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Income Tax Appellate Tribunal, DELHI BENCH “F” NEW DELHI
Before: SHRI G.S. PANNU & SHRI AMIT SHUKLA
PER AMIT SHUKLA, J.M.: The aforesaid appeal has been filed by the assessee against the impugned order dated 29.11.2018, passed by Ld. Commissioner of Income Tax (Appeals)-I, NOIDA for the quantum of assessment passed u/s.147/144 for the Assessment Year 2009-10. In the grounds of appeal, the assessee has raised following grounds:- “1. That the ld. CIT(A) has erred in not admitting the appeal filed by the assessee invoking provisions of Section 249(4)(b) of the Income Tax Act. 2. That the Ld. CIT(A) has erred in holding that for the purpose of section 249(4)(b), assessed income has to be treated as returned
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income and therefore, for having the appeal admitted, assessee was required to pay an amount equal to advance tax which was payable by the assessee on an income of 7.44 crore. 3. That the Ld. CIT(A) has erred in not considering the material fact that the assessee had filed its return of income for the relevant year u/s 139(1) of the Act in Sirhind, Punjab, at its permanent place of residence and therefore, proceeding initiated by the Assessing Officer u/s 147 was bad-in-law. 4. That the Ld. CIT(A) has not considered the material fact that the Assessing Officer i.e. ITO Ward-2(5), Noida had no jurisdiction to issue the notice u/s 148 of the Act and therefore, the entire proceeding initiated and conducted by him was bad- in-law, deserves to be quashed. 5. That despite holding that notice u/s 143(2) was not issued by the Assessing Officer to the assessee before framing assessment u/s 147 r/w section 144 of the Act, Ld. CIT(A) has erred in confirming the assessment order passed by the Assessing Officer. 6. That since no notice u/s 143(2) had been issued by the Assessing Officer, the assessment order framed by him was a nullity. 7. That the Ld. CIT(A) has passed the contradictory orders when it stated that the assessment framed by the Assessing Officer can be saved by issuing the directions u/s 150 of the Income Tax Act but in the ultimate analysis confirmed the assessment order framed by the Assessing Officer.”
The brief facts are that the assessee is an employee of Timex Group Precision Engineering Ltd. having its registered
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office at 117, Ground Floor, World Trade Centre, Babar Road, New Delhi. For the year under consideration, the assessee has filed its return of income from Sirhind, Punjab declaring income of Rs.7,56,980/-. Being a salaried employee of M/s. Timex Precision Engineering Ltd., TDS of Rs.1,36,057/- was deducted by the Employer Company. On the basis of some AIR information that assessee has purchased immovable property on 01.09.2008 for consideration of Rs.7,44,00,000/-, Assessee’s case was reopened by issuance of notice u/s.148 on 23.03.2016. The said notice has been stated to be sent through speed post; however no compliance has been made by the assessee. Ld. Assessing Officer has also noted that other notices to the assessee remained uncomplied with. Accordingly, the Assessing Officer treated the investment made in the property at Rs.7,44,00,000/- as undisclosed investment which was added u/s.69 of the Act.
Thereafter, assessee has preferred an appeal before the Ld. CIT (A)-I, NOIDA. Ld. CIT(A) in his operating paragraph has observed that assessee has not filed the return of income before the Assessing Officer including the amount added in the impugned assessment order; and accordingly has issued a show cause notice for non- compliance of provision of Section 249(4)(b) of the IT Act. As per him no such explanation was given by the ld. counsel for the assessee. Thereafter, in his 60 page order instead of deciding the issue on merits and material placed on record, the Ld. CIT (A) has gone completely out of track and has taken into irrelevant
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considerations for deciding the appeal of the assessee and accordingly, has dismissed the appeal stating that the appeal itself is not maintainable and on merits also without even considering material facts placed before him he has dismissed the grounds.
Before us, ld. Senior counsel, Mrs. Prem Lata Bansal, submitted that very premise on which Ld. CIT(A) has dismissed the appeal after invoking the provision of Section 249(4)(b) that the assessee has not filed return of income, is absolutely incorrect. Because, the assessee has filed the return of income and he was regularly filing the return of income which is evident from the document annexed in the paper book filed before us. Not only that, before the Ld. CIT (A) the assessee has filed evidences and documents along with affidavit of the assessee that he has not purchased any property on his behalf but on the behalf of the company in which he was an employee; and in support, resolution passed by the Board of Directors of the Company in its meeting dated 29.07.2008 was also produced whereby assessee was authorized by his employer company to enter into contract or undertaking on behalf of the company. As per the Board Resolution, the assessee has signed one transfer cum sale deed 30.08.2008 for purchase of industrial built up factory in NOIDA and even the amount paid for the consideration has given from the bank account of the company for which bank statement of the company was also filed along with copy of Board Resolution, copy of transfer cum sale deed, ITR filed by
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the company, audited account and balance sheet along with P&L account. Ld. CIT (A) not only failed to consider the evidences and documents filed, but have also gone off track in deciding the appeal of the assessee. Before the Assessing Officer also no notice could be received by the assessee as all the notices were sent at wrong address, and therefore, no compliance could be made, therefore, she requested that in the interest of justice, matter should be restored back to the file of the Assessing Officer.
On the other hand, ld. DR has relied upon the order of the Ld. CIT (A).
After considering the submissions made by the parties and on perusal of the impugned order, we find that Ld. CIT (A) has wrongly treated the appeal filed by the assessee as inadmissible, perhaps on the reason that assessed income is to be treated as return of income, and therefore, assessee was required to pay amount equal to advance tax of Rs. 4.77 crore on the assessed income. From a bare perusal of the provision of Section 249(4)(b), it is clear that in a case, where the return has been filed by the assessee, if the assessee has paid the tax due on the income returned by him then the appeal filed by the assessee is to be admitted, but where no return has been filed by the assessee and the assessee has not paid an amount equal to the amount of advance tax which was payable by him then the appeal filed by the assessee cannot be admitted. Further, as per the proviso, power is conferred
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upon the CIT (A) to grant exemption to the assessee from the operation of this provision, for any good and sufficient reasons to be recorded in writing.
The provision of Section 249 empowers the CIT (A) to ensure recovery of tax on the return income and it is not a provision to defeat the legitimate right of appeal. Nowhere the legislature has envisaged that tax payer is required to pay tax on addition made by the Assessing Officer. If the entire liability as determined in the assessment order has been disputed, then there is no reason as to why assessee should be forced to pay the tax before filing of first appeal. Here, the assessee has filed return of income and taxes has been paid by way of TDS deducted by the employer of Rs.1,36,057/-. Thus, advance tax on return of income had already been paid by the assessee, and therefore, provision of Section 249(4)(b) are not applicable at all.
Here in this case, since neither the Assessing Officer nor the Ld. CIT (A) has considered the material facts as brought on record; that, assessee was merely an employee of M/s. Times Group Precision Engineering Ltd. and the investment for the purchase of property has been stated to be done on behalf of the company for which he was duly authorized by the Board and even the purchase consideration has been paid by the said company from its bank account. These are very vital facts which need to be considered and examined. Therefore, in the interest of natural justice, we restore the
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entire addition as well as validity of reopening u/s.147/148 to the file of the Assessing Officer who shall not only adjudicate the jurisdictional issue of validity u/s.147/148, but also on merits by considering the entire evidences placed by the assessee before the Ld. CIT (A) or any other documents if required during the course of assessment proceedings. Ld. Assessing Officer shall give due and effective opportunity of hearing to the assessee and decide the issue afresh in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 17th January, 2020.
Sd/- Sd/- [G.S. PANNU] [AMIT SHUKLA] VICE PRESIDENT JUDICIAL MEMBER DATED: 17th January, 2020 PKK: