I.T.As. Nos. 521/KB to 525/KB of 2001, decided on 14th March, 2002 VS I.T.As. Nos. 521/KB to 525/KB of 2001, decided on 14th March, 2002, 2002 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2192 (2002)

(a) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑S.130(1)‑‑‑Form of appeal‑‑‑Limitation‑‑‑Filing of ‑appeal without payment of appeal fee‑‑‑Effect‑‑‑Question whether the right to file an appeal could be exercised by an assessee even without payment of the prescribed appeal fee was answered by the Tribunal observing that a memorandum of appeal could be filed but the appeal would not be held to have properly been filed unless the appeal fee had been paid.

1961 ITR 163 rel.

(b) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss.129, 134 & 130‑‑‑Appeal to Appellate Additional Commissioner‑‑ Non‑payment of appeal fee‑‑‑Dismissal of appeal without pointing out the deficiency and giving opportunity of being heard ‑‑‑Validity‑‑ Memorandum of appeal was presented within time, but the required appeal fee in terms of S.130(1) of the Income Tax Ordinance, 1979 was not deposited‑‑‑Appeal filed suffered from a deficiency which ought to have been pointed out by the office‑‑‑If despite the pointation of deficiency the assessee had failed to pay the prescribed .amount, the validity of appeal for hearing could have been called in question‑‑‑No such notice was given within the limitation period, the dismissal of appeal on account of non‑payment of the fee was, therefore, not maintainable‑‑‑Deficiency being that of non‑payment of appeal fee at the time of filing the Memorandum of Appeal which having not been pointed out to the assessee, requirements of justice were not fulfilled by dismissing the appeal in limine‑‑‑Appellate Tribunal vacated the order of the First Appellate Authority and remanded the case for re‑adjudication on merit on payment of appeal fee by appellant within 15 (fifteen) days from the receipt of the order of the Tribunal.

PLD 1984 SC 289 and Muhammad Nawaz Khan's case 1970 SCMR 319 rel.

Afzal Hashmi, ITP for Appellant.

Muhammad Ali Indhar, D.R. for Respondent.

Date of hearing: 12th March, 2002.

ORDER

All the above captioned five appeals have been filed at the instance of assessee/appellant against the judgments passed by the learned CIT(A) dated 21‑9‑2001. As common issues are involved in all the appeals, therefore, all the aforesaid appeals are disposed of through a single order.

2. The issue raised by the assessee/appellant are as follows;--

"The learned Appellate Commissioner of Income Tax, Sukkur Range, Sukkur, was required to ask the appellant to pay the appeal fee before rejecting his appeal. Therefore, the order of rejecting appeals without providing opportunity is not justifiable and against the spirit of law.

"The learned AACIT, Sukkur, is not justified to reject the appeal without giving the consideration the grounds raised before him

"The learned AACIT, Sukkur is not justified to reject the appeal filed before him without providing sufficient opportunity of being heard. The office of the learned Appellate Additional Commissioner of Income Tax, recently shifted from Quetta to Sukkur. Therefore, compliance to notices issued by him was not made due to some misconception.

"The learned AACIT, Circle II, Quetta is not justified to issue notice under section 56 of the Income Tax Ordinance, 1979 after the close of assessment years.

Therefore; notice issued by him is devoid from merits.

"The deductions/allowances have not been allowed properly.

The learned AACIT, Circle‑II, Quetta is not justified to make the ex parte assessment under section 63 of the Income Tax Ordinance, 1979, without providing sufficient opportunity of being heard.

3. Brief, relevant facts of the case are that on receipt of information, that the assessee being owner of property at Satellite Town, Quetta was receiving rent from Habib Bank Ltd. under the agreement of tenancy with him, proceedings were initiated by Assessing Officer, Statutory Notices were served upon assessee but no compliance was made. Thereafter assessment was finalized the Assessing Officer under section 63 of the Income Tax Ordinance, 1979. Assessee after receiving the demand notice and assessment order challenged the ex parte order of Assessing Officer before learned CIT (A), who on the objection of non payment of appeal fee dismissed the appeals of assessee ex parte without touching the merits of the case. The assessee/appellant through these appeals has challenged the action of learned CIT(A). He has contended that the assessee was not confronted with the fact of inadmissibility of appeal arising out of the deficiency of non‑payment of appeal fee. He has further contended that appeal was dismissed ex parte on technical, ground of non‑payment of appeal fee and not on merits. Had the assessee been confronted with the deficiency, the same could have been made up by the appellant by paying the required fee. As such the learned A.R. has called for setting aside the order of the learned A.A.C. for remanding the case back to him for hearing on merits on payment of the appeal fee which he has now undertaken to pay.

4. We have given consideration to the arguments of the parties and perused the relevant order. The learned CIT(A) has dismissed the appeals of assessee by holding that assessee failed to pay the prescribed mandatory appeal fee as laid down under section 130(1) of the Income Tax Ordinance, 1979 to qualify his appeal.

5. The said section 130 of the Income Tax Ordinance is reproduced as under for ready reference:

"130. Form of appeal and limitation.‑‑‑‑(1) Every appeal under section 129 shall be in the prescribed form and shall be verified in the prescribed manner, and shall be accompanied by a fee of (one thousand rupees or ten percent. of tax levied, whichever is less, provided that where no tax is levied, a fee of one thousand rupees in the case of companies and two hundred rupees in the case of other assessee shall be paid.

(2) The appeal shall be presented within thirty days of the following date, namely‑‑‑

(a) where the appeal relates to any assessment or penalty, the date of service of the notice of demand relating to the said assessment or penalty, as the case may be, and

(b) in any other case, the date on which intimation of the order to be appealed against is served.

(3) The Appellate [Additional Commissioner] may admit an appeal after the expiration of the period specified in subsection (2) if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within that period."

6. The question that arises now is whether the right to file an appeal can be exercised by an assessee even without payment of the prescribed appeal fee. The answer is that a memorandum of appeal can be filed but the appeal will not be held to have properly been filed unless the appeal fee has been paid. We are fortified in our view by a judgment of the Supreme Court of India in the case reported as (1961) ITR 163 where while elaborating the meaning of the words "no appeal shall lie" in the context of an appeal against an order under section 46(1) of Income‑tax Act, 1922 it was held that:‑‑

"The controversy between the parties revolves round the words 'no appeal lie'. The contention which was raised before us was that these words mean that there is no right of appeal till the tax is paid and, therefore, if the tax has not been paid the memorandum of appeal cannot be filed and if filed it is merely a waste paper. In our opinion the meaning of the words 'no appeal shall lie' in the proviso is not that no memorandum of appeal can be presented. All that it means is that the appeal will, not be held to be properly filed until the tax has been paid. If for instance, the memorandum of appeal is filed on the 20th day. i.e., 10 days, the appeal will be a proper appeal; it will be within time and no question of limitation will arise but if the tax is paid after the period of limitation has expired it will be taken to have been filed on the day when the tax is paid even though the memorandum of appeal was presented earlier and within the period of limitation. The question will then have to be decided whether there was sufficient cause for condonation of delay and that is exactly what the Tribunal had ordered and that in our opinion is the effect of the proviso to section 30(1) read with subsection (2) of section 30 of the Act."

7. In the present context the memo. of appeal is seen to have been presented within time. However, the required appeal fee in terms of section 130(1) was not deposited. The appeal filed, therefore, suffered from a deficiency which ought to have been pointed out by the office. If despite this pointation the assessee had failed to pay the deficient amount, the validity of‑appeal filed for hearing could have been defi nitely called in question. It is the plea of the appellant that no such notice was given within the limitation period. The dismissal of the appeal on account of non‑payment of the appeal fee is, therefore, not maintainable.

8. At this point a reference can properly also be made to the judgment of our own Supreme Court reported as PLD 1984 page 289 (SC Pak.) wherein discussing with application of Order VII, rule 11(b)(c), C. P. C. to appeals it was held that:

"It might not be possible to reject a Memorandum of Appeal on the ground of deficiency of court‑fee unless in accordance therewith an opportunity is provided to supply the required court‑fee. It is also conducive for a purpose amongst others, for which Order VII, rule 11(b) and (c) were enacted namely collection of State revenue insofar as appeal stage of Court process is concerned. As would be presently shown it is obligatory under Order VII, rule 11 (c) to afford one opportunity to supply the deficiency in court‑fee, before rejection of plaint under the said provision. If as is discussed above there are two interpretations of section 107(2) (when read with Order VII rule 11 (c) and Order XLI, Rule 3) then the one favouring the saving of the appeal proceedings from rejection on the ground connected with collection of public revenue by affording the said opportunity, would have to be adopted.", (P.312)

9. It was further observed that:‑‑

"The failure to supply proper court‑fee in the context of the Court Fees Act and section 149 and Order VII, rule 11(c), C.P.C. can at best be equated with non‑prosecution and not with non‑institution or presentation of the matter/document nor with the bar of limitation." (P.315)

10. In respect of limitation itself the Hon'ble Supreme Court also reiterated the following findings and observations in one of their earlier judgments in the case of Muhammad Nawaz Khan (1970) as under: (page 319)

(a) It would indeed be anomalous if limitation is not saved in cases in which law requires the Court to allow the plaintiff to correct the valuation of the relief claimed in the suit which must necessarily entail making up deficiency in the stamp paper affixed on the plaint; therefore:

(b) Time should automatically be enlarged in cases in which the Court has the discretion to grant time to pay the whole or part of the court‑fee prescribed; and

(c) Consequently, where the plaintiff is required to correct the valuation of the relief claimed in the suit, "he shall further be required to supply requisite stamp paper and on compliance it shall have the same force and effect as if such fee had been paid in the first instance.

Finally the Hon'ble Court remanded both the cases as directed to the 1st Appellate Court as directed by them in their short order passed earlier for rehearing the appeals subject to payment of deficiency in court‑fee within six week of the order. Following this order of the Hon'ble Supreme Court we feel that the deficiency in. the present cases also being that of non‑payment of appeal fee at the time of filing the Memorandum of Appeal and that deficiency having not been pointed out to the assessee taken, the requirements of justice are not held to have been fulfilled by in limine dismissal of appeal. We accordingly, vacate the order of the learned A.A.C. and remand the case back to him for re -adjudication of the case on merit on payment of appeal fee which the appellant is directed to make within 15 (fifteen) days from the date of receipt of this order.

11. The appeals are allowed to the extent and in the manner indicated above.

C.M.A./M.A.K./357/Tax(Trib.)Appeal accepted.