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Facts
The assessee did not file a return for AY 2015-16. The AO reopened the assessment based on information about cash deposits and credit card payments. The assessee filed a return belatedly, declaring Rs.10,54,060/-, but the AO made an addition of Rs.62,59,549/- as unexplained money.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal for non-payment of advance tax, as there was no obligation on the assessee to pay advance tax when no taxable income was initially determined. The appeal was therefore maintainable.
Key Issues
Whether the appeal before the CIT(A) was maintainable when the assessee had not paid advance tax, despite the AO's addition, and whether the CIT(A) was justified in dismissing the appeal as not admitted.
Sections Cited
147, 148, 69A, 115BBE, 249(4)(b), 234B(1), 208, 209, 144B, 156, 144, 140A, 143, 210
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE K, VICE- & SHRI S.R. RAGHUNATHA
O R D E R
PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 06.11.2024 and pertains to assessment year 2015-16.
The assessee has raised the following grounds of appeal:
1. The order of the AO/CIT(A) is erroneous, is contrary to law, opposed to principles of natural justice and the facts and circumstances of the case. CIT(A) has failed to Adjudicate the Case:
2. The Learned CIT(A) has failed to adjudicate the appeal on incorrect grounds.
:-2-: ITA. No: 3186/Chny/2024 3. The Learned CIT(A) erred in stating that advance tax should be paid if an appeal is filed, without appreciating that the addition is made in the course of assessment.
4. The Learned CIT(A) failed to note that the question of advance tax in on the return of income as determined by the Appellant and not by the AO, as there would be impossibility of compliance, if the latter was true. Cash Deposited pertains the Employer of the Appellant: 5. The Learned AO/CIT(A) failed to note that the cash deposited into the accounts of the Appellant are entirely that of the employer of the Company in which the Appellant is working for.
6. The Learned AO/CIT(A) ought to have noted that none of the amounts are his own and entirely belong to the employer.
7. The Learned AO/CIT(A) ought to have noted that the entire cash deposited has been withdrawn and handed over to the same person.
The Learned AO/CIT(A) failed to afford the Appellant an opportunity to cross-examine and furnish information to prove the facts are real.
9. The Learned AO/CIT(A) ought to have factually verified the submissions of the Appellant and failed to do the same.
Any other ground that may be raised at the time of personal hearing.”
The brief facts of the case are that the assessee is an individual had not filed his return of income for the A.Y.2015-16. The AO as per the information available on insight portal found that the assessee had deposited cash of Rs.56,76,812/- in his savings bank account, paid Rs.16,64,500/- towards credit card bill and received interest amounting to Rs.23,745/- during financial year 2014-15 and hence issued statutory notices to reopened the assessment. In response to the notice u/s.148 of the Act, the assessee filed his return of income filed on 09.09.2023 by declaring a total income of Rs.10,54,060/-. During the assessment proceedings, the assessee furnished the details of deposits made to the :-3-: ITA. No: 3186/Chny/2024 ICICI bank, IOB, SBI, Federal bank and Axis bank accounts was Rs.62,59,549/-. Further, the assessee explained that the cash deposits were only rotation of funds for the welfare of co-workers and promoters on behalf of his employer i.e. VV Group. However, the AO was not convinced with the explanations of the assessee and passed an order u/s.147 r.w.s. 144B of the Act dated 23.03.2024 by making an addition of Rs.62,59,549/- as unexplained money u/s.69A of the Act r.w.s. 115BBE of the Act to the returned income of Rs.10,54,060/-. Aggrieved by the order of the AO the assessee preferred an appeal before the ld.CIT(A), NFAC, Delhi.
4. On perusal of the Form 35 filed by the assessee, wherein at serial No.9, the assessee has offered ‘Not applicable’ comments. Therefore, the ld.CIT(A) held that the assessee has not paid the advance in compliance with section 249(4)(b) of the Act, 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 view of the above, the ld.CIT(A) dismissed the appeal as not admitted by passing an order on 06.11.2024 by holding as under: Decision - 3.1 I have examined facts of the case as also gone through relevant provisions of Income Tax Act (the Act). In the present case, the appellant failed to file return of income. The appellant has filed return of income on 09.09.2023 which was invalid return having been filed after 30 days from notice dated 07.04 2022 issued u/s 148 of the Act. The impugned order was passed u/s 147 r.w.s 144 of the Act, creating demand of Rs. 63,42,835/-and the appellant was asked by notice u/s 156 of the Act to deposit the demand but it is noticed that the appellant has not deposited the demand before filing
:-4-: ITA. No: 3186/Chny/2024 of this appeal. The appellant, at sl, no. 16 of Form-35, has stated to have made payment of appeal fee of Rs. 1,000/-only. At sl. No. 9 of Form-35, the appellant has offered 'Not applicable 'comments. This sl. No. 9 is reproduced below- 9 Where no return has been filed by the appellant for the assessment Not year, whether an amount equal to the amount of advance tax as applicable per section 249(4)(b) of the Income-tax Act, 1961 has been paid
3.2 As per provisions 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. The provisions of section 249 (4) of the Act are reproduced as under- Section 249(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] on an application made by the appellant in this behalf, the Deputy Commissioner (Appeals)) or, as the case may be, the Commissioner (Appeals)) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of that clause)] 3.3 As per provisions of section 234B(1), read with provisions of section 208 of the Act, the liability to pay advance tax, in a case where returned income is less than the assessed income, is calculated on the basis of assessed income. The provisions of section 234B(1) and provisions of section 208 of the Act are reproduced below - Section 234B(1) "(1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent of the assessed fax, the assessee shall be liable to pay simple interest at the rate of two per cent for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of section 143 and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be. on the amount by which the :-5-: ITA. No: 3186/Chny/2024 advance tax paid as aforesaid falls short of the assessed tax. 5 Explanation 1- In this section," assessed tax" means,- (a) for the purposes of computing the interest payable under section 140A, the tax on the total income as declared in the return referred to in that section, (b) in any other case, the tax on the total income determined under sub- section (1) of section 143 or on regular assessment, as reduced by the amount of tax deducted or collected at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income ] Explanation 2.- Where in relation to an assessment year, an assessment is made for the first time under section 147, the assessment so made shall be regarded as a regular assessment for the purposes of this section. Explanation 3.- In Explanation 1 and in sub-section (3)," tax on the total income determined under sub-section (1) of section 143" shall not include the additional income-tax, if any, payable under section 143.] 3.4. Section 208 "208 Conditions of liability to pay advance tax Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is one thousand five hundred rupees or more." 3.5. The appellant has offered 'Not applicable comments at sl. No. 9 of Form-35 and the appellant failed to make payment of amount equal to the advance tax which was due on its income. It is, therefore, clear that information, given at sl. no. 9 of Form-35 is not correct and the appellant has not made payment of amount equal to the advance tax which was due on its income. The appellant 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 appellant has not filed return of income since the ITR filed by him on 09.09.2023 was invalid return having been filed after 30 days from notice dated 07.04.2022 issued u/s 148 of the Act as well as not paid an amount equal to the amount of advance tax which was payable by it, present appeal is not liable to be admitted. The appeal is infructuous and is, therefore, dismissed.
The ld.AR for the assessee submitted the ld.CIT(A) has erred in dismissing the appeal without admitting due to non-payment of advance tax as per the provisions of Section 249(4)(b) of the Act. The section 249(4) of the Act reads as follows:
:-6-: ITA. No: 3186/Chny/2024 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 on an application made by the appellant in this behalf, the Commissioner (Appeals) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of that clause.
The ld.AR stated that the assessee filed the return of income for the impugned assessment year by paying the admitted taxes on the total income of Rs.10,54,060/- on 09.09.2023 in response to notice u/s.148 of the Act dated 07.04.2022. Further, the ld.AR also stated that the assessee has disputed the entire income added by the AO to the returned income and hence the question of payment of admitted taxes on such additions does not arise to compute the advance tax on the total income of the assessee.
To buttress his argument, the ld.AR relied on the decision of the Raipur Tribunal in the case of Vishnusharan Chandravanshi v. ITO [2024] 161 Taxmann.com 803 (Raipur – Trib) [10.04.2024], wherein the Tribunal held that where an assessee had no taxable income, no obligation would be cast upon him to compute and pay any advance tax u/s.208 & 209. In view of the above arguments, ld.AR prayed for setting aside the order of the ld.CIT(A) and issue the direction to admit the appeal to adjudicate the same on merits.
:-7-: ITA. No: 3186/Chny/2024 8. Per contra, the ld. DR relied on the order of the ld.CIT(A) and stated that the section 249(4)(b) of the Act is very clear and accordingly the ld.CIT(A) order is in accordance with law.
We have heard the rival contentions perused the material available on record and gone through the orders along with the decision of the Tribunal. Admittedly the assessee had not filed the return of income and the AO on reopening of the assessment, passed an order without considering the explanations offered by the assessee by making an addition of Rs.62,59,549/- to the returned income of Rs.10,54,060/-. We find that the ld.CIT(A) dismissed the appeal of the assessee as not admitted due to non-payment of advance tax as per the section 249(4)(b) of the Act.
10. In the present case on hand, the assessee has filed the return of income on 09.09.2023 which is beyond the time limit of 30 days from the notice u/s.148 of the Act. It is pertinent to note that the AO has considered the income declared of Rs.10,54,060/- in the said return in the computation of taxable Income to make further addition of Rs.62,59,549/- in his order u/s.147 of the Act. Therefore, in our considered opinion, when the AO has taken the returned income of the assessee as starting point of the computation, the income declared and corresponding taxes on such income tantamount to admitted taxes and hence the assessee has :-8-: ITA. No: 3186/Chny/2024 complied with the provisions of section 249(4)(b) of the Act and hence further payment of taxes on the disputed amount of addition made does not arise to get the appeal admitted by the ld.CIT(A).
Further, we note that the decision of the Raipur Tribunal in the case of Vishnusharan Chandravanshi v. ITO (supra) is also decided in favour of the assessee in the situation where the assessee had no taxable income, by holding as under: “12. Admittedly, as per section 249(4)(b) of the act, in a case where no return of income has been filed by the assessee, then his appeal shall be maintainable before the CIT(Appeals) only if he had paid an amount equal to the amount of advance tax which was payable by him. At the same time, the legislature had carved out an exception to the applicability of the aforesaid statutory requirement by way of a “provision” to Section 249(4) of the Act, as per which, on an application made by the appellant, the CIT(Appeals) may, for any good and sufficient reason to be recorded in writing exempt him from the operation of the aforesaid statutory provision. 13. At this stage, I may herein observe that the statutory requirement contemplated in Clause(b) of Sub-section (4) of section 429 of the Act would stand triggered only where any obligation was cast upon the assessee to pay “advance tax”. As stated by the Ld. AR, and rightly so, in absence of any taxable income for the year under consideration (as was stated by him in the “SOF” filed before the CIT(Appeals) no obligation was cast upon him to compute and pay any advance tax u/s. 208 & 209 of the Act. Considering the fact that as no obligation was cast upon the assessee to compute / deposit any amount towards “advance tax” for the subject year, I am unable to concur with the view taken by the CIT(Appeals) who had dismissed the appeal as not maintainable for the reason of non-compliance of the mandatory condition contemplated in Clause(b) of sub-section (4) of Section 249 of the Act. Although, at the first blush, I was of the view that the amount assessed by the AO vide his order u/s. 144 of the Act dated 23.11.2019 of Rs. 10 lacs would saddle the assessee with an obligation to pay “advance tax”, but stood corrected on a careful perusal of Section 208 and section 209(1)(a) of the Act, which contemplates determination of the said tax liability at the behest of the assessee. 14. As in the present case, the assessee had not only before me but had also in the “Statement of facts” stated before the CIT(Appeals) that he had no taxable income, therefore, in my view in absence of any obligation cast upon the assessee to compute/ pay “advance tax” u/s. 208 and 209 of the Act for the subject year, the first appellate authority could not have held that he had failed :-9-: ITA. No: 3186/Chny/2024 to comply with the statutory conditions contemplated in Sec. 249(4)(b) of the Act. My aforesaid view I fortified by the orders of the ITAT, Bengaluru in the case of Shamannar eddy(supra) and that of ITAT, Delhi in the case of Vikram Singh(supra).
I, thus, in terms of my aforesaid observations, set aside the order of the CIT(Appeals) and restore the same to his file with a direction to dispose off the appeal after considering the merits of the case.Needless to say, the CIT(Appeals) shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee.……”
In view of the above facts and circumstances of the case and relying upon the decision in the case of Vishnusharan Chandravanshi v. ITO (supra), we set aside the order of the ld.CIT(A) with direction to admit the appeal and to decide the same on merits by allowing the grounds raised by the assessee.
In the result the appeal of the assessee is allowed for statistical purposes. Order pronounced in the court on 18th March, 2025 at Chennai.