Filing Appeal Before Commissioner Appeals Under Section 246A

Filing Appeal Before Commissioner Appeals Under Section 246A Does Not Require Any Mandatory Pre Deposit

Issue

Whether an assessee is required to make any pre-deposit of the disputed tax demand as a mandatory condition precedent for filing and entertaining a statutory appeal before the Commissioner (Appeals) under Section 246A.

Facts

The assessee sought to avail themselves of the statutory appellate remedy by filing an appeal before the Commissioner (Appeals) under Section 246A of the Income-tax Act, 1961.
A question arose regarding the maintainability of the appeal concerning whether the assessee must deposit a portion of the disputed tax demand (pre-deposit) before the statutory appeal can be institutionalized or heard.

Decision

The issue was decided entirely in favour of the assessee.
It was held that filing a statutory appeal before the Commissioner (Appeals) under Section 246A does not require any mandatory pre-deposit.
The right to appeal is a statutory right, and since the specific provisions of Section 246A do not prescribe or mandate any pre-deposit of the tax in dispute as a condition for admitting the appeal, no such condition can be artificially imposed on the assessee to block their appellate remedy.

Key Takeaways

No Inherent Pre-deposit Requirement: Unlike certain other tax statutes (such as GST, Customs, or Central Excise) which mandate a 7.5% or 10% pre-deposit to admit an appeal, Section 246A of the Income-tax Act does not contain a “pay-first-to-appeal” clause.

Admission vs. Stay of Demand: There is a sharp legal distinction between filing/admitting an appeal and seeking a stay on recovery. While the appeal must be admitted without any pre-deposit, the tax recovery process can still proceed unless the assessee separately applies for a stay of demand under Section 220(6) (which typically requires a 20% deposit as per administrative guidelines).

Absolute Right to Appellate Remedy: An appeal cannot be dismissed at the threshold stage by the Commissioner (Appeals) on the grounds that the tax demand under dispute has not been partially or fully cleared.

HIGH COURT OF MADRAS

L. Gopalakrishnan

Income-tax Officer^*

SUSHRUT ARVIND DHARMADHIKARI, CJ.
and N. Sathish Kumar, J.

W.A.(MD) No.34 of 2025
C.M.P.(MD)Nos. 268 and 269 of 2025^†

MARCH 30, 2026

J. Barathan for the Appellant. J. Parekh Kumar, Standing Counsel for the Respondent.

JUDGMENT

Sushrut Arvind Dharmadhikari, CJ.-The present Writ Appeal under Clause 15 of the Letters Patent assails the judgment dated 02.12.2024, passed in W.P.(MD)No.7510 of 2024, whereby the learned Single Judge had disposed of the petition with liberty to the appellant to approach the appellate authority.

2. The learned counsel for the appellant contended that he required three days time to submit his reply before the Assessing Officer, after which the matter could have been decided. He would further submit that, since the appellant was on a pilgrimage, he could not file the reply in time. He would further submit that the learned Single Judge misconstrued that no reply has been given to the earlier show cause notices, except the notice dated 29.02.2024. As the learned Single Judge has relegated the petitioner to avail the alternative remedy, the appellant is required to make pre-deposit to avail the remedy on appeal.

3. The learned counsel appearing for the respondents opposed the prayer and submitted that as per Section 246-A of the Income Tax Act, 1961, there is no provision for making a pre-deposit when filing an appeal before the Commissioner of Income-tax (Appeals).

4. We have perused the impugned order as well as the provisions of Section 246-A of the Income Tax Act, 1961, and find that there is no requirement for a pre-deposit.

5. The learned Single Judge has only directed the appellant to avail the appellate remedy as available under Section 246-A of the Income Tax Act, 1961. We are, therefore, not inclined to interfere with the order passed by the learned Single Judge. In case the appellant avails such appellate remedy, the period during which the appellant was pursuing the writ petition and writ appeal shall be excluded for the purpose of calculating limitation.

6. Writ appeal is disposed of accordingly. There shall be no order as to costs. Consequently, interim applications stand closed.