Therefore, it is clear that provisions of section 249(4) is mandatory and in order to get the exemption the assessee had to make an application for exemption from operation of provisions of section 249(4). In the instant case at the time of filing the return the assessee did not make any application for seeking an exemption from operation of section 249(4). It is only when the case was being considered by the Tribunal that the assessee made submission that oral requests for exemption from the provisions of section 249(4) was made explaining the financial difficulties and also pointed out that proper opportunity was not given then the Tribunal taking into consideration the factual position, which was similar to that of a case of M/s. Capri International Pvt. Ltd. opportunity was given to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 140A it cannot be categorised that the assessee had made request to adjust the refund against self-assessment tax payable under section 140A of the IT Act. In the absence of specific request, it cannot be said that the assessee was not in default of paying the self-assessment tax. Besides, the fact that the payment of Rs. 2,43,000 and Rs. 2,19,000 was made much after the self-assessment tax was payable at the time of filing the appeal. The assessee also cannot take any benefit of the fact that the revenue Deptt. itself stayed the payment of admitted tax up to25-10-1987and later on up to30-6-1988upon by an application dated5-10-1987because this application was also moved after the period of limitation. So far as the case law relied upon by the learned counsel for the assessee in the case of Filmistan Ltd. is concerned, the Hon'ble Supreme Court was considering the meaning of the words " no appeal shall lie " under the proviso by section 30 of the IT Act, 1922 which is different from the provision of section 249(4) of the IT Act, 1961 where the word appearing are " appeal shall not be admitted ". Therefore, the ratio laid down by the Hon'ble Supreme Court in that case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mandatory provision is complied there is no vested right of appeal. 8. As regards the sufficient reason for exemption from the provision of section 249(4) and the facts relating to the same are concerned, we find that the CIT(A) has analysed the financial position of the assessee from the balance-sheet produced for the impugned asst. order, which is also mentioned In the preceding paragraph. Therefore, keeping in view the factual position given in the balance-sheet, we find that during the asst. year under consideration not only the sale of the assessee increased but the stock value also increased. Assessee also made provision for tax and payment provision for dividend besides the cash and bank balance mentioned above. Therefore, if the assessee had an intention to make payment at the time of filing the appeal, there was no difficulty to make the payment of Rs. 8,43,721. 9. As regards the decision cited by the learned counsel for the assessee in the case of J.K.K. Nataraja is concerned it was a case where the admitted tax was paid before the appeal was taken up for hearing, and the assessee had also paid equally large amount in respect of other taxes. Therefore, this case is d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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