Is it compulsory to make the payment of tax before filing an appeal with Commissioner of Income Tax (Appeal)?
The issue is dealt with in section 249 of the Inocme Tax Act – 1961. Under Section 249 (4), no appeal can be admitted unless at the time of filing of the appeal:
1. Where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or
2. Where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him.
The clause very clearly mentions that the payment required to be done is the payment of tax of returned income and not assessed income. It means the tax has been paid as per income declared in income tax return then there is no barrier on filing appeal u/s 249(4).
In cases falling under clause (2) and on an application made by the appellant in this behalf, the Commissioner (Appeals) may exempt assessee from the operation of the provisions of this clause if there exist a good and sufficient reason which has to be recorded in writing,.
It may be noted that in Bhumiraj Constructions Vs. Addl. CIT 135 TTJ 357, the assessee paid the tax due on income returned. However, the tax was paid after the disposal of appeal by the learned CIT(A).
It was held that on such payment, the defect in the appeal due to non-compliance of a directory requirement of paying such tax before the filing of the appeal, stood removed. As a consequence the appeal should have been revived by the CIT(A). The order was set aside and the matter was restored to the file of learned CIT(A) for disposal of appeal on merit.