Case Note & Summary
The dispute arose from the interpretation of the proviso to Section 30(1) of the Indian Income-tax Act, 1922, which provided that no appeal shall lie against an order under Section 46(1) unless the tax had been paid. The respondent assessee was assessed for the year 1949-50 to income-tax and super-tax of Rs. 1,80,646/14 on June 2, 1954, and a demand notice under Section 29 required payment by July 17, 1954. The assessee was permitted to pay by instalments, with the last instalment of Rs. 30,646/14 due on or before March 20, 1955. On default of that instalment, the Income-tax Officer imposed a penalty of Rs. 3,000 under Section 46(1) on March 31, 1955. The assessee filed an appeal to the Appellate Assistant Commissioner on April 20, 1955, which was within the limitation period, but the last instalment of tax remained unpaid and was not paid until May 16, 1955, after the limitation period for filing the appeal had expired. The Income-tax Officer raised a preliminary objection that the appeal was not competent because the tax had not been paid. The Appellate Assistant Commissioner accepted that objection and held the appeal not maintainable. On appeal, the Income-tax Appellate Tribunal held that the right of appeal was conferred by Section 30(1) and was not extinguished by Section 30(2); the remedy alone was barred until payment. Once the tax was paid, the appeal became valid and should be treated as preferred on the date of payment, leaving the Appellate Assistant Commissioner to decide whether there was sufficient cause to condone the delay under Section 30(2). The Tribunal referred the question of law to the Bombay High Court, which answered it in the affirmative. The Commissioner of Income-tax then appealed to the Supreme Court. The appellant contended that the words 'no appeal shall lie' meant there was no right of appeal until the tax was paid, so the memorandum of appeal could not be filed and, if filed, was a mere waste paper. The respondent's position, reflected in the Tribunal's order, was that the right was not destroyed and the appeal became good upon payment. The Supreme Court held that the phrase 'no appeal shall lie' did not prevent the presentation of a memorandum of appeal; it merely meant that the appeal would not be held to be properly filed until the tax had been paid. If the memorandum was filed within limitation and the tax paid within that period, the appeal would be proper and within time. But if the tax was paid after expiry of the limitation period, the appeal would be deemed to have been filed on the date the tax was paid, and the appellate authority would then have to consider whether there was sufficient cause for condonation of delay under Section 30(2). The Court found that this was precisely the direction given by the Tribunal and that it was unnecessary to refer to the two earlier cases cited by the High Court. Accordingly, the Supreme Court dismissed the appeal with costs, affirming the High Court's answer to the referred question.
Headnote
A) Income Tax - Appeals Against Penalty - Proviso to Section 30(1) and Section 30(2) Indian Income-tax Act, 1922 - Core Legal Point: 'No appeal shall lie' means appeal not properly filed until tax paid; memorandum may be presented but appeal deemed filed on date tax paid - The respondent assessee filed an appeal against penalty under Section 46(1) within limitation, but paid the outstanding tax after the limitation period expired. The Supreme Court held that the proviso to Section 30(1) read with Section 30(2) means the appeal is not properly filed until the tax is paid; if tax is paid late, the appeal is deemed filed on the date of payment and the Appellate Assistant Commissioner must then consider whether there was sufficient cause for condonation of delay. Held that the High Court correctly answered the referred question in the affirmative and dismissed the revenue's appeal with costs (Paras not mentioned).
Issue of Consideration
Whether an appeal filed before the Appellate Assistant Commissioner on 20 April 1955 against penalty under Section 46(1) of the Indian Income-tax Act, 1922 became a proper and complete appeal though the outstanding tax was paid after the limitation period expired, and whether the Appellate Assistant Commissioner should have decided the question of condonation of delay under Section 30(2).
Final Decision
Supreme Court dismissed the appeal with costs, holding that 'no appeal shall lie' in proviso to Section 30(1) means appeal not properly filed until tax paid; if tax paid after limitation expiry, appeal deemed filed on date of payment and question of condonation of delay under Section 30(2) to be decided. High Court's affirmative answer affirmed.
Law Points
- Expression 'no appeal shall lie' in proviso to Section 30(1) of Indian Income-tax Act
- 1922 does not bar presentation of memorandum of appeal but requires payment of tax before appeal can be held properly filed
- appeal deemed filed on date tax paid even if memorandum presented within limitation period
- if tax paid after limitation expires then question of condonation of delay under Section 30(2) to be decided by appellate authority
- right of appeal conferred by Section 30(1) not extinguished by Section 30(2)
