M/S. JHUNJHUNU BALAJI MOTORS PVT. LTD.,JHUNJHUNU vs. ACIT, CIRCLE-JHUNJHUNU, JHUNJHUNU

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA. Nos. 264 & 263/JP/2020 fu/kZkj.k o"kZ@Assessment Year : 2014-15 & 2013-14 cuke M/s Jhunjhunu Balaji Motors Pvt. Ltd. ACIT, Vs. Mandawa Road, Sitar, Circle, Jhunjhunu Jhunjhunu LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCJ9791P vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : None jktLo dh vksj ls@ Revenue by : Smt. Runi Pal (Addl.CIT) a lquokbZ dh rkjh[k@ Date of Hearing : 29/07/2021 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 30/07/2021 vkns'k@ ORDER PER: VIKRAM SINGH YADAV, A.M.

These are two appeals filed by the assessee against the orders passed by the ld. CIT(A)-3, Jaipur dated 28.03.2019 for A.Y 2013-14 and A.Y 2014-15 respectively.

“In connection with the subject cited above it is humbly submitted:

2. The assessee due to Serious Financial hardships could not deposited the self assessment Tax and filed return of Income for the relevant A.Y.2013-14.

3. The AO completed the assessment Ex-party u/s 147/144 of IT Act vide assessment order dated 28.12.2017 at huge assessed Income of Rs. 2,93,38,850/-.

4. The assessee preferred appeal before ld. CIT(A)-III Jaipur against the relevant assessment order dated 28.12.2017 along with application for condoning delay of 34 days in filing of the appeal.

5. The ld. CIT(A)-III Jaipur observed that the assessee has not deposited the Advance Tax as provided u/s 249(4)(b) of IT Act, & 263/JP/2020 3 M/s Jhunjhunu Balaji Motors Pvt Ltd., Jhunjhunu vs. ACIT, Circle- Jhunjhunu 1961, therefore vide order dated 28.03.2019 dismissed the appeal of the assessee as un admitted.

6. The order of the ld. CIT(A) was communicated vide E-Mail on 28.03.2019 which came in the knowledge of the assessee either on the same day or later day.

10. The A/R of the assessee advised that taking in to account the Tax already deposited in different installments before disposal of the appeal by ld. CIT(A) along with Tax deposited on 25.02.2020 is sufficient for compliance of section 249(4)(b) of IT Act, 1961. The assessee directed his A/R to file the appeal before Hon. ITAT.

Therefore, it is humbly prayed to admit the appeal as provided u/s 253(5) of I.T Act, 1961, by condoning the delay in filing of the same and decide the appeal on merits.”

2. Under the facts and circumstances of the case the ld. CIT(A) is not justified in not disposing the following Grounds of appeal on merits. 2.1 Under the facts and circumstances of the case the AO is not justified in Estimating the Net Profit of Rs. 2,88,00,000/- by applying NP Rate of 8% of Gross Receipts of Rs. 36,00,00,000/-. 2.2 Under the facts and circumstances of the case the AO is not justified in Estimating the Net Income from Interest and commission of Rs. 3,17,048/-. 2.3 Under the facts and circumstances of the case the AO is not justified in Estimating the Net Income from Rent of Rs. 2,21,800/-.”

7. In Ground No. 1, the assessee has challenged the action of the ld. CIT(A) in dismissing the appeal due to non deposit of admitted tax/advance tax as provided u/s 249(4) of the Act, 1961.

8. In this regard, the ld DR drawn our reference to the findings of the ld. CIT(A) which read as under:-

I have carefully considered the material before me. I find that the appellant is not paid the tax on admitted income till date, which is mandatory as per section 249(4) of the IT Act. The & 263/JP/2020 6 M/s Jhunjhunu Balaji Motors Pvt Ltd., Jhunjhunu vs. ACIT, Circle- Jhunjhunu section say that “No appeal under this Chapter shall be admitted unless at the time of filing of the appeal:- (a) Where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or (b) 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.

In the appellant case the appellant not file any return of income. The A/R of the appellant submitted profit and loss account, balance sheet where in profit before tax was shown Rs. 37,10,130/- and income tax at Rs. 14,00,000/- but the appellant not paid any amount of advance tax which is violation of section 249(4) of the I.T. Act. Therefore, the appeal is dismissed as un- admitted.”

9. It was submitted by the ld DR that since the assessee has not filed any return of income originally, therefore, it was incumbent on part of the assessee to deposit an amount equal to advance tax which was due had it filed its return of income. It was submitted that since the assessee failed to deposit taxes equivalent to the amount of advance tax, the ld CIT(A) was right in rejecting the appeal at the threshold in view of the clear and mandatory provisions of section 249(4) of the Act.

11. On reading of the aforesaid provisions, it is noted that where the assessee has not filed its return of income, the assessee is required to pay an amount equal to the amount of advance tax which was payable by him which needs to be taken into consideration before the appeal is admitted for adjudication by the ld CIT(A). At the same time, the CIT(A) has been empowered to exempt the assessee from the payment of amount equal to advance tax on an application filed by the assessee. In other words, where the assessee did not file any return for the relevant assessment year, the assessee can file the appeal before the ld CIT(A) against the assessment order passed by the AO even without the payment of tax provided he satisfies the CIT(A) with the reasonable explanation for non-payment of taxes. Therefore, before the appeal is admitted for adjudication, the ld CIT(A) has to examine whether the assessee has either complied with the requirement of payment of taxes, or has moved an application seeking an exemption from such & 263/JP/2020 8 M/s Jhunjhunu Balaji Motors Pvt Ltd., Jhunjhunu vs. ACIT, Circle- Jhunjhunu requirement and on disposal of such application seeking exemption from payment of taxes, the appeal may be admitted for adjudication.

12. In the instant case, on perusal of the order of the ld CIT(A), we find that the ld CIT(A) has not admitted the appeal for want of payment of taxes equal to advance tax by the assessee. Apparently, there is nothing on record which suggests that the assessee has moved any application before the ld CIT(A) seeking exemption from payment of taxes. However, before us, the assessee has moved an application seeking admission of additional evidence by way of tax challans disclosing payment of Rs 13 lacs equal to advance tax as per section 249(4)(b) for the impugned assessment year.

13. It is noted that taxes amounting to Rs 6 lacs have been deposited by the assessee before filing of appeal before the ld CIT(A), the taxes amounting to Rs 2 lacs have been deposited after filing of appeal before the ld CIT(A) and Rs 5 lacs have been deposited after passing of the impugned order by the ld CIT(A) which reasonably explains the financial hardship faced by the assessee and also its earnestness in taking the necessary steps to be in compliance with the provisions of section 249(4)(b) and to be heard on merits.

“9. The objective behind section 249(4) is to ensure the payment of tax on income returned before the admission of appeal. If such payment after the filing of appeal but before it is taken up for disposal validates the defective appeal, then there is no reason as to why the doors of justice be closed on a poor assessee who, could manage to make the payment of tax at a later date, The stipulation as to the payment of such tax ante the filing of first appeal is only directory and not mandatory. Whereas the payment of such tax is mandatory but the requirement of paying such-tax before filing appeal is only directory. When the defect in the appeal, being the non-payment of such tax, is removed, the earlier defective appeal becomes valid. Once we call an appeal as valid, it is implicit that it is not time-barred. It implies that all the consequences which follow on the removal of defect are that the validity is attached to the appeal from the date when it was originally filed and not when the defect is removed.

10. The ld. AR submitted that the assessee was facing the financial crunch which led to the non-payment of tax on the returned income at the time required by the ld. CIT(A). It was claimed that on making the payment of tax, the appeal ought to have been admitted by the ld. CIT(A). He relied on the order passed by the Mumbai Bench of the Tribunal in the case of Anant R. Thakore v. Asstt. CIT [2006] 5 SOT 298 in which it has been held that the CIT(A) was not justified in dismissing the appeal under section 249(4)(a) where the assessee's application for downward rectification of self-assessment tax was still pending. Per contra the learned Departmental Representative relied on & 263/JP/2020 10 M/s Jhunjhunu Balaji Motors Pvt Ltd., Jhunjhunu vs. ACIT, Circle- Jhunjhunu another order passed by the Mumbai Bench of the Tribunal in the case of Bharatkumar Sekhsaria v. Dy. CIT [2002] 82 ITD 512 in which the action of the CIT(A) in not admitting the appeal was held to be justified. He further relied on the judgment of the Karnataka High Court in the case of D. Komalakshi v. Dy. CIT [2007] 162 Taxman 16.

12. Adverting to the facts of the instant case we find that the assessee paid the tax due on income returned albeit after the disposal of appeal by the ld. CIT(A). 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. Ex consequenti this appeal should have been revived by the ld. first appellate authority. Under such circumstances we set aside the impugned order and restore the matter to the file of the learned CIT(A) for disposal of the appeal on merits.”