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Facts
A search was conducted on the assessee's premises, leading to a notice under section 153A of the Income Tax Act. The assessee filed a return disclosing additional income but failed to pay the due tax. The AO treated the return as defective and completed the assessment. The CIT(A) dismissed the appeal as not maintainable due to non-payment of admitted tax.
Held
The Tribunal held that the assessee had paid the admitted tax on the original return of income. Although a revised return under section 153A was filed with additional income, the CIT(A) wrongly dismissed the appeal for non-payment of tax on this revised income, which was considered non-est. The Tribunal relied on High Court and coordinate bench decisions.
Key Issues
Whether an appeal is maintainable when the tax on a revised return filed under section 153A is not paid, despite the tax on the original return being paid?
Sections Cited
132, 153A, 142(1), 139(9), 144, 139(1), 140A, 153C, 249(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘C’: NEW DELHI
(Assessment Year: 2014-15) M/s. KDP Buildwell Pvt. Limited, vs. DCIT, Central Circle, A-213, 1st Floor, Shanti Gopal Chamber, Ghaziabad. Vikas Marg, Shakarpur, Delhi – 110 092. (PAN :AABCS6353E) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Suresh Gupta, Advocate REVENUE BY : Shri Kailash Dan Ratnoo, CIT DR Date of Hearing : 28.04.2025 Date of Order : 25.06.2025 O R D E R
PER S.RIFAUR RAHMAN, ACCOUNTANT MEMBER :
This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)-IV, Kanpur [hereinafter referred to as ‘ld. CIT (A)] dated 23.03.2018 for Assessment Year 2014-15.
Brief facts of the case are, a search and seizure operation under section 132 of the Income-tax Act, 1961 (for short ‘the Act’) was conducted on 26.09.2014 on the premises of the assessee comprising KDP/MGP Group of cases. Based on the incriminating material found during the search, a notice 153A of the Act was issued on 16.09.2016 and subsequently notice u/s 142(1) was issued. Subsequently, assessee has filed its return of income declaring an income of Rs.16,02,39,060/- u/s 153A of the Act which also included an amount of Rs.15,00,00,000/- which was surrendered during the search and disclosed in its return of income but failed to pay the due tax on the abovesaid additional disclosure. The Assessing Officer made further addition of Rs.1,26,14,350/- additional cash deposited/unexplained cash credit in its books of account. Since assessee has filed the return of income u/s 153A however failed to deposit the due tax on the same, the Assessing Officer treated the abovesaid return as defective u/s 139(9) of the Act, accordingly, proceeded to complete the assessment/s 153A r.w.s. 144 of the Act by determining the total income at Rs.17,65,16,710/-.
Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A)-IV, Kanpur. After considering the memo of appeal and material available before him, he observed that assessee has filed its return of income u/s 139(1) on 29.11.2014 disclosing income of Rs.1,39,02,360/-. The total tax and interest payable was Rs.49,17,160/-. The assessee paid Rs.25,00,000/- as advance tax and Rs.1,48,143/- as TDS and amount remained to be paid was Rs.26,48,143/- on or before 29.11.2014 as per section 140A of the Act. He observed that as per ITR no self-assessment tax was paid by the assessee and the said amount remained unpaid at the time of 10.02.2015. Further a search and seizure operation u/s 132 of the Act was conducted in assessee’s case and assessee has filed its return of income declaring income of Rs.16,39,02,360/- on 18.12.2016. As per the return of income, assessee was required to pay due tax of Rs.7,10,53,800/- on or before the date of filing of return i.e. 18.12.2016. But the assessee has not paid the admitted tax till the assessee filed the appeal before him. Since the assessee has not paid the admitted tax filed in response to notice issued u/s 153A of the Act, therefore, it is admitted fact that assessee has not paid tax due on the returned income which contravenes the provisions of section 153A of the Act, relying on the case laws on this subject he dismissed the appeal as not maintainable.
Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal :- Grounds “On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in dismissing the appeal treating the same as non- maintainable for non-payment of admitted tax before filing the appeal without correcting and properly appreciating the facts and circumstances of the case and law bearing on the subject. The above action being arbitrary, erroneous and unlawful must be quashed with directions for relief. That the Ld. CIT (A) be directed to adjudicate the appeal on merits.”
5. At the time of hearing, ld. AR of the assessee brought to our notice page 7 of the assessment order wherein Assessing Officer has treated the return of income filed by the assessee in response to notice issued u/s 153A of the Act as defective and subsequenlty ld. CIT (A) also dismissed the appeal of the assessee as not maintainable for the reason that assessee has not paid the due tax as per return of income filed in response to section 153A of the Act. In this regard, he relied on the decision of ITAT, Bangalore in the case of Smt. Sulochana Ramesh vs. ACIT in dated 20.02.2023 and it was held that assessee has already paid admitted tax on its original return of income and assessee has filed revised return of income u/s 153C and did not pay the tax on the revised income and they held that the disputed tax i.e. not paid and the undisputed additions at the admitted income as per the original return of income is duly paid, therefore, based on the decision of Hon’ble High Court and decision of coordinate Bench, they allowed the appeal of the assessee and restored the same back to the ld. CIT (A) to admit the appeal and adjudicate the same on merits. Hence, he relied on the above decision.
On the other hand, ld. DR of the Revenue relied on the findings of the ld. CIT(A) on the aspect of non-maintainability of the appeal.
Considered the rival submissions and material perused on record. We observed that assessee has paid the due tax on the admitted income in original return of income. However, assessee has filed revised return of income u/s 153A declaring additional income which was disclosed during search, however not paid the abovesaid due tax on the revised return of income. We observed that the facts in the case of Smt. Sulochana Ramesh (supra) and the relevant findings of the coordinate Bench are as under :- “9. From the above it is clear that the appeal before the CIT(A) shall not be admitted where the tax on the returned income is paid or in case where no return is filed the advance tax has not been paid. In assessee’s case we notice that the CIT(A) has rejected the appeal by stating that the assessee’s case fall within the purview of section 249(4)(b) and the assessee has not complied with the requirement under the proviso to the said section. This in our considered view is not correct since the assessee has already filed the return of income and therefore even if the appeal is not admitted on the ground of nonpayment of tax the same cannot be done in assessee’s case u/s. 249(4)(b). Now coming to the issue of whether the assessee has paid the tax due on the income returned, the contention of the assessee is that the taxes are duly paid on the original income returned and there is no tax liability is due as per the return filed in response to notice u/s.153C since the same has been considered as non-est by the AO. The assessee is also drawing strength for this contention from the fact that the entire amount assessed is disputed in the appeal before the CIT(A) and therefore there is no undisputed liability that is due. The revenue’s contention is that the in the return filed in response to notice u/s.153C, the assessee herself has returned income to the tune of Rs.11,82,60,329 thereby admitting the tax liability on the same and therefore provisions of section 249(4) is attracted.
We notice that the coordinate bench of the Tribunal in the case M/s.Garden City Resorts Pvt., Ltd (supra) has considered a similar issue where the assessee has filed the original return which was initially to be treated as return filed in response to notice u/s.153C and tax on the returned income was duly paid. The assessee had later filed a revised return u/s.153C and did not pay the tax on the revised income. The CIT(A) came to reject the appeal u/s.249(4). The Tribunal in the said case held that – “4. Having carefully examined the relevant provisions of the Act, we are of the view that while filing an appeal before the CIT(Appeals), the assessee is required to pay the tax on the admitted return of income. But in the instant case, on the admitted return of income, the assessee has already paid the taxes. The assessee has not paid the taxes on the revised return which was not treated to be valid by the AO and was non est in law. Since the revised return was treated to be non est in law, there was no question of making payment of tax on the income declared therein. Therefore, we are of the view that the assessee has already paid the tax on the admitted income declared in the original return filed which was acted upon by the AO for framing the assessment u/s. 153C of the Act. In the light of these facts, we are of the view that the CIT(Appeals) was wrong in dismissing the appeal of the assessee. Therefore, we set aside his order and restore the matter to his file with a direction to readjudicate the appeal on merits by passing a reasoned order.”
We further notice that the Hon’ble Karnataka High Court in the case of T Govindappa Setty (supra) has considered what is contemplated as a condition for non-admission of appeal u/s.249(4) and held that – “The object of clause (a) of sub-section (4) of section 249 is not to entertain the appeal where the assessee fails to pay the undisputed tax liability. Section 249(4) has to be construed in the backdrop of the right to appeal provided to an assessee under section 249 of the Act. Under these circumstances, while interpreting section 249(4) of the Act, the court will have to keep in mind the object of section 249(4) and also the right to prefer an appeal guaranteed to an assessee. In that view of the matter, subsection (4) has to be liberally construed to serve the object of the right provided to an assessee, and not with a view to deprive the right provided to an assessee to prefer an appeal. When the very liability is disputed, the right guaranteed to the assessee to prefer an appeal cannot be deprived by taking the view that the assessee has failed to pay the tax due on the income shown in the return filed.”
The facts in assessee’s case are similar where the assessee has filed the original return in which the tax on the income returned is duly paid. On perusal of Form 35 filed we notice that the assessee has Page disputed the entire amount including what is declared in the return filed in response to notice u/s.153C which is considered as non-est by the AO and the additions made by the AO. We also see merit in the submissions of the ld AR that it is the disputed taxes that is not paid and the undisputed tax on the admitted income as per the original return have been duly paid. Therefore in our considered view the ratio laid down by the Hon’ble High Court and the coordinate bench of the Tribunal is applicable to assessee’s case. Accordingly we set aside the order of the CIT(A) and restore the matter to the CIT(A) with a direction to readjudicate the appeal on merits. Needless to say that the assessee be given a reasonable opportunity of being heard. It is ordered accordingly.
In the result, the assessee’s appeal is allowed for statistical purposes.”
Since the facts in the present case are exactly similar to the above case except return filed u/s 153A under consideration, we are inclined to remit this issue back to the file of ld. CIT (A) and direct him to admit the appeal and readjudicate the appeal on merits after giving proper opportunity of being heard to the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on this 25th day of June, 2025.