HARIBABU YENUGANTI,ONGOLE vs. INCOME TAX OFFICER, WARD-1, ONGOLE

Facts

The Assessing Officer (AO) initiated reassessment proceedings for AY 2017-18 under section 147 due to significant cash deposits and withdrawals, determining the assessee's income at Rs. 62,94,561 with specific additions. The assessee appealed this order to the Commissioner of Income Tax (Appeals) [CIT(A)], who dismissed the appeal for non-payment of advance tax, citing section 249(4)(b) of the Act, despite the assessee's contention of having no taxable income and thus no obligation for advance tax.

Held

The ITAT found that the assessee's belief of having no taxable income was bona fide, and their failure to seek exemption under the proviso to section 249(4) was prompted by this belief. The Tribunal held that the CIT(A) should have sought clarification from the assessee regarding their 'not applicable' claim for advance tax payment and afforded them an opportunity to explain. Consequently, the matter was remanded to the CIT(A) for a fresh hearing, providing the assessee a reasonable opportunity to present their case for exemption.

Key Issues

Whether the CIT(A) was justified in dismissing the assessee's appeal for non-payment of advance tax under section 249(4)(b) without providing an opportunity to explain their bona fide belief of having no taxable income and thus no obligation to pay advance tax.