My client wants to challenge the search itself and the jurisdiction to make a block assessment. He has filed a block return but has no funds to pay the tax on the returned undisclosed income. Can the Commissioner (Appeals) refuse to admit the appeal?
Yes. Where a return has been filed, s.249(4)(a) makes payment of the tax due on the returned income a condition of admission, and a challenge to the search or to the jurisdiction under s.158BC does not displace it. The Karnataka High Court upheld the Commissioner (Appeals) and the Tribunal in refusing to admit the appeals, answering the questions of law against the assessees — but, on the assessees' counsel undertaking that they would pay, gave them four weeks to make good the admitted tax and directed that if they did, the Commissioner (Appeals) must hear the appeals on merits uninfluenced by the earlier proceedings.
Decided by the High Court (R. Gururajan J and N. Ananda J) on 2006-11-08, reported as (2007) 209 CTR (Kar) 70; [2007] 292 ITR 99 (Kar); ITA Nos. 768 and 769 of 2006, High Court of Karnataka. It bears on section 249(4), section 249, section 158BC, section 132 of the Income Tax Act 1961, in Appeals and Search, Survey & Block Assessment matters.
This is the case to read before advising that a jurisdictional attack lets you skip the s.249(4) payment. It does not. The assessees here said in terms that they had no source from which to raise the funds; the Court treated that as an admission of non-compliance with a mandatory requirement. The practical value, however, lies in the last two paragraphs: even after answering the questions against the assessee, the Court kept the appeal alive by giving time to pay. That is the order to ask for. Read alongside PCIT v. Abdul Zahid, where the same High Court's later line — that payment made after filing but before the Commissioner (Appeals) disposes of the appeal is enough — was applied to restore the appeal outright. The two together mean that in Karnataka a s.249(4) dismissal is very often curable, but only if the money is actually found.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The premises of D. Rajkumar were searched under s.132. Notices under s.158BC were issued to him and to his wife, D. Komalakshi. Both filed block returns. Smt. Komalakshi declared undisclosed income of Rs 19,32,838 for the block period with tax payable, including surcharge, of Rs 11,82,896. Sri Rajkumar declared Rs 1,07,96,536 with tax payable of Rs 66,07,480; the Assessing Officer gave credit for Rs 53,00,000 seized during the search, leaving Rs 13,07,480 due from him. The Assessing Officer completed the block assessments at Rs 83,19,650 in her case and at Rs 4,64,85,100, with tax of Rs 2,78,91,060, in his. Both appealed to the Commissioner (Appeals), who rejected the appeals as not maintainable under s.249(4). The Tribunal upheld that by a common order. Before the High Court counsel for the assessees argued that there was no admitted tax at all because the tax liability itself, the validity of the s.132 search and the very jurisdiction to proceed under s.158BC were all under challenge. The assessees had stated before the appellate authority that they had no source from which to raise funds to make good the tax due at the time of filing the appeals.
The appeals were rejected and the questions of law answered against the assessees. Section 249(4) makes payment of the tax due on the income returned a condition of the admission of the appeal; the assessees' own statement that they could not pay showed a failure to comply with a mandatory requirement, and there was no legal error in the orders of the Commissioner (Appeals) or the Tribunal (paragraphs 10 and 11). The Court nevertheless accepted counsel's request for time, gave the assessees four weeks to pay the admitted amounts, and directed that if payment were made the Commissioner (Appeals) 'shall consider the appeals on merits and pass appropriate orders in accordance with law, without in any way being influenced by the earlier proceedings', expressing no opinion on the merits and leaving all contentions open (paragraphs 12 and 13).
The Court set out s.249(4) in full at paragraph 9 and read it at paragraph 10 as making the admission of an appeal subject to payment of the tax due on the returned income, a requirement introduced in the larger interest of revenue collection. At paragraph 11 it took the assessees' own pleading — that they had no source to raise funds, and that in the absence of tax on the admitted income the appeal could not be admitted — as demonstrating non-compliance on their own case. Having found no legal error, it declined to disturb the concurrent orders, but at paragraph 13 it departed from what it said it would do 'in the normal course' and allowed four weeks for payment so that the appeals could be revived on merits.
A reading of this section makes it very clear to us that admission of an appeal is subject to payment of tax due on the income returned and the same has been introduced, probably in the larger interest of the revenue collection by way of payment of admitted tax for the purpose of appeal.
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Handle my notice → Ask a CA on WhatsAppYes. Where a return has been filed, s.249(4)(a) makes payment of the tax due on the returned income a condition of admission, and a challenge to the search or to the jurisdiction under s.158BC does not displace it. The Karnataka High Court upheld the Commissioner (Appeals) and the Tribunal in refusing to admit the appeals, answering the questions of law against the assessees — but, on the assessees' counsel undertaking that they would pay, gave them four weeks to make good the admitted tax and directed that if they did, the Commissioner (Appeals) must hear the appeals on merits uninfluenced by the earlier proceedings. This was decided by the High Court (R. Gururajan J and N. Ananda J) and bears on section 249(4), section 249, section 158BC, section 132 of the Income Tax Act 1961. It is reported as (2007) 209 CTR (Kar) 70; [2007] 292 ITR 99 (Kar); ITA Nos. 768 and 769 of 2006, High Court of Karnataka. This is the case to read before advising that a jurisdictional attack lets you skip the s.249(4) payment. It does not. The assessees here said in terms that they had no source from which to raise the funds; the Court treated that as an admission of non-compliance with a mandatory requirement. The practical value, however, lies in the last two paragraphs: even after answering the questions against the assessee, the Court kept the appeal alive by giving time to pay. That is the order to ask for. Read alongside PCIT v. Abdul Zahid, where the same High Court's later line — that payment made after filing but before the Commissioner (Appeals) disposes of the appeal is enough — was applied to restore the appeal outright. The two together mean that in Karnataka a s.249(4) dismissal is very often curable, but only if the money is actually found. If it applies to you, the first step is this: Treat the tax on the returned income as the price of admission and pay it before filing, whatever the strength of the jurisdictional grounds.
The premises of D. Rajkumar were searched under s.132. Notices under s.158BC were issued to him and to his wife, D. Komalakshi. Both filed block returns. Smt. Komalakshi declared undisclosed income of Rs 19,32,838 for the block period with tax payable, including surcharge, of Rs 11,82,896. Sri Rajkumar declared Rs 1,07,96,536 with tax payable of Rs 66,07,480; the Assessing Officer gave credit for Rs 53,00,000 seized during the search, leaving Rs 13,07,480 due from him. The Assessing Officer completed the block assessments at Rs 83,19,650 in her case and at Rs 4,64,85,100, with tax of Rs 2,78,91,060, in his. Both appealed to the Commissioner (Appeals), who rejected the appeals as not maintainable under s.249(4). The Tribunal upheld that by a common order. Before the High Court counsel for the assessees argued that there was no admitted tax at all because the tax liability itself, the validity of the s.132 search and the very jurisdiction to proceed under s.158BC were all under challenge. The assessees had stated before the appellate authority that they had no source from which to raise funds to make good the tax due at the time of filing the appeals. The matter was decided on 2006-11-08 by the High Court (R. Gururajan J and N. Ananda J). On those facts the High Court held as follows. The appeals were rejected and the questions of law answered against the assessees. Section 249(4) makes payment of the tax due on the income returned a condition of the admission of the appeal; the assessees' own statement that they could not pay showed a failure to comply with a mandatory requirement, and there was no legal error in the orders of the Commissioner (Appeals) or the Tribunal (paragraphs 10 and 11). The Court nevertheless accepted counsel's request for time, gave the assessees four weeks to pay the admitted amounts, and directed that if payment were made the Commissioner (Appeals) 'shall consider the appeals on merits and pass appropriate orders in accordance with law, without in any way being influenced by the earlier proceedings', expressing no opinion on the merits and leaving all contentions open (paragraphs 12 and 13).
The Court set out s.249(4) in full at paragraph 9 and read it at paragraph 10 as making the admission of an appeal subject to payment of the tax due on the returned income, a requirement introduced in the larger interest of revenue collection. At paragraph 11 it took the assessees' own pleading — that they had no source to raise funds, and that in the absence of tax on the admitted income the appeal could not be admitted — as demonstrating non-compliance on their own case. Having found no legal error, it declined to disturb the concurrent orders, but at paragraph 13 it departed from what it said it would do 'in the normal course' and allowed four weeks for payment so that the appeals could be revived on merits. In the words reproduced by the source cited on this page: "A reading of this section makes it very clear to us that admission of an appeal is subject to payment of tax due on the income returned and the same has been introduced, probably in the larger interest of the revenue collection by way of payment of admitted tax for the purpose of appeal."
It was decided by the High Court on 2006-11-08 and is reported as (2007) 209 CTR (Kar) 70; [2007] 292 ITR 99 (Kar); ITA Nos. 768 and 769 of 2006, High Court of Karnataka. 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 158BC, section 132, 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 helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The appeals were rejected and the questions of law answered against the assessees. Section 249(4) makes payment of the tax due on the income returned a condition of the admission of the appeal; the assessees' own statement that they could not pay showed a failure to comply with a mandatory requirement, and there was no legal error in the orders of the Commissioner (Appeals) or the Tribunal (paragraphs 10 and 11). The Court nevertheless accepted counsel's request for time, gave the assessees four weeks to pay the admitted amounts, and directed that if payment were made the Commissioner (Appeals) 'shall consider the appeals on merits and pass appropriate orders in accordance with law, without in any way being influenced by the earlier proceedings', expressing no opinion on the merits and leaving all contentions open (paragraphs 12 and 13). It arises in Appeals and Search, Survey & Block Assessment matters, on section 249(4), section 249, section 158BC, section 132 of the Income Tax Act 1961, and was decided by R. Gururajan J and N. Ananda 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. Where funds are genuinely short, do not tell the appellate authority that no source exists — that statement was used against the assessees here. Seek an instalment arrangement and place the payment on record before the appeal is taken up. If the appeal has already been refused admission, apply for time to pay and ask expressly for a direction that on payment the appeal be heard on merits without being influenced by the earlier order, which is the relief granted at paragraph 13. Where a block assessment is involved, remember that credit for cash seized during the search reduces the tax due, as it did for the co-appellant here; work out the net figure before conceding that the bar applies. Do not confuse clause (a) with clause (b): the proviso allowing exemption for good and sufficient reason is available only where NO return was filed.
Still good law. A citedby search returns 7 later citing documents, 4 of them High Court. The Karnataka High Court applied it in Ittina Infra-Tech Limited v ACIT (9 September 2022): the Bench acted 'in the light of the judgment of this Court in the case of D. Komalakshi Vs. Deputy Commissioner of Income Tax - ILR 2007 KAR 898', adopted what it called a justice oriented approach to give the petitioner 'one more opportunity', and set aside the impugned orders and remitted the matter - the same Court doing the same thing again in ACIT v Ittina Infra-Tech Limited (20 May 2025). The Gujarat High Court in Shreenath v Income Tax Officer (5 April 2011) and the Bombay High Court in Gobind Builders and Developers v Income Tax Settlement Commission (4 March 2008) both work from it, the Gujarat Bench noting the observations made 'while granting additional time'. Nothing overruling, doubting or confining it was found. But read the judgment for what it actually does, because the citator is being used both ways. The bar in s.249(4) is mandatory - that is what the CIT(A) took from it in Smt. Sulochana Ramesh v ACIT (Bangalore Tribunal, 20 February 2023) - yet the practical current of the later High Court decisions is to cure the default by granting time rather than to shut the appeal out, and in Sulochana Ramesh the Tribunal rejected the CIT(A)'s reliance on it, holding on Garden City Resorts and the Karnataka decision in T. Govindappa Setty that s.249(4) did not bite where the undisputed tax on the returned income had been paid. A practitioner facing the bar should ask for time under the Ittina Infra-Tech line rather than treat the appeal as lost. 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 report as carried on indiankanoon contains obvious transcription corruption. Throughout paragraphs 10 and 11 the section is printed as 'Section 249A' where the context and the quoted text at paragraph 9 show it is section 249(4); the same paragraphs contain 'we bold' for 'we hold', 'four (4) weeks tune' for 'time', 'be wants' for 'he wants' and 'essessee' for 'assessee'. The key quote reproduced here is from paragraph 10, which is clean and which was confirmed word for word on a second, independent retrieval route. Two authorities were cited by counsel for the assessees only by citation string — '231 ITR 892' (this Court) and '187 ITR 688' (Supreme Court) — and the judgment does not name either; they are therefore not listed in 'followed'. The equivalent citations printed at the head of the report are (2007) 209 CTR (Kar) 70 and [2007] 292 ITR 99 (Kar). 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.
The appeals were rejected and the questions of law answered against the assessees. Section 249(4) makes payment of the tax due on the income returned a condition of the admission of the appeal; the assessees' own statement that they could not pay showed a failure to comply with a mandatory requirement, and there was no legal error in the orders of the Commissioner (Appeals) or the Tribunal (paragraphs 10 and 11). The Court nevertheless accepted counsel's request for time, gave the assessees four weeks to pay the admitted amounts, and directed that if payment were made the Commissioner (Appeals) 'shall consider the appeals on merits and pass appropriate orders in accordance with law, without in any way being influenced by the earlier proceedings', expressing no opinion on the merits and leaving all contentions open (paragraphs 12 and 13).
TaxSphere, “D. Komalakshi v Dy. CIT — no money, no appeal: the section 249(4) bar bites even where the whole search and the block assessment are challenged”, https://taxnotice.vittsphere.com/caselaw/case/d-komalakshi-v-dcit-249-4-bar-is-mandatory-in-a-block-assessment-appeal/ (validity last checked 2026-09-08)
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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?
My client filed his appeal without paying the tax on the returned income, then paid it a fortnight before the Commissioner (Appeals) passed the dismissal order. Is the appeal gone?
I am filing a first appeal to the Commissioner (Appeals). What exactly must I have done before the appeal can even be admitted, and from what date do the thirty days run?
Is payment of admitted tax under s.249(4) a condition that must be satisfied again when the appeal goes on to the Tribunal?
