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Facts
The assessee, Ms. Priyanka Mandadi, did not file an income tax return for AY 2017-18, claiming no tax liability. The Assessing Officer (AO) reopened the assessment based on information of substantial cash deposits in her bank account, treating it as income and completing the assessment. The CIT(A) dismissed the assessee's appeal as non-admissible due to non-compliance with Section 249(4)(b) regarding advance tax payment.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal solely on the grounds of non-payment of advance tax, especially when the assessee explained the cash deposits related to the sale of old cars, resulting in a loss. The Tribunal found that the condition for advance tax payment is applicable only when there is an actual liability.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal as non-admissible for non-compliance of Section 249(4)(b) without considering the explanation for cash deposits and the absence of taxable income.
Sections Cited
249(4)(b), 148, 147, 144, 69A, 271F, 271B
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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Manjunatha, G.
Per Vijay Pal Rao, Vice President.
This appeal by the assessee is directed against the order dated, 19/09/2024 of the learned CIT (A)-NFAC Delhi, relating to A.Y.2017-18.
The assessee has raised the following grounds:
3. At the time of hearing, the learned AR of the assessee has submitted that, the learned CIT (A) has dismissed the appeal of the assessee as non-admissible for want of advance tax payment u/s 249(4)(b) of the I.T. Act, 1961. He has pointed out that, the assessee has not filed any return of income for the year under consideration, as there was no income assessable to tax. The Assessing Officer has reopened the assessment by issuing notice u/s 148 of the Act, on the basis of the information that, during the year under consideration, the assessee has made cash deposits of more than Rs.1.00 crore in her bank account. The Page 2 of 6 learned AR has submitted that, the assessee has purchased the old cars in the bank auctions, which were subsequently sold and incurred loss in those transactions and therefore, there was no taxable income for the year under consideration. The notice issued by the Assessing Officer were sent to the email registered with the ITBA Portal and did not come to the knowledge of the assessee, therefore, there was no response to the notices issued by the Assessing Officer. He has further submitted that the learned CIT (A) has issued a notice, dated 11/09/2024 allowing the assessee to furnish written submission on or before 18/09/2024. In response to the said notice, the assessee has filed the reply, vide letter dated 16/09/2024 and requested some more time. However, the learned CIT (A) has passed the impugned order, dated 19/09/2024 without considering the request of the assessee as well as other record filed by the assessee before the learned CIT (A). The learned AR has submitted that the dismissal of the appeal of the assessee on the ground of non-payment of advance tax is not sustainable, when there was no return of income filed by the assessee, nor any taxable income was earned by the assessee during the year. Thus, he has pleaded that, the impugned order of the learned CIT (A) may be set aside and the matter may be remanded to the record of the Assessing Officer for fresh adjudication after considering the relevant details and evidences to be filed by the assessee.
On the other hand, the learned DR has submitted that, despite repeated notices issued by the Assessing Officer as Page 3 of 6 well as the learned CIT (A), the assessee did not respond and file the relevant details. Therefore, it is a case of gross negligence on the part of the assessee, of non-compliance of the notices issued by the authorities below. He has relied upon the orders of the authorities below.
We have considered the rival submissions as well as the relevant material available on record. The Assessing Officer has noted that, the assessee has not filed any return of income. However, as per the information, the assessee has made cash deposits of Rs.1,07,37,700/- in her bank account during the year under consideration and accordingly, notice u/s 148 of the Act was issued on 31/03/2021. In response to the statutory notices issued by the Assessing Officer u/s 142(1) and 148 of the I.T. Act, 1961, there was no compliance on behalf of the assessee. Even no return of income was filed by the assessee. The assessment was then completed u/s 147 r.w.s. 144 of the I.T. Act, 1961 on 9/3/2022 whereby the Assessing Officer has assessed the total income at Rs.1,07,37,700/- by taking the entire cash deposits in the bank account as income of the assessee. The assessee challenged the action of the Assessing Officer before the learned CIT (A). However, the appeal of the assessee was dismissed in limine by the learned CIT (A) vide his order in para 4.2 and 4.3 as under: “4.2 Facts of the Case: In this case, it is noted that the appellant has not filed any return of income and has not paid any form of tax. This fact was brought to the notice of appellant vide a notice dated 11.09.2024 and she was asked to comment on the specific requirement of Section 249(4)(b). The appellant did not file any submission with respect to it.
As per the provisions of Section 249(4)(b), the appellant is required to pay the tax due on the income returned before the appeal can be admitted. On examination of the records and submissions made, it is observed that the appellant has failed to file the return of Income. Appellant has failed to pay an amount equal to the amount of advance tax that was payable by him. The appellant has not furnished any substantial cause or valid reason for the non-compliance with the mandatory requirement under Section 249(4)(b). Further, it is noted that the A.O in his assessment order has also initiated penalty proceedings u/s. 271F and 271B of the Act against the appellant. 4.3 In view of the aforementioned facts and provisions, and considering the mandatory nature of the requirement under Section 249(4)(b) of the Income Tax Act, 1961, the appeal filed by the appellant, is hereby dismissed as non- admissible.”
The learned CIT (A) was of the view that, the assessee has not furnished any substantial cause or filed reasons, for non- compliance of the mandatory requirements u/s 249(4)(b) of the I.T. Act, 1961. It is pertinent to note that, the requirement of payment of advance tax, as per section 249(4)(b) of the Act for filing appeal before the learned CIT (A) is mandatory, only when there is a liability on the assessee for payment of advance tax. In the case in hand, the Assessing Officer has assessed the income of the assessee on account of deposits of cash in the bank account for which the assessee has explained that the said cash was deposited for participation in the auction conducted by the Bank for sale of old cars, which were subsequently sold by the assessee resulting loss. Without considering the fact that, the deposit of cash in the Bank Account does not ipso facto fasten the liability of advance tax payment on the assessee, the learned CIT (A) has dismissed the appeal of the assessee in limine.
Page 5 of 6 Accordingly, in the facts and circumstances of the case, the impugned order of the learned CIT (A) is set aside and the matter is remanded to the record of the Assessing Officer for fresh adjudication after considering the relevant details as well as evidences to be filed by the assessee in support of her claim. Needless to say, the assessee shall be given a reasonable opportunity of being heard, before passing the fresh order.