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Facts
The assessee's case was reopened for scrutiny due to an unexplained loan of Rs. 45,00,000/-. The assessee filed a return declaring gross turnover of Rs. 28,63,620/- and presumptive income of Rs. 2,36,100/- under Section 44AD. The Assessing Officer treated Rs. 62,78,915/- as additional turnover and made additions to income.
Held
The Tribunal held that the assessee had no obligation to pay advance tax as per Section 208 of the Act for the assessment year in question, based on the declared turnover. Therefore, the dismissal of the appeal in limine by the Ld. Commissioner was set aside.
Key Issues
Whether the Ld. Commissioner was justified in dismissing the appeal in limine for non-payment of advance tax, when the assessee claimed no such liability existed based on declared income.
Sections Cited
147, 144B, 148, 44AD, 250, 69A, 249(4)(b), 208
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI
Before: SHRI BR BASKARAN & SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 26.11.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2016-17.
In the instant case, the case of the Assessee was reopened for scrutiny u/s 147 r.w.s. 144B of the Act, for the reason that the Assessee during the year under consideration, has given loan of Rs.45,00,000/- to Rais Shaikh, Prop. of Beacon Trade, however has not filed his return of income for the AY under consideration and therefore, the said transaction remains unexplained and calls for verification and clarification on the part of the Assessee for any escapement.
3. The Assessee in response to the notice u/s 148 of the Act has filed his return of income claiming himself as builder and declaring the gross turnover or gross receipt of Rs.28,63,620/- and presumptive income u/s 44AD of the Act to the tune of Rs.2,36,100/-.
4. The Assessing Officer (AO) though accepted the gross receipt of Rs.28,63,620/- as shown by the Assessee in ITR as correct, however, treated the amount of Rs.62,78,915/- as gross turnover/receipt of the Assessee over and above his declared gross receipt of Rs.28,63,620/- and estimated the profit @ 8.2448% on the total turnover of Rs.91,42,535/- (including turnover declared by the Assessee), which works out at Rs.7,53,784/- and therefore added the difference of Rs.5,17,684/- {Rs.7,53,784/- - Rs.2,36,100/- as declared by the Assessee} in the income of the Assessee.
The AO also made the addition of Rs.45 lakhs being un- explained money and added the same to the total income of the Assessee u/s 69A of the Act.
The Assessee, being aggrieved, challenged the said additions before the Ld. Commissioner, however, of no avail, as the Ld. Commissioner by taking refuge of the provision of section 249(4)(b) of the Act, dismissed the appeal of the Assessee in limine, by observing and holding as under:
“That the Assessee has not filed return of income as well as not paid an amount equal to the amount of advance tax which was payable by and therefore present appeal is not liable to be admitted.”
The Assessee, being aggrieved, is in appeal before this Tribunal and at the outset, has submitted that as the Assessee’s gross turnover was of Rs.28,63,620/- only, on which the Assessee was not required to pay any advance tax during the assessment year under consideration and therefore the Assessee has not paid any advance tax. Lateron in response to notice u/s 148 of the Act, the Assessee on such gross turnover of Rs.28,63,620/- has shown the presumptive income to the tune of Rs.2,36,100/- u/s 44AD of the Act, which is not taxable at all and therefore no advance tax was/is payable by him, as mandated in the provisions of section 249(4)(b) of the Act and therefore the decision of the Ld. Commissioner in dismissing the appeal of the Assessee in limine is contrary to the relevant provisions of law and therefore the same may be set aside.
On the contrary, the Ld. D.R. refuted the claim of the Assessee.
We have heard the parties and perused the material available on record. The contention raised by the Assessee, seems to be plausible as the Assessee, as per facts available on record, had no obligation to make payment of advance tax u/s 208 of the Act for the assessment year under consideration and therefore we are inclined to set aside the impugned order and for the just decision of the case and substantial justice, to remand the instant case to the file of the Ld. Commissioner for decision on merit, suffice to say by affording reasonable opportunity of being heard to the Assessee. Thus, the case is remanded to the file of the Ld. Commissioner accordingly.
In the result, the appeal filed by the Assessee stands allowed for statistical purposes.
Order pronounced in the open court on 24.03.2025.