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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), (hereinafter referred to as “CIT(A)”), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi dated 20.05.2025, passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2012-13.
The grounds of appeal raised by the assessee are as under:
“1. The ld.CIT(A) erred in law as well as on fact in dismissing an appeal on ground of alleged defect in form no.35 on by misreading the same and as such there is no defect.
2. The ld.CIT(A) erred in law as well as on fact in upholding an addition of Rs. 99,60,000 made by Id.AO being investment made in shares of SMS softtech LTD.”
The primary grievance raised by the assessee before us, as raised in Ground No.1 above, relates to the dismissal by the Ld. CIT(A), of the assessee’s appeal as non-maintainable on account of defects in Form No.35. The findings of the Ld.CIT(A) in this regard reveals the defects noted by him as under:
“I have carefully perused relevant facts and materials available on record, grounds of appeal, Form 35 as filed by the appellant and assessment order. It is found that the appellant didn't fill up Form 35 properly. In column 8 of Form 35, appellant made remarks "not applicable" in respect of data for return of income filed by the appellant for the assessment year in connection with which the appeal is filed. In column 9, appellant made same remark in case of no return filed. Sub-section (4) to section 249 as under: No appeal under this chapter shall be admitted unless at the time of filling 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 to 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.
Onus for filling of Form 35 in proper& complete way lies on the appellant. Since the appellant made remarks in both the columns 8 &9 as "Not applicable and no such application is made in this behalf, this appeal of the appellant is not admitted as per section 249(4) of the Income Tax Act, 1961. As a result, appeal of the appellant is hereby dismissed.”
As is evident from a bare perusal of the above, the defects noted by the Ld. CIT(A) in Form 35, related to column 8 of Form 35 requiring furnishing of data of return of income filed by the assessee for the assessment year in which the appeal was filed. The Ld.CIT(A) has noted assessee mentioning ‘not applicable” against the said column. Similarly, in column 9 of the Form where in case of no return filed, the assessee was noted to have mentioned the same remark. The Ld. CIT(A) further goes on note the provisions of law requiring the assessee to have paid all advance taxes which he was liable to pay where no return of income is filed, as a necessary pre-requisite for admitting appeals by the First Appellate Authority. He also noted that the assessee can be exempted from this requirement of paying advance taxes for admitting its appeal before the first appellate authority only on making an application seeking such exemption to the appellate authority giving good and sufficient reasons for non-payment of advance tax. Having noted so the Ld.CIT(A) found the assessee to have not correctly filled up form 35, mentioning Not applicable against the furnishing of detail of return of income filed and further noting absence of any application filed by the assessee seeking exemption from payment of advance tax, for admitting its appeal for adjudication, he dismissed assesses appeal as non- maintainable.
During the course of hearing before us, Ld. Counsel for the assessee pointed out the fact noted in the assessment order itself that the assessee was a non-filer of return of income and contended therefore that there was no anomaly in the reporting by the assessee in this regard in Form No.35 at Sl. Nos. 8 & 9, wherein the assessee has reported to have not filed any return of income, mentioning “Not applicable” against the same. He, therefore, pleaded that the Ld. CIT(A) had erred in dismissing the appeal as non-maintainable.
On the other hand, Ld. DR stated that since the Ld. CIT(A) had not admitted the issue on merits, the matter may be restored back to him for adjudication on merits.
Having considered the contentions of both the parties, the primary grievance of the assessee before us is against the order of the Ld. CIT(A) rejecting its appeal before him as non-maintainable for improper details furnished in Form 35 particularly with respect to detail of furnishing of return of income mentioning “Not Applicable” therein and being non-filer of return of income finding the assessee to have not complied with the condition prescribed in section 249(4) of the Act for admissibility of the appeal ,of having paid advance taxes thereon /or filed an application to the appellate authority seeking exemption from the payment of advance tax.
Ld. Counsel for the assessee has pointed out that there was no anomaly in the furnishing of particulars in Form No.35 vis-à- vis details relating to the furnishing of return of income which the assessee had correctly disclosed as not filed and the Ld. DR has fairly agreed to the same. Therefore, we agree with the Ld. Counsel for the assessee that there was no anomaly, as such, in the details furnished by the assessee in Form No.35. The more pertinent fact and reason we have noted with the Ld. CIT(A) for dismissing the assessee’s appeal as non-maintainable is on account of non-fulfillment of the requirement of law as contained in Section 249(4) of the Act prescribing the conditions necessarily to be fulfilled for admitting appeals by the Ld. CIT(A), i.e. payment of advance taxes where the assessee is a non-filer of return of income and if the assessee seeks exemption from the same, the requirement of filing of application giving plausible reasons for seeking exemption, to the appropriate authority.
The assessee in the present case admittedly was a non-filer of return of income and no taxes were also paid by him. In the assessment framed, we have noted from the assessment order, huge addition amounting to Rs.99,60,000/- has been made. The Co- ordinate benches of the ITAT, have in several cases held that the liability to pay advance tax arises on the admitted income of the assessee and not on disputed assessed income. In the case of Laxmanji Khodaji Solanki (Thakor) vs. ITO in for A.Y. 2017-18, dated 28.08.2025, the Co- ordinate Bench held as under:
“10. Having held so, we have noted that before the AO the assessee remained unheard and the Ld. CIT(A) dismissed assessee’s appeal as non-maintainable on account of the fact that no return of income was filed by the assessee and no advance taxes were paid by the assessee. The Ld. CIT(A), we hold was grossly incorrect in treating the assessee’s appeal non-maintainable for the aforesaid reasons. Advance tax liability of an assessee arises on admitted and undisputed income of the assessee and not on addition made to the income of the assessee which are disputed by the assessee. The provisions of section 208-211 of the Act deal with conditions, computation and payment of advance tax. And on perusal of the said sections it is abundantly clear that suo moto computation of advance tax liability of assesses is based on estimation of current years income and tax liability thereon and where the AO calculates advance tax liability, the same is based on latest previous year income assessed of the assessee or any subsequent year income returned by the assessee whichever is higher. Section 208 & 209 of the Act are reproduced hereunder for clarity: 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 ten thousand rupees or more.
Computation of advance tax. 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:”
In any case, logically also, the liability relates to payment of taxes in advance (advance tax liability) and the same can be based only on a realistic estimate of income to be earned during the year, which can be gathered on the basis of assesses knowledge of his income earning sources for the year or on the basis of income returned to tax and assessed in preceding years. There can be no case at all for advance tax being paid on assessed income for the year, i.e on additions made to the income in assessment which are all disputed by the assessee.
12. In the light of the same, we hold, that the Ld.CIT(A) was incorrect in law to have dismissed assesses appeal as non- maintainable for not having paid advance taxes on its income, as per section 249(4)(b) of the Act.
13. In the light of the same, we set aside the order passed by the Ld. CIT(A) and noting that the assessee was prevented by sufficient cause from appearing even before the AO, we consider it fit to restore the matter back to the AO to decide the issue afresh after giving due opportunity of hearing to the assessee.”
In the case of the assessee, there is no admitted income of the assessee and the entire income added in the hands of the assessee is disputed before the Ld. CIT(A). Therefore, there was no requirement for the assessee to pay any advance tax. The assessee’s appeal, therefore, we hold, should not have been dismissed as non-maintainable by the Ld. CIT(A) for not having paid advance taxes or for not having made an application seeking exemption from the said requirement.
11. In the light of the same, the rejection of the assessee’s appeal as non-maintainable by the Ld. CIT(A) is, we hold, against the provisions of law. The Ld. CIT(A) is directed, therefore, to admit assessee’s appeal for adjudication and decide the same on merits. The appeal is, therefore, restored back to the file of the Ld. CIT(A) for adjudication afresh after giving due opportunity of hearing to the assessee. Ground No.1 raised by the assessee is, therefore, allowed for statistical purposes.
Since, we have restored the appeal back to the file of the Ld. CIT(A), the issue raised in Ground No.2, on merits of the addition made, needs no adjudication.
In view of the above, appeal filed by the assessee stands allowed for statistical purposes in above terms.
This Order pronounced on 30/09/2025
Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 30/09/2025 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT आयकर आयु�(अपील) / The CIT(A)- 4. 5. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,