No return was filed and no advance tax was paid, but the Commissioner (Appeals) admitted the appeal and decided it. The department now says the appeal was never maintainable. Can the Tribunal presume that the Commissioner (Appeals) exercised her power to exempt?
No. The Delhi High Court held that the proviso to s.249(4)(b) requires the Commissioner (Appeals) to decide, and to record in writing, whether there were good and sufficient reasons to exempt the assessee from paying an amount equal to the advance tax, and that this is mandatory. The Tribunal in that case had reasoned that because the Commissioner (Appeals) had admitted and adjudicated the appeals, it could be assumed she had exercised her discretion and found good and sufficient reasons; the High Court held the requirement had simply not been complied with. Note carefully that at paragraph 24 the Court expressly declined to dispose of the appeals on this reasoning and said it had referred to the section only to clarify the legal position.
Decided by the High Court (Sanjiv Khanna J and R.V. Easwar J) on 2012-02-08, reported as ITA Nos. 7/2006, 2/2006, 3/2006, 4/2006, 5/2006, 8/2006, 10/2006, 11/2006, 17/2006 and 22/2006, High Court of Delhi. It bears on section 249(4), section 249, section 147, section 148, section 154, section 250, section 292B, section 260A of the Income Tax Act 1961, in Appeals and Reassessment & Reopening matters.
This cuts both ways and both sides use it. For the department it is authority that a s.249(4)(b) defect is not cured by the appellate authority's silence. For the assessee it is authority that the exemption power exists, is real, and must be addressed by a speaking order — so where the Commissioner (Appeals) dismisses in limine without dealing with an application under the proviso, the order is defective for the same reason. The limit on its weight must be stated honestly: paragraph 24 records that the Court was not deciding the appeals on this ground and was clarifying the position only, so it is a considered clarification rather than the ratio. The safe practice that follows is the same either way — never leave the proviso to inference, and always ask for a written finding on it.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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Ten appeals by the Revenue under s.260A concerned assessment years 1989-90 and 1992-93 to 1995-96 of a common respondent, Jagat Novel Exhibitors Private Limited. The Commissioner (Appeals) had held the s.147/148 notices void because the words 'Pvt. Ltd.' were missing from the description of the assessee, and the Revenue appealed against that. Separately, the assessee had filed s.154 applications contending that its returned income had wrongly been retained in the computation, the Assessing Officer had rejected them, the same Commissioner (Appeals) had dismissed the assessee's appeals against that rejection, and the assessee appealed to the Tribunal against that. All ten appeals were disposed of by a common Tribunal order dated 15 April 2005. Dealing with the Revenue's appeals, the Tribunal rejected the contention that the appeals before the Commissioner (Appeals) were not maintainable for non-payment under s.249(4), holding that clause (a) did not apply because the assessee had not filed valid returns, and that as to clause (b) it could be assumed the Commissioner (Appeals) had exercised her discretionary power and concluded there were good and sufficient reasons for not paying the advance tax.
On the s.249(4) point (paragraph 23): the Commissioner (Appeals) had not examined whether to grant exemption from payment of advance tax under s.249(4)(b) and the proviso; the proviso requires her to decide and to record in writing whether there were good and sufficient reasons to exempt the assessee from complying with clause (b); this is mandatory; the requirement had not been complied with. On the questions actually admitted, the notices were held valid, the omission of 'Pvt. Ltd.' being neither a misnomer nor a misdescription that made the proceedings null and void (paragraphs 47 to 49), and those questions were answered in favour of the Revenue. Paragraph 50 directed the parties to appear before the concerned Commissioner (Appeals) on 26 March 2012 so that the assessee's appeals could be heard on merits.
The Court set out s.249(4) in full at paragraph 22, then at paragraph 23 measured the Commissioner (Appeals)' order against the proviso and found the exercise absent rather than implicit. At paragraph 24 it stopped short, holding that the questions of law admitted were on a different aspect and that the section had been referred to only to clarify the legal position, and it expressly disclaimed s.249(4) as a ground for the answers it gave. The remainder of the judgment turns on s.292B and on the distinction between misdescription and misjoinder drawn in Chief Forest Conservator v. Collector, the test applied being whether the recipient of the notice could have been in doubt that it was meant for him.
The proviso requires the CIT(A) to decide and record in writing whether there were good and sufficient reasons to exempt an assessee from complying with Section 249(4)(b). This is mandatory.
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Handle my notice → Ask a CA on WhatsAppNo. The Delhi High Court held that the proviso to s.249(4)(b) requires the Commissioner (Appeals) to decide, and to record in writing, whether there were good and sufficient reasons to exempt the assessee from paying an amount equal to the advance tax, and that this is mandatory. The Tribunal in that case had reasoned that because the Commissioner (Appeals) had admitted and adjudicated the appeals, it could be assumed she had exercised her discretion and found good and sufficient reasons; the High Court held the requirement had simply not been complied with. Note carefully that at paragraph 24 the Court expressly declined to dispose of the appeals on this reasoning and said it had referred to the section only to clarify the legal position. This was decided by the High Court (Sanjiv Khanna J and R.V. Easwar J) and bears on section 249(4), section 249, section 147, section 148, section 154, section 250, section 292B, section 260A of the Income Tax Act 1961. It is reported as ITA Nos. 7/2006, 2/2006, 3/2006, 4/2006, 5/2006, 8/2006, 10/2006, 11/2006, 17/2006 and 22/2006, High Court of Delhi. This cuts both ways and both sides use it. For the department it is authority that a s.249(4)(b) defect is not cured by the appellate authority's silence. For the assessee it is authority that the exemption power exists, is real, and must be addressed by a speaking order — so where the Commissioner (Appeals) dismisses in limine without dealing with an application under the proviso, the order is defective for the same reason. The limit on its weight must be stated honestly: paragraph 24 records that the Court was not deciding the appeals on this ground and was clarifying the position only, so it is a considered clarification rather than the ratio. The safe practice that follows is the same either way — never leave the proviso to inference, and always ask for a written finding on it. If it applies to you, the first step is this: If no return was filed, file a written application under the proviso to s.249(4)(b) at the time of filing the appeal, stating the good and sufficient reasons, and ask for a specific order on it.
Ten appeals by the Revenue under s.260A concerned assessment years 1989-90 and 1992-93 to 1995-96 of a common respondent, Jagat Novel Exhibitors Private Limited. The Commissioner (Appeals) had held the s.147/148 notices void because the words 'Pvt. Ltd.' were missing from the description of the assessee, and the Revenue appealed against that. Separately, the assessee had filed s.154 applications contending that its returned income had wrongly been retained in the computation, the Assessing Officer had rejected them, the same Commissioner (Appeals) had dismissed the assessee's appeals against that rejection, and the assessee appealed to the Tribunal against that. All ten appeals were disposed of by a common Tribunal order dated 15 April 2005. Dealing with the Revenue's appeals, the Tribunal rejected the contention that the appeals before the Commissioner (Appeals) were not maintainable for non-payment under s.249(4), holding that clause (a) did not apply because the assessee had not filed valid returns, and that as to clause (b) it could be assumed the Commissioner (Appeals) had exercised her discretionary power and concluded there were good and sufficient reasons for not paying the advance tax. The matter was decided on 2012-02-08 by the High Court (Sanjiv Khanna J and R.V. Easwar J). On those facts the High Court held as follows. On the s.249(4) point (paragraph 23): the Commissioner (Appeals) had not examined whether to grant exemption from payment of advance tax under s.249(4)(b) and the proviso; the proviso requires her to decide and to record in writing whether there were good and sufficient reasons to exempt the assessee from complying with clause (b); this is mandatory; the requirement had not been complied with. On the questions actually admitted, the notices were held valid, the omission of 'Pvt. Ltd.' being neither a misnomer nor a misdescription that made the proceedings null and void (paragraphs 47 to 49), and those questions were answered in favour of the Revenue. Paragraph 50 directed the parties to appear before the concerned Commissioner (Appeals) on 26 March 2012 so that the assessee's appeals could be heard on merits.
The Court set out s.249(4) in full at paragraph 22, then at paragraph 23 measured the Commissioner (Appeals)' order against the proviso and found the exercise absent rather than implicit. At paragraph 24 it stopped short, holding that the questions of law admitted were on a different aspect and that the section had been referred to only to clarify the legal position, and it expressly disclaimed s.249(4) as a ground for the answers it gave. The remainder of the judgment turns on s.292B and on the distinction between misdescription and misjoinder drawn in Chief Forest Conservator v. Collector, the test applied being whether the recipient of the notice could have been in doubt that it was meant for him. In the words reproduced by the source cited on this page: "The proviso requires the CIT(A) to decide and record in writing whether there were good and sufficient reasons to exempt an assessee from complying with Section 249(4)(b). This is mandatory." The decision followed or applied Chief Forest Conservator, Government of Andhra Pradesh v. Collector (2003) 3 SCC 472 — applied on misdescription of parties; Prime Securities Ltd. v. Varinder Mehta, ACIT (2009) 317 ITR 27 (Bom) — referred to on s.292B; Balchand v. ITO (1969) 72 ITR 197 (SC) — referred to on construing a defective statutory notice.
It was decided by the High Court on 2012-02-08 and is reported as ITA Nos. 7/2006, 2/2006, 3/2006, 4/2006, 5/2006, 8/2006, 10/2006, 11/2006, 17/2006 and 22/2006, High Court of Delhi. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 249(4), section 249, section 147, section 148, section 154, section 250, section 292B, section 260A, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. On the s.249(4) point (paragraph 23): the Commissioner (Appeals) had not examined whether to grant exemption from payment of advance tax under s.249(4)(b) and the proviso; the proviso requires her to decide and to record in writing whether there were good and sufficient reasons to exempt the assessee from complying with clause (b); this is mandatory; the requirement had not been complied with. On the questions actually admitted, the notices were held valid, the omission of 'Pvt. Ltd.' being neither a misnomer nor a misdescription that made the proceedings null and void (paragraphs 47 to 49), and those questions were answered in favour of the Revenue. Paragraph 50 directed the parties to appear before the concerned Commissioner (Appeals) on 26 March 2012 so that the assessee's appeals could be heard on merits. It arises in Appeals and Reassessment & Reopening matters, on section 249(4), section 249, section 147, section 148, section 154, section 250, section 292B, section 260A of the Income Tax Act 1961, and was decided by Sanjiv Khanna J and R.V. Easwar J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Check the Commissioner (Appeals)' order for an express finding on the proviso. If there is none, take the point yourself before the Tribunal rather than waiting for the department to take it. Do not argue, as the Tribunal did here, that admission of the appeal implies the discretion was exercised — the Delhi High Court has said in terms that the recording is mandatory and had not been done. Distinguish clause (a) from clause (b) at the outset. Where a valid return was filed the exemption is unavailable, and where no valid return was filed clause (a) does not apply at all — the Tribunal's finding here was that no valid returns had been filed, which is what put the case into clause (b). Where you are the respondent before the Tribunal and the s.249(4) point is raised against you, remember that this judgment answers only whether the discretion must be recorded, not whether the appeal must be thrown out.
Validity check could not be completed. Validity check could not be completed: no search for later treatment was run. The weight of the s.249(4) passage is in any event limited by the Court's own paragraph 24, which disclaims it as a ground of decision; that limit is stated in the entry rather than concealed. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The judgment runs to fifty numbered paragraphs and ends at paragraph 50 with the judges' signatures and the date; that was established by transcribing paragraphs 44 to 50 and the closing lines, not by asking whether the document ended there. The substantial questions admitted, set out at paragraphs 2 and 3, concern the validity of s.148 notices in which the words 'Pvt. Ltd.' were missing, and the answer at paragraph 49 is in favour of the Revenue on that point. The s.249(4) discussion at paragraphs 22 and 23 is therefore a clarification: paragraph 24 states 'we would not like to decide and dispose of the appeals on the present reasoning' and 'It is clarified that this is not the ground why we are answering the question of law'. Paragraph 50 nevertheless directs the parties to appear before the Commissioner (Appeals) on 26 March 2012 because the assessee's appeals had to be heard on merits. The entry is written to reflect that limit rather than to present paragraph 23 as the ratio. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
On the s.249(4) point (paragraph 23): the Commissioner (Appeals) had not examined whether to grant exemption from payment of advance tax under s.249(4)(b) and the proviso; the proviso requires her to decide and to record in writing whether there were good and sufficient reasons to exempt the assessee from complying with clause (b); this is mandatory; the requirement had not been complied with. On the questions actually admitted, the notices were held valid, the omission of 'Pvt. Ltd.' being neither a misnomer nor a misdescription that made the proceedings null and void (paragraphs 47 to 49), and those questions were answered in favour of the Revenue. Paragraph 50 directed the parties to appear before the concerned Commissioner (Appeals) on 26 March 2012 so that the assessee's appeals could be heard on merits.
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