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Facts
The assessee did not file an income tax return for AY 2015-16. Based on information of significant cash and term deposits, the Assessing Officer (AO) initiated reassessment proceedings u/s 147 and made an addition of Rs. 61,89,736/- as unexplained money. The assessee did not comply with notices and failed to provide explanations.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal for non-payment of advance tax, as the assessee had no admitted tax liability due to not filing a return and claiming no taxable income. The case was restored to the CIT(A) for adjudication on merits, providing an opportunity for the assessee to submit evidence.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal for non-payment of advance tax when the assessee claimed no taxable income and whether principles of natural justice were violated by the AO in passing an ex-parte order.
Sections Cited
147, 144, 144B, 139, 250, 69A, 115BBE, 271(1)(c), 271(1)(b), 271F, 249(4)(b), 234B(1), 208, 148, 142(1), 143
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Income Tax Appellate Tribunal, PUNE BENCHES “B”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of assessee pertaining to Assessment Year 2015-16 is directed against the order dated 21.10.2024 passed by National Faceless Appeal Centre, Delhi passed u/s.250 of the Income Tax Act, 1961 (in short ‘the Act’) which in turn is arising out of Assessment Order dated 02.11.2023 passed u/s.147 r.w.s.144 r,w.s.144B of the Act.
Brief facts of the case are that the assessee is an individual and the assessee has not filed the return of income for the A.Y. 2015-16 under 139(1) of the Act. Based on the information available that the assessee made huge cash deposit and term deposits to the tune of Rs.61,89,736/- with the bank account maintained with Marathwada Gramin Bank, case reopened and notices u/s.148/142(1) were issued through ITBA portal calling upon the assessee to file the relevant information. There was no compliance from the side of assessee to any of the notices. In the event, ld. AO passed the concluded the assessment making addition of said sum of Rs.61,89,736/- as unexplained money u/s.69A re.w.s.115BBE of the Act by holding as under :
Hence, on the basis of discussion mentioned above, the assessee was show-caused as to why the cash deposit and term deposits aggregating to Rs. 61,89,736/- should not be treated as unexplained money as per section u/s 69A of the Income Tax Act, 1961 and is to be taxed with respect to section 115BBE during the F.Y. 2014-15 relevant to the A.Y. 2015-16 and added back to the total income of the assessee. The assessee failed to file any explanation, documentary evidences in respect of such financial transactions executed during the year under consideration, hence there is no option but to add the sum of Rs. 61,89,736/- as per section 69A and taxed with respect to section 115BBE of the Income Tax Act. As the assessee concealed the particulars of income the penalty u/s271(1)(c) has been initiated separately. Penalty proceedings U/s. 271(1)(b) has been initiated separately for non-compliance of notice U/s. 142(1). Penalty proceedings U/s. 271F has been initiated separately for non-filing of return of income as per provision of section 139 of the Income Tax Act.
Aggrieved assessee preferred an appeal before the ld.CIT(A) and the ld.CIT(A) dismissed the appeal as not maintainable by observing 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 impugned order was passed u/s 147 r.w.s 144 of the Act, creating demand of Rs.57,56,955/- 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 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 Not the assessment year, Not whether an amount equal applicable to the amount of advance tax as 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 asseessee 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 retum 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, 2 in a case falling under clause (b) and] on an application made by the appellant in this behalf, the 3 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 5 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 2348(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 tax, 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 1434 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 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 6 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 made 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.
4. Since the appellant has not filed return of income 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.”
Now the assessee is in appeal before this Tribunal assailing the order of ld.CIT(A) by raising the following grounds :
“(01) "GROUND NO. I Violation of Principles of Natural Justice: Opportunity of being heard:
The assessment order passed under section 147 read with section 144 of the Income Tax Act, 1961, violates the principles of natural justice. Subsequently, the Ld. CIT(A) dismissed the appeal of the assessee merely on the technical issue and consequently, the Appellant was not afforded a reasonable opportunity to be heard or to present his case. The Hon'ble Supreme Court, in Sahara India (Firm) vs. Commissioner of Income Tax ((2008) 300 ITR 403 (SC)], held that the principles of natural justice are integral to the tax assessment process. The Court emphasized that "the assessee should be given a reasonable opportunity of being heard before any addition is made to his income."
GROUND No.II That the Appellate Order passed by the Learned Commissioner of Income Tax thereinafter referred to as "the Ld. CIT(A)" is highly illegal, bad in law, unsustainable and not in accordance with the provisions of law. On the facts and in the circumstances of the case as well as in law, the Ld. CIT(A) has erred in dismissing the appeal in limine holding it as not maintainable under the provisions of section 249(4) of the Act which is highly unjustified, unwarranted, unsustainable, not proper on facts and not in accordance with the provisions of law without appreciating the fact that, the appellant was not required to file the return of income so no question of paying the consequent taxes thereon. Hence, It is prayed that the Order passed may please be annulled.
GROUND No.III The Ld.CIT(A) has failed to appreciate that the appellant could not file the return of income and could not pay the taxes due on such income owing to his engagement in education and financial dependency on his father. Rather, the assessee was not having any source of income for the hear under consideration and hence, there were good and sufficient reasons for such contravention hence, the Ld.CIT(A) ought to have exercised his discretion in favour of the appellant and ought to have exempted the appellant from the operation of clause (b) of section 249(4) of the Act. Hence, wis prayed that the Order passed by the Ld.CIT(A) may please be annulled and may please be set aside for adjudication on merits.
GROUND NO.IV On the facts and in the circumstances of the case as well as in law, the Ld.CIT(A) has grossly erred in dismissing the appeal in limine without considering the grounds raised by the appellant on merits which is highly unjustified, unwarranted, unsustainable and not in accordance with the (02) Section 148: Issue: Proceedings of reassessment barred by time: That the CIT(A) erred in law in not appreciating the fact that notice under section 148 of the Act was issued based on some information flagged as per Risk Management Strategy formulated by the CBDT in NMS module of insight portal regarding time deposit of amount which was not properly uploaded and there was mistake in uploading the said information. He erred in not considering the fact that Notice under section 148 of the Act was issued on 10.04.2022 based on some flagged information as per CBDT risk management matrics after a period of three years to assess alleged unexplained income of Rs.61,89,736/- which had escaped assessment. Said notice u/s. 148 of the Act could have been issued even under the new provisions, only and only when income of Rs.50 lacs or more had escaped assessment whereas the assessee has entered the transaction of cash deposits to the extent of Rs 20,01,000/- only hence notice issued on 10.04.2022 was barred by time and order passed based on such notice deserves to be quashed.
Apart from the above grounds on merit, the assessee has also raised the above legal grounds for the first time before the Tribunal and also other grounds relating to (1) Validity of Information for issuance of notice under section 148, (2) barred by time and (3) Erroneous addition u/s.69A.
At the outset, the Ld. AR submitted that ld.CIT(A)/ NFAC has erred on facts and law while denying the admission of appeal on account of non-payment of advance tax as provided u/s.249(4)(b) of the Act without appreciating the contention of the assessee in view of the intention of the legislature behind the provisions of section 249(4)(b) of the Act where the assessee intends to take advantage of appeal under Chapter XX of the Income Tax that he should pay the admitted tax liability of payment of advance tax on the admitted income before filing the appeal. Ld. AR argued that the CIT(A), while rejecting the admission of appeal on account of non-payment of advance tax as provided u/s.249(4)(b) of the Act has not appreciated the settled principles of law that there should be liberal interpretation of provisions of Section 249(4)(b) of the Act. He submitted that the assessee could not comply with the notice u/s 142(1) of the Act and AO has passed an ex-parte Assessment Order u/s 147 r.w.s. 144 r.w.s. 144B of the Act dated 02.11.2023. It is accordingly submitted that the appeal filed by the assessee may kindly be admitted and the case of the assessee may kindly be set aside to the file of CIT(A) for denovo adjudication on merits after providing sufficient opportunity of being heard. The assessee assures that he will comply with the notices issued
Ld. Departmental Representative vehemently argued supporting the orders of the lower authorities.
We have heard both the sides and perused the material on record and the written submissions filed before us. Admittedly, ld. CIT(A) has rejected the contention of the assessee while denying to admit the appeal on the application of Section 249(4)(b) of the Act stating that the assessee has not paid an amount equal to the amount of advance tax which was payable by him. In the instant case, the assessee did not file his income-tax return for the captioned year as he did not have taxable income and the additions are made by the Ld. AO during the course of assessment proceedings in an exparte assessment passed u/s.144B of the act without proper opportunity for rebuttal to the assessee. Meaning thereby, there was no admitted tax liability by the assessee rather. In our view, since the assessee did not have any taxable income resulting into advance tax liability or the admitted tax liability, there does not arise any question of dismissal of appeal of the assessee as per mandate of the Section 249(4)(b) of the Income Tax Act, 1961. As such, considering the gamut of facts and circumstances of the case and the submissions of ld. Counsel for the assessee, we are of the opinion, that the assessee has presented a prima facie case, of no obligation to make payment of advance tax u/s. 208 of the Act 1961, for the year under appeal, and we hold that the CIT(A) ought to have admitted the appeal for adjudication on merits. In view thereof, without dwelling into merits of the issues, we set aside the impugned order and restore the same to the file of ld.CIT(A) for necessary adjudication on merits, after carrying out necessary verification of all documentary evidences. Assessee is at liberty to adduce any evidence/documents as deemed expedient. Assessee is directed to remain vigilant and not to seek adjournment unless otherwise required for reasonable cause. All the effective grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on this 21st day of April, 2025.