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Facts
The AO initiated assessment proceedings under Section 147 r.w.s. 144 of the Act based on information regarding cash withdrawals. The assessee, a chit fund company, deposited cash collected from vendors into a bank account. The AO assessed the amount as unexplained money under Section 69A of the Act. The CIT(A)/NFAC dismissed the appeal on the sole ground that the assessee had not deposited the demand and had not paid an amount equal to the advance tax due, as required under Section 249(4)(b) of the Act.
Held
The Tribunal held that the dismissal of the appeal by the CIT(A)/NFAC was on a technical ground without considering the merits. The Tribunal found that it was not a case of non-filing of return or non-payment of tax due, but the submissions made by the assessee needed to be examined. The Tribunal remitted the issue to the CIT(A)/NFAC for denovo consideration.
Key Issues
Whether the appeal was rightly dismissed by the CIT(A)/NFAC on technical grounds without considering the merits of the case, specifically regarding compliance with Section 249(4) of the Act.
Sections Cited
250, 249(4), 148A(b), 148A(d), 148, 69A, 139, 156, 147, 144, 115BBE, 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C’’ BENCH: BANGALORE
Before: SHRI PRASHANT MAHARISHI & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the Order of learned CIT(A)/NFAC vide DIN and Order No ITBA/ NFAC/ S/ 250/2024-25/1069914627(1) dated 24.10.2024 for the Assessment Year 2018-19 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’).
The assessee has raised the following grounds of appeal:
1. The Learned Commissioner of Income Tax (Appeals), erred in dismissing the appeal on the ground that the appellant has not complied with terms of section 249(4) of the Act.
2. The Learned Commissioner of Income Tax(Appeals) erred in not considering the submission that appellant has filed People Tree Chits Pvt. Ltd, Bangalore Page 2 of 7 return of income and the entire tax payable on returned income is covered by the TDS.
The Learned Commissioner of Income Tax (Appeals) did not provide an opportunity to explain that the appellant though a Company PAN is allotted as Firm and appellant filed return using the same PAN.
The appellant respectfully submits herewith a copy of the acknowledgement for having filed return of income for the assessment year 2018–2019, the appellant by inadvertent mistake filed acknowledgement for having filed return for the assessment year 2017-2018 along with written submissions, though computation of statement of income and final accounts for the asst. year 2018 – 2019 were filed to explain the deposits in bank were out of business collections.
The appellant prays that this Hon’ble Tribunal be pleased to permit the appellant to add, delete or modify any ground or grounds at the time of hearing.
The brief facts of the case are that the specific information 3. was received on the insight portal that the assessee had carried out the Cash withdrawals (including through bearer’s cheque) in current account amounting to Rs. 1,28,28,590/- and accordingly show cause notice u/s 148A(b) of the Act. Thereafter, as the assessee neither filed any written submission nor documentary evidences, the AO passed an order u/s 148A(d) of the Act and accordingly notice u/s 148 of the Act was issued. During the course of the assessment proceedings the assessee filed its reply and stated that the assessee is a company and running a chit fund company. The cash is collected from chit venders & thereafter the same had been deposited in the bank account. Cash withdrawal has been paid to chit bidders. The assessee company had also furnished the bank statement. The AO observed that the assessee has deposited huge cash to the tune of Rs. 1,05,59,590/- but the source of the cash deposited has not been substanciated by it. Further, as observed by the Authorities below, the assessee being a People Tree Chits Pvt. Ltd, Bangalore Page 3 of 7 company had neither furnished any return under section 139 of the Act nor in response to notice under section 148 of the Act. Even, during the course of the assessment proceeding, the assessee had also not furnished any adequate reply to the statutory notices issued. Therefore, the AO concluded that the assessee company has nothing to offer in this regard and hence the amount found in the form of cash deposited amounting to Rs. 1,05,59,590/- remained unexplained and to be assessed as unexplained money under section 69A of the Act. Accordingly, the AO assessed on a total income of Rs.1,05,59,519/- to be taxed under section 115BBE of the Act.
4. Aggrieved by the Assessment completed under section 147 r.w.s 144 r.w.s. 144B of the Act, dated 27.02.2024, the assessee preferred an appeal before the ld. CIT(A)/NFAC.
5. The ld. CIT(A)/NFAC dismissed the appeal of the assessee without considering the merits of the case on the sole ground that the impugned Order was passed under section 147 r.w.s. 144 of the Act, creating demand of Rs.1,04,38,190/- and the assessee was asked by notice under section 156 of the Act to deposit the demand but it is noticed that the assessee has not deposited the demand before filing of this appeal. Further, the ld. CIT(A) observed that at Sl. No.9 of Form 35 the assessee has offered “not applicable” comments and failed to make payment of amount equal to the advance tax which was due on its income. Further the CIT(A)/NFAC was of the view that the assessee has also not requested for exemption from operation of the provisions of clause (b) of sub-section (4) of section 249 of the Act. Since the assessee has not filed return of income as well as not paid the an amount equal to the amount of advance tax, the ld. CIT(A) held that present
Aggrieved by the Order of the ld. CIT(A)/NFAC, the assessee has filed the present appeal before the Tribunal.
Before us, the learned AR of the assessee submitted that the AO has passed an ex-parte assessment under section 147 r.w.s. 144 of the Act. Further the assessee could not represent its case before the AO since all the notices posted on the Income Tax portal were not noticed as the assessee could not operate the same on regular basis. Further, learned AR of the assessee submitted that the CIT(A)/NFAC also dismissed the appeal on the technical ground without considering the merit of the case and requested to grant one more opportunity & remand the matter back to the file of AO for denovo consideration.
Learned DR on the other hand supported the Order of the authority below and submitted that learned CIT(A) has rightly dismissed the appeal as infructuous since as per the provision of section 249(4)(b) of the Act where no return has been filed by the assessee, the assessee has to pay an amount equal to the amount of advance tax which was payable by him otherwise appeal shall not be admitted. Further, the assessee has also not requested for exemption from operation of the provisions of Section 249(4)(b) of the Act.
We have heard the rival submission and perused the material on record. It is an undisputed fact that based on the specific information received on the insight portal that the assessee had carried out the Cash withdrawals (including through bearer’s cheque) in current account amounting to Rs. 1,28,28,590/- the AO People Tree Chits Pvt. Ltd, Bangalore Page 5 of 7 has initiated the assessment proceedings by issuing notice u/s 148A(b) of the Act. Further on going through the Assessment Order passed u/s 147 r.w.s 144 of the Act, we found that the additions u/s 69A of the Act were made based on the cash deposits into bank accounts amounting to Rs.1,05,59,590/- on the ground that the source of the cash deposited has not been substantiated by it. Further the ld. CIT(A)/NFAC dismissed the appeal on the sole ground that as the assessee has not deposited the demand as raised u/s 156 of the Act before filing the appeal and also failed to made payment of amount equal to the advanve tax which was due on its income as required u/s 249(4)(b) of the Act and further also not requested for exemption from operation of the provisions of section 249(4)(b) of the Act, held that the appeal is not liable to be admitted & accordingly dismissed as infructous. Before proceeding further, it is appropriate to take note of section 249(4) of the Act for the purpose of this case which read as under:
Form of appeal and limitation. --------- --------- (4)[ 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:]
Provided that, [in a case falling under clause (b) and ] [ Inserted by Act 3 of 1989, Section 45 (w.e.f. 1.4.1989).]on an application made by the appellant in this behalf, the [* * *] [ Omitted by Act 21 of 1998, Section 65 (w.e.f. 1.10.1998).] [Commissioner (Appeals)] [ Inserted by Act 29 of 1977, Section 39 and Schedule V (w.e.f. 10.7.1978).] may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of [that clause] [ Substituted by Act 3 of 1989, Section 45, for " this sub-Section" (w.e.f. 1.4.1989).].
People Tree Chits Pvt. Ltd, Bangalore Page 6 of 7 10. On the plain reading of the above, we find that no appeal shall be admitted unless at the time of filing of appeal 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. On going through the Grounds of Appeal as well as before us, the ld. AR of the assessee submitted that the ld. CIT(A)/NFAC erred in not considering the submission that the assessee has filed the return of income & the entire tax payable on the returned income are covered by way of TDS. Further the AR of the assessee also submitted that the ld. CIT(A)/NFAC did not provide an opportunity to explain that the assessee though a company, the PAN is also allotted in the status of Firm & the assessee has filed the return using the same PAN. Therefore, prima facie we are of the opinion that it is neither a case of non filing of the return nor non payment of the tax due on the return of Income but the submissions made before us need to be examined by the ld. CIT(A)/NFAC which he failed to do.
11. Being so, in the interest of justice and fair play as well as at the request of the AR of the assessee, we are remitting the entire issue in dispute to the file of learned CIT(A)/NFAC for denovo consideration with a direction to admit the appeal after verifying the claims of the assessee that the assessee has filed the return of income on Firm’s PAN & the entire tax payable on the returned income is covered by TDS. Needless to say, reasonable opportunity of being heard must be granted to the assessee & decide the case in accordance with the law. The assessee is also directed to submit all relevant documents / record / information to substantiate its claim and should not seek unnecessary adjournment and co-operate with the proceedings for the early disposal of the case. It is ordered accordingly.
In the result, appeal filed by the assessee is partly allowed for statistical purposes.