RAVINDER REDDY GADDAM RAJA ,HYDERABAD vs. DY. COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE-2(4), HYDERABAD

At the outset, learned AR submitted that as against the assessment order dated 31/03/2013 for the assessment year 2009-10, assessee preferred an appeal before the learned CIT(A), but the learned CIT(A) raised objection that the assessee did not pay the taxes due on the self- assessment, and, therefore, in accordance with section 249(4) of the Income Tax Act, 1961 (for short “the Act”), no appeal could be entertained.

According to the learned AR, a refund was due to the assessee for the assessment years 2008-09 and 2010-11 of an amount more than the demand for the assessment year 2009-10 and, therefore, the learned CIT(A) was incorrect in refusing to adjudicate the appeal and dismissing the same.

Learned AR further submitted that the letters dated 26/06/2023, 27/01/2022 and 19/05/2023 establish the fact that a sum of Rs. 42,12,045/- is due to the assessee from the department by way of refunds for the assessment years 2008-09 and 2010-11 and which are available for adjustment towards tax for the assessment year 2009-10. He filed the copies of the letters referred to by him and they form part of record.

Learned DR submitted that under section 249(4) of the Act, no appeal shall be admitted unless the assessee has paid the taxes due on the income returned by him, at the time of filing of the appeal itself before the learned CIT(A) but since no refund was due to the assessee to be adjusted for the assessment year 2009-10, as evidenced by the report dated 16/08/2019 submitted by the learned Assessing Officer, refusal to entertain the appeal by the learned CIT(A) is justified. Learned DR, however, does not dispute the correctness of the letters, copies of which are filed by the assessee.

We have gone through the record in the light of the submissions made on either side. Assessee claimed before the learned CIT(A) that there was a refund of Rs. 40,10,795/- in assessment year 2008-09 and Rs. 7,18,202/- in assessment year 2010-11 due to the assessee and adjustment of these funds as against the demand for assessment year 2009-10 would result in net refund and, therefore, there was sufficient compliance with the provisions of section 249(4) of the Act. The letters referred to by the learned AR also clearly establish that for the assessment year 2008-09 and 2010-11 a sum of Rs. 34,95,510/- and Rs. 7,16,535/- were found due to be refunded to the assessee and for that matter, it is clear by the letter dated 19/05/2023 that the sooner the approval of JCIT is received, such amounts will be submitted to CPC for adjustment of the demand for the assessment year 2009-10.

Learned CIT(A) in his order found that the taxes due as per the return of income filed by the assessee are to the tune of Rs. 34,73,230/- for the assessment year 2009-10. The amount of refund available to the assessee is Rs. 42,12,045/- which is more than the tax to be paid. Appeal before the learned CIT(A) was preferred as on 29/04/2013 and report of the learned Assessing Officer stating that no refunds were available for adjustment was as on 16/08/2019. However, by order dated 04/10/2021, the earlier order dated 31/03/2013 under section 143(3) of the Act for the assessment year 2008-09 was modified to determine the refund to the tune of Rs. 34,95,510/-. Hence, it is but natural for the learned CIT(A) to return a finding as he had given in the impugned order. However, the subsequent events justify the claim of the assessee.

We, therefore, are of the opinion that in the changed circumstances, the impugned order cannot be sustained and in view of the availability of refunds for the assessment years 2008-09 and 2010-11, the assessee’s request to set aside the impugned order and to restore the appeal to the file of the learned CIT(A) for adjudication on merits is justified. Hence, we set aside the impugned order and restore the appeal to the file of the learned CIT(A) for considering the appeal on merits.