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Facts
The assessee, engaged in the wholesale tea business, filed a NIL return for AY 2014-15. Information indicated the assessee received a ₹90 lakh accommodation entry, leading to reassessment proceedings under Section 147. The AO assessed income at ₹1,55,57,476 by making an addition under Section 68 for unexplained cash credit. The CIT(A) dismissed the assessee's appeal as infructuous, citing non-filing of return in response to Section 148 notice and non-payment of advance tax, as required by Section 249(4)(b) of the Income Tax Act.
Held
The Tribunal observed that the CIT(A) had not determined the specific amount of advance tax payable or the applicability of Section 208, and the assessee did not utilize the option to apply for exemption from advance tax payment under Section 249(4)(b) proviso. Given that the CIT(A) dismissed the appeal procedurally without addressing the merits, the Tribunal set aside the CIT(A)'s order. The case is remanded back to the CIT(A) to allow the assessee to file an application for exemption from advance tax, decide it according to law, and then hear the appeal on its merits.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal as infructuous under Section 249(4)(b) without deciding on the merits of the Section 68 addition, and whether the assessee should be allowed to make an application for exemption from advance tax payment.
Sections Cited
147, 144B, 68, 250, 148, 249(4)(b), 208, 209, 210
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA
Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2014-15 dated 28.12.2024, which has been passed against the assessment order u/s 147 r.w.s. 144B of the Act, dated 28.12.2016. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. For that the Ld. AO. did not Consider facts, the circumstances of the case and ignored the true essence of the nature, legality of the transaction by way of Loan and wrongly considered it as unexplained cash credit under section 68 of the IT Act as concealment of income to the tune of Rs. I.T.A. No.: 401/KOL/2025 Assessment Year: 2014-15 Varun Trade Link Private Limited. 1,55,57,476/-. The learned A.O. ignored the identity the Loan Creditors, Creditworthiness and Genui(ne)ness of the transaction.
For that the learned A.O. did not give assessee proper opportunity of being heard. This is against the principal of natural justice Audi Alteram Partem.
For that the reopening of assessment proceedings under section 148 was bad in law. The order of the learned A.O. is erroneous, harsh and unjustified and is against the spirit of law.
For that the assessee seek to challenge the report submitted by the Ld. Inspector of Income Tax in question.
For that the Ld. CIT(A) was wrong in treating the instant appeal infructuous.
For that the appellant prays for relief and seeks permission to adduce fresh grounds of appeal and/or modify the same before or at the stage of hearing of the appeal.”
Brief facts of the case are that the assessee had e-filed its return of income for assessment year 2014-15 showing total income of ₹ ‘NIL’. The assessee is engaged in the business of wholesale of tea. Information available in the insight portal revealed that the assessee was a beneficiary of accommodation entry from M/s. Flex Trade Pvt. Ltd. for an amount of ₹90,00,000/- during FY 2013-14 relevant to AY 2014-15. Based on the above information and material available on record, the Ld. JAO formed a reasoned belief that the income to the tune of ₹90,00,000/- had escaped assessment within the meaning of section 147 of the Act. Subsequently notice u/s 148 was issued to the assessee after obtaining approval of the competent authority. In response thereof, the assessee made submissions from time to time. The Assessing Officer (hereinafter referred to as Ld. 'AO') noted that the assessee failed to prove the three limbs of section 68 of the Act and assessed the total income of the assessee at ₹1,55,57,476/- u/s 147 r.w.s. 144B of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who vide order dated 28.12.2024 dismissed the I.T.A. No.: 401/KOL/2025 Assessment Year: 2014-15 Varun Trade Link Private Limited. appeal of the assessee holding that since the assessee had not filed the return of income in response to the notice u/s 148 of the Act and not paid the amount equivalent to the amount of advance tax payable by it, the appeal was not liable to be admitted and became infructuous. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before this Tribunal.
Rival contentions were heard and the record and the submissions made were examined. Before adjudicating the appeal, it is important to refer to the provisions of Section 249(4)(b) of the Act, which is relied upon by the Ld. CIT(A) while dismissing the appeal and which is as under: “249(4)(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 [Joint Commissioner (Appeals) or 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.”
As per the proviso thereof, there is an option available to the assessee to file an application before the Ld. CIT(A) who may dispense with the requirement of payment of advance tax on the basis of facts. Apparently, no such application was filed by the assessee and, therefore, the appeal was dismissed.
However, the liability to pay the advance tax is determined by the provisions of Chapter XVII-C relating to advance payment of tax and is governed by the provisions of section 208 as per which 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 I.T.A. No.: 401/KOL/2025 Assessment Year: 2014-15 Varun Trade Link Private Limited. accordance with the provisions in this regard is Rs. 10,000/- or more. Further, Section 209 of the Act r.w.s. 210 specifies the manner of computation of advance tax; section 209(1) of which is reproduced as under: “209. (1) The amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3), be computed as follows, namely :— (a) where the calculation is made by the assessee for the purposes of payment of advance tax under sub-section (1) or sub-section (2) or sub- section (5) or sub-section (6) of section 210, he shall first estimate his current income and income-tax thereon shall be calculated at the rates in force in the financial year; (b) where the calculation is made by the Assessing Officer for the purpose of making an order under sub-section (3) of section 210, the total income of the latest previous year in respect of which the assessee has been assessed by way of regular assessment or the total income returned by the assessee in any return of income furnished by him for any subsequent previous year, whichever is higher, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year; (c) where the calculation is made by the Assessing Officer for the purpose of making an amended order under sub-section (4) of section 210, the total income declared in the return furnished by the assessee for the later previous year, or, as the case may be, the total income in respect of which the regular assessment, referred to in that sub-section has been made, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year; (d) the income-tax calculated under clause (a) or clause (b) or clause (c) shall, in each case, be reduced by the amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of this Act from any income (as computed before allowing any deductions admissible under this Act) which has been taken into account in computing the current income or, as the case may be, the total income aforesaid; and the amount of income-tax as so reduced shall be the advance tax payable: Provided that for computing liability for advance tax, income-tax calculated under clause (a) or clause (b) or clause (c) shall not, in each case, be reduced by the aforesaid amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of I.T.A. No.: 401/KOL/2025 Assessment Year: 2014-15 Varun Trade Link Private Limited. this Act from any income, if the person responsible for deducting tax has paid or credited such income without deduction of tax or it has been received or debited by the person responsible for collecting tax without collection of such tax.”
The Ld. CIT(A) has not specified as to how much advance tax was payable or even whether the provisions of Section 208 of the Act were applicable to the assessee or not. On the contrary, the assessee contends that since the income was below the maximum amount not chargeable to tax, therefore, there was no question of payment of any advance tax. Further, the Ld. CIT(A) has not decided the appeal on the merits of the case. Hence, in view of the facts, since the Ld. CIT(A) has not mentioned as to how much advance tax was payable by the assessee which has not been paid, and the assessee had the option of filing an application before the Ld. CIT(A), which however, was not filed and consequently the discretion available to the Ld. CIT(A) to exempt the assessee from the applicability of the rigours of section 249(4) could not be exercised by him and the appeal has also not been decided on merit, therefore, in the interest of justice, the order of the Ld. CIT(A) is set aside to be done afresh. The assessee may file an application for exemption from the requirement of payment of advance tax, which shall be decided by the Ld. CIT(A) in accordance with law and considering the totality of facts. The assessee shall also be at liberty to file necessary evidences in support of the relief claimed before the Ld. CIT(A) as per law. Needless to say, the assessee shall be given a reasonable opportunity of being heard and to make any further submissions he wants to make in support of the relief claimed. The Ld. CIT(A) shall also grant an opportunity of representing the case and be heard to the Ld. AO as per rule 46A of the Income Tax Rules, 1962, if required, and thereby pass I.T.A. No.: 401/KOL/2025 Assessment Year: 2014-15 Varun Trade Link Private Limited. an order in accordance with law Accordingly, the grounds taken by the assessee in his appeal are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 25th August, 2025. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 25.08.2025 Bidhan (Sr. P.S.) I.T.A. No.: 401/KOL/2025 Assessment Year: 2014-15 Varun Trade Link Private Limited. Copy of the order forwarded to:
Varun Trade Link Private Limited, Flat No.4B, 35, Ahiripukr Road, Ballygunge, Kolkata, West Bengal, 700019. 2. CIT(Appeals), NFAC, New Delhi.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order