AHAMED SYEDMOULAN HABEEB MOHAMED,COIMBATORE vs. ITO, NCW-3(1), COIMBATORE

The Assessee raised the following grounds of appeal :

The NFAC, Delhi erred in dismissing the appeal against scrutiny assessment order dated 06.12.2019 as infructuous in terms of Section 249(4) of the Act without assigning proper reasons and justification.

The NFAC, Delhi failed to appreciate that the provisions of Section 249(4) of the Act were fully complied with by the appellant at the time of filing the appeal in Form No. 35 dated 08.01.2020 and further ought to have appreciated that the dismissal order passed by them in this regard should be reckoned as nullity in law.

The NFAC, Delhi failed to appreciate that having not taken on record the details filled in Row No. 11 forming part of the Form No. 35, taxable total income being less than the threshold limit, dismissal of the appeal preferred before them on ground of non payment of advance tax should accordingly be considered bad in law in view of apparent and gross non application of mind.

The NFAC, Delhi erred in sustaining the addition to the tune of Rs.3,70,000/- being the cash deposits made in SBNs during demonetisation period as unexplained money in terms of Section 69A in the computation of taxable total income without assigning proper reasons and justification.

The NFAC, Delhi to appreciate that provisions of Section 69A r.ws 115BBE of the Act had no application to the present facts and in circumstances of the case, there by vitiating the findings in relation there to.

The NFAC, Delhi failed to appreciate that the pre-requisite conditions required for making an addition in terms of Section 69A of the Act were absent in the present case and ought to have appreciated that in any event provisions of Section 115BBE of the Act had no application in view of the law declared by the Madras High Court on its applicability from Assessment Year: 2018-19 only, there by negating the findings in relation there to.

The NFAC, Delhi erred in sustaining the assessment of business income at 8% of the total cash deposits amounting to Rs. 3,11,82,741/- amounting to Rs. 24,94,619/- excluding the cash deposits made during demonetisation period as business income of the appellant without assigning proper reasons and justification

The NFAC, Delhi failed to appreciate that the quantification of the business income of the appellant at 8% of the disputed cash deposits was arbitrary and wholly unjustified and further ought to have appreciated that having not taken note of the increase / decrease reflected in the immediately preceding and succeeding assessment years, the mechanical action in computing the taxable total income at 8% of such cash deposits should accordingly be reckoned as nullity in law.

The NFAC, Delhi failed to appreciate that in any event having not independently examined the source & nature of the cash deposits during the assessment year under consideration, the consequential sustenance of the entire addition as unexplained money in terms of Section 69A of the Act was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

The NFAC, Delhi failed to appreciate that the scrutiny assessment order was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law.

The NFAC, Delhi failed to appreciate that the entire re-computation of taxable total income was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

The NFAC, Delhi failed to appreciate that having not adhered to the prescription of faceless regime, the consequential appellate order passed should be reckoned as bad in law.

The NFAC, Delhi failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law.

The Appellant craves leave to file additional grounds/arguments at the time of hearing.”

Briefly the facts of the case are that the Appellant is an Individual. No regular return of income under the provisions of section 139(1) of the Act was filed for the Assessment Year 2017-18. However, based on the information that the appellant made cash deposits of Rs.3,15,52,741/- in the current account maintained with Karur Vysya Banka and Axis Bank, the Assessing Officer formed an opinion that income got escaped assessment from tax. Accordingly, a notice u/s.142(1) of the Act was issued to the appellant dated 12.03.20185 calling upon the appellant to file the return of income for the Assessment Year 2017-18. The appellant neither complied with the notice u/s.142(1) nor responded to the notice issued u/s.144 of the Income Tax Act. In the circumstances, the Income Tax Officer, Non- Corporate Ward-3(1), Coimbatore (hereinafter called “AO’) had proceeded with framing best judgment assessment vide order dated 06.12.2019 passed u/s.144 of the Act at a total income of Rs.28,64,619/-. While doing so, the Assessing Officer treated the credits in bank account of Rs.3,15,52,741/- as a business turnover of the appellant and estimate income at 8% thereon. Assessing Officer also made an addition of cash deposits in specified bank notes during the Demonetization Period of Rs.3,70,000/- as unexplained money of the appellant.

Being aggrieved by the above assessment order, an appeal was filed before the ld.CIT(A), who vide impugned order dismissed the appeal in limine without admitting the appeal on the ground that the appellant had not paid the advance tax due on the total income invoking the provisions of Clause-(b) of sub-section 4 of section 249 of the Income Tax Act, 1961.

Being aggrieved, the appellant is in appeal before us in the present appeal. The ld.AR submits that there is no advance liability on the part of the appellant in terms of the provisions of section 209 of the Income Tax Act and therefore, the question of payment of advance tax does not arise. The ld.CIT(A) had wrongly invoked provisions of Clause-(b) of sub-section (4) of Section 249 of the Act. He also placed reliance on the decision of the Tribunal in the case of ITA Nos:2513, 2514, 2515, 2516, 2517, 2518 & 2519/CHNY/2025 of Shri Abdul Munaf Irfanudeen Vs. DCIT vide order dated 28.11.2025.

On the other hand, ld.Sr.DR opposed the above submission submits that unless and until assessee paid the advance tax due on the income, no appeal can be admitted. In this connection, also placed reliance on the decision of Hon’ble Madras High Court.

We heard rival submissions and perused the material available on record. The issue that arises for our consideration is whether the ld.CIT(A) was justified in not admitting the appeal placing reliance on the provisions of Clause-(b) of sub-section (4) of section 249 of the Income Tax Act. Admittedly, the appellant had not filed the return of income under the provisions of section 139 of the Act or in response to the notice u/s.142 of the Act. The material on record does not show that there was obligation on the part of the appellant to pay advance tax. There was no tax liability, but for the additions made by the Assessing Officer which are subject matter of appeal. Therefore, the ld.CIT(A) ought not to have invoked the provisions of sub-section (4) of section 249 of the Income Tax Act and dismissed the appeal in limine. The ratio of the decision of Hon’ble Madras High Court in the case of Pesco Beam Environmental Solutions (P.) Ltd Vs. DCIT [2020] 119 taxmann.com 123 (Madras) relied upon by the ld.Sr.DR have no application to the facts of the present case in as much as, the appellant had not filed the return of income and there was no admitted tax liability. Therefore, we remit the mater back to the file of ld.CIT(A) with a direction to admit the appeal and decide the issues in appeal on merit, after affording a reasonable opportunity of being heard to the appellant.

In the result, appeal filed by the assessee stands partly allowed for statistical purpose. Order pronounced in the open Court on 7th May, 2026.