Demand of income tax after proceeding of assessment
Neeraj Kumar Giri
(Querist) 18 February 2014
This query is : Resolved
Dear Experts,
If any Income Tax Officer, is making an Assessment proceeding of an Assessee u/s 143(1) and after completion of proceeding he demanded Rs. 2 Lakhs as Income Tax and Interest as these income has been escaped by the Assessee in view of ITO. Then is it mandatory to pay the demand of Tax before filing appeal to the competent authority.
Because same incident had took place with a Assessee whom the ITO has told to first deposit the Tax then to file Appeal before CIT (Appeal), otherwise he is authorized to attach his bank for recovery of Tax.
So, Sir under which section of IT Act, can a ITO compel the Assessee to deposit the Tax before filing Appeal.
Thank You.
R.V.RAO
(Expert) 19 February 2014
if the appeal is made to CIT(A),THEN,YES the assessee needs first to pay tax and then go for appeal..till date of final hearing ,he has time to pay.
but if the appeal is made before ITAT,NO NEED TO FIRST PAY TAX.
PL. READ CAREFULLY SEC 249(4) OF IT Act, and also commentary on same.reproduced below:
Section-249 (4)-payment of tax on Returned Income before the appeal
Section 249 (4) provides that no appeal shall be admitted unless the appellant has paid the tax due on the returned income before filing of the appeal. This is a very important part of appeal proceedings and one has to be extra careful on this front. If the tax on the returned income is not paid before the filing of the appeal, the appeal is not likely to be admitted. Section 249(4) is mandatory and there is no remedy available against the operation of the said section.
If the Tax is not paid before the filing of the appeal, then legally the CIT (A) is empowered to dismiss the appeal. However, if the tax is paid before the final date of hearing of the appeal, then normally the CIT (A) allows the appeal to be heard and decides the same on merit.
In a case where no return is filed the assessee should pay tax of an amount equivalent to the amount of advance tax payable by him before filing an appeal.
There is no condition that interest if any u/s. 234 A/B/C should also be paid before the appeal could be admitted.
Section 249(4) applies to appeals against assessment as well as appeal against penalty.
The provision of Section 249(4) however applies to appeal before CIT(A) only and do not apply for filing appeal before the ITAT.
source:www.itrtoday.com/appeals-proceedings...
i found some recent case law also on the subject given below.
Commissioner of Income Tax Versus Pramod Kumar Dang - 2014 (1) TMI 762 - DELHI HIGH COURT - Income Tax
Applicability of section 249(4)(a) - Held that - As per section 249(4) - Where an Assessee has filed a return of income, then the tax which is admittedly payable by the Assessee should be paid prior to the hearing of any appeal filed by the Assessee - The rationale seems very logical for the reason that no Assessee can be heard in an appeal where the tax which is admittedly payable by the Assessee is outstanding. It is to enforce payment of tax o........
Rajendra K Goyal
(Expert) 19 February 2014
Well advised by the expert R.V.RAO ji, agree to it.
Neeraj Kumar Giri
(Querist) 19 February 2014
Dear Experts,
Kindly advise me that if an Assessee who is a retailer of a shop and made the made to his creditors Rs.18000/- twice a day in cash through different receipt voucher,because he was unaware of the rule and regulation of the IT Act, in this case what should he do, and to justify that the act of mistake should be set aside due to ignorance because it was an advent mistake and it does not reflect his escape of income because the ledger copies of the creditors are with him and if AO made a notice u/s133 (6) about the payment he will find the same as the ledger of the creditors.
in this case how to get relief of omission of law.
R.V.RAO
(Expert) 19 February 2014
FOR ISSUE OF NOTICE UNDER SEC 133(6),THE THIRD PROVISO IN THE SEC.PROVIDES A RESTRICTION THAT NO NOTICE CAN BE GIVEN UNDER THIS SEC.WITHOUT PRIOR PERMISSION FROM A DIRECTOR/CIT,IF NO PROCEEDINGS ARE PENDING.
SO CLARIFY IF ANY PROCEEDINGS ARE PENDING IN THIS OR ANY OTHER MATTER AGAINST YOU UNDER IT ACT?
IF YOUR ANSWER IS NO ,NOT TO WORRY.
more over ,if your concern is CASH PAYMENTS EXCEEDING RS 20000/UNDER SEC40(A)(3), note the Madhya pradesh high court held that the statutory limit applied is to payments made to a party at one time but not to aggregate of payments made to a party in the course of the day.
T. Kalaiselvan, Advocate
(Expert) 20 February 2014
expert Mr. R.V. Rao has given his opinions elaborately on the subject issue, I agree with the same.
R.V.RAO
(Expert) 20 February 2014
thanks.sri kalaiselvanji.
Neeraj Kumar Giri
(Querist) 20 February 2014
Me too...Thank you all experts..Thanks again.
R.V.RAO
(Expert) 21 February 2014
you r welcome.
Vineet
(Expert) 21 February 2014
Mr Giri
1. I understand the assessment order has been passed u/s 143(3). An order u/s 143(1) is mere intimation and tax can be demanded only for shortfall in tax and interest computation. No adjustments to income are permissible u/s 143(1).
2. If demand has been raised persuant to assessment order u/s 143(3), there is no compulsion that it should be paid before filing of appeal before CIT(A). Non payment of tax demand persuant to assessment cannot be a ground for dismissal of appeal. Only requirement of section 249 is that assessee should have paid admitted tax liability i.e. tax on returned income. I reiterate no compulsion to pay the disputed tax demand merely for appeal.
3. As per provisions of IT Act, tax demand has to be paid within 30 days of demand notice. However. assessee can file for stay of demand before AO which may be granted if AO is satisfied or he can grant part stay and instalments. Rejection of stay petition can be further contested before Addl CIT, CIT and CCIT.
4. If demand is not paid within 30 days and stay application is not pending, AO is entitled to initiate recovery proceedings which include attachment of debtors and bank accounts.
Hope this resolves Quesry No 1.
For Query 2, the law is very clear that total payment to a person in a day should not exceed Rs 20000/- in a day except the exceptions provided in Rule 6DD. However, courts have sometimes taken liberal view in the matter if genuineness and identity of payee is established. So keep your fingers crossed.
R.V.RAO
(Expert) 21 February 2014
the queriest talks of sec 143(1) in his query (SUMMARY ASSESSMENT)
Vineet
(Expert) 04 March 2014
I wanted to give a comprehensive reply. Under 143(1), no adjustments are possible while querist talks about escapement of income and demand after completion of proceedings.
143(1) is mere processing of return in which tax is calculated as per returned income, credits for prepaid taxes are given and demands may arise only for two reasons; either tax computation was wrong or taxes were not paid. There may be third instance that TDS and other prepaid taxes are not available in departmental system due to wrong PAN details fed by deductor or bank. In such case rectification application is sufficient and not appeal.
However, if the person has actually not paid taxes due on returned income and demand is arising due to this fact, then god save him. First of all, no appeal lies, and if at all appeal filed, will be dismissed at first instance for non payment of tax on returned income.
