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PATNA HIGH COURT
V.Ramaswami and Choudhary JJ.
Kamdar Brothers
Versus
Commissioner Of Income Tax
Miscellaneous Judicial Case No. 278 of 1953 ;
Decided On : SEPTEMBER 27, 1954
INCOME TAX ACT, 1922 - SEC. 30(1) - APPEAL AGAINST PENALTY UNDER SEC. 46(1) - COMPETENCY - PAYMENT OF TAX - DATE OF PRESENTATION OF APPEAL - DATE OF ADMISSION OF APPEAL - DISTINCTION.
Fact of the Case:
The assessee, a Hindu undivided family, filed an appeal against a penalty imposed under Section 46(1) of the Income Tax Act, 1922. The appeal was presented on February 5, 1951, but was not admitted until April 24, 1952. The assessee had paid the full amount of tax due on the assessment year in question by March 20, 1950. The Appellate Assistant Commissioner dismissed the appeal on the ground that it was incompetent as the assessee had not paid the full amount of tax at the time of presentation of the appeal.
Finding of the Court:
The High Court held that the appeal was competent as the assessee had paid the full amount of tax due before the date of admission of the appeal. The Court interpreted the first proviso to Section 30(1) of the Act, which states that "no appeal shall lie against an order under Sub-section (1) of Sec. 46 unless the tax has been paid," to mean that an appeal shall not be presented against an order under Section 46(1) unless the tax has been paid. The Court distinguished between the presentation of an appeal and the admission of an appeal, and held that the crucial date for determining whether the tax had been paid was the date of admission of the appeal, not the date of presentation.
Issues: Whether the appeal against the penalty imposed under Section 46(1) of the Act was competent, given that the assessee had paid the full amount of tax due before the date of admission of the appeal.
Ratio Decidendi: The Court held that the appeal was competent because the assessee had paid the full amount of tax due before the date of admission of the appeal. The Court interpreted the first proviso to Section 30(1) of the Act to mean that an appeal shall not be presented against an order under Section 46(1) unless the tax has been paid, but that the crucial date for determining whether the tax had been paid was the date of admission of the appeal, not the date of presentation.
Final Decision: The Court answered the question referred to it in favor of the assessee and against the Income-tax Department. The Income-tax Department was ordered to pay the costs of the reference.
1. In this case the assesses is a Hindu undivided family called Kamdar Brothers of Jharia.
2. The assessment year is 1948-49, and the corresponding accounting year is 2003 Sambat. The assessment was made on the assessee on 26-10-1948, but this was revised on 30-11-1949, and, according to the revised assessment a sum of Rs. 15321 and odd was demanded from the assessee as tax by the Income-tax authorities. The assessee preferred an appeal against the assessment to the Income-tax Commissioner. Pending the hearing of the appeal the assesses made payments of the tax from 28-12-1949, up to 20-3-1950.
3. The total amount of payment made by the assessee was Rs. 13000. On 10-8-1950, the Appellate Assistant Commissioner dismissed the appeal. But the assessee took an appeal against the order of the Appellate Assistant Commissioner to the Income-tax Appellate Tribunal. While this appeal was pending, the Income-tax Officer imposed a penalty of Rs. 3500 upon the assessee under Sec. 46(1), Income-tax Act, for failure to pay the entire amount of assessment for 1948-49. Against this order of penalty the assessee brought an appeal to the Appellate Assistant Commissioner.
4. The appeal was presented on 5-2-1951, but ft was not admitted by the Appellate Assistant Commissioner on that date. It appears that on 2-5-1951, the appeal against the original assessment was heard by the Income-tax Appellate Tribunal and the appeal of the assessee was allowed in part and assessment of tax was reduced to a sum of Rs. 9,057 and odd.
5. The appeal against the order under Sec. 46 (1) was heard by the Appellate Assistant Commissioner on 24-5-1952. On that date the Appellate Assistant Commissioner took the view that the appeal was incompetent and should be struck off as the assessee had not paid the full amount of tax, namely the amount of Rs. 15,321 at, the time of presentation of the appeal. The Appellate Assistant Commissioner considered that under the proviso to Sec.30(1) the assessee was bound to pay the full amount of tax on 5-2-1951, on which date the appeal was presented against the order under Sec. 46(1).
6. The Appellate Assistant Commissioner conceded that if the crucial date was 24-4-1952, the amount of tax payable by the assessee should have been deemed to have been fully paid. For the admitted position was that the amount of tax reduced by the Income-tax Appellate Tribunal was Rs. 9,057 and odd, but the assessee had paid a sum of Rs. 13,000, between 28-12-1940 and 20-3-1950. The assessee preferred an appeal to the Income-tax Appellate Tribunal from the order of the Appellate Assistant Commissioner as regards the penalty under Section 46(1). The appeal was dismissed by the Tribunal and the order of the Appellate Assistant Commissioner was confirmed.
7. In these circumstances the Income-tax Appellate Tribunal has submitted the following question of law for the opinion of the High Court:
"Whether, in the circumstances of the case, the appeal preferred on 5-2-51 by the assesses against the penalty imposed under Sec. 46(1) of the Act was competent?"
8. On behalf of the assessee Mr. Dutt put forward the argument that the appeal preferred before the Appellate Assistant Commissioner against the order under Section 46(1) was competent since, the amount of tax had been fully paid on 24-4-1952.
9. The argument put forward by learned counsel was that the crucial date for paying the amount of tax was not the date of presentation of the appeal, but the date of admission. In the present case, the appeal was presented by the assessee before the Appellate Assistant Com missioner on 5-2-1951, but the appeal was ac tually, taken up on 24-4-1952, for deciding the preliminary question whether the appeal was competent. The contention was that the amount of tax had been fully paid by the assessee be- fore 24-4-1952, and, therefore, the Appellate Assistant Commissioner was wrong in law in holding that the appeal was not competent on that date. In our opinion, the a
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