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Facts
The assessee appealed against the orders of the CIT(A) which dismissed appeals against assessment and penalty orders. The CIT(A) dismissed the quantum appeal for not paying taxes on agreed income as per Section 249(4)(b) of the Income Tax Act, and the penalty appeal was not taken up as the quantum additions were not decided.
Held
The Tribunal held that the CIT(A) incorrectly dismissed the appeal without considering the merits, especially since the assessee disputed the demand. For the penalty appeal, the Tribunal noted that penalty computation is dependent on quantum additions, which were not yet decided.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal for non-payment of tax without adjudicating on merits, and whether the penalty appeal could be decided before quantum additions.
Sections Cited
147, 144, 271(1)(c), 249(4)(b), 148, 139(1)
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Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY
PHYSICAL HEARING O R D E R PER RAJ PAL YADAV, VP The assessee is in appeal against the separate
orders of the Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 18.12.2023 passed in assessment year 2012-13. 2. It is pertinent to note that ld. First Appellate Authority has decided two appeals, one pertains to quantum appeal which was filed against an assessment & 196/CHD/2024 A.Y.2012-13 2
order passed under Section 147 read with Section 144 and the second against a penalty order dated 03.02.2022 whereby the AO has imposed a penalty under Section 271(1)(c) of the Act. The ld. CIT(A) has issued separate numbers for both the orders.
We first take quantum appeal i.e. ITA No. 195/CHD/2024. The ld. Counsel for the assessee, at the very outset submitted that ld. CIT(A) has dismissed the appeal with the help of Section 249(4)(b) of the Income Tax Act. He pointed out that assessee did not file the return of income. The AO has reopened the assessment and issued a notice under Section 148 of the Income Tax Act.
Thereafter, he passed an ex-parte assessment order on 23.12.2019. The ld. AO has determined the taxable income at Rs.58,29,000/-. The ld. Counsel for the assessee further pointed out that Section 249(4) contemplates that an appeal of the assessee would not be entertained by the CIT(A) unless assessee had paid the tax on the agreed income. In other words, if an assessee has filed a return declaring income under Section 139(1), then on that & 196/CHD/2024 A.Y.2012-13 3 income assessee ought to have paid the taxes. In the present case, since assessee has not paid the taxes, therefore, the demand by virtue of the income determined by the AO would not be construed as an liability to pay advance tax and on non payment of such taxes, appeal of the assessee is to be construed as not maintainable. This is an incorrect approach of the CIT(A). For buttress the contention, he relied upon four orders of the ITAT namely; Ritika Jain Vs ITO ITA 168/Agra/2023, Vishnusharan Chandravanshi Vs ITO reported in 161 taxmann.com 803 and in the case of Balwinder Singh Vs ITO 163 taxmann.com 599 (Amritsar Bench) and that of ITAT Indore in the case of Pushpendra Singh Vs ITO ITA 122/Indore/2024. Copies of all these orders are placed on record by the ld. Counsel for the assessee. On the strength of these decisions, ld. Counsel for the assessee contended that impugned orders of the CIT(A) be set aside and appeals be restored to the file of CIT(A) for deciding on merit afresh. & 196/CHD/2024 A.Y.2012-13 4
The ld. Sr.DR, on the other hand relied upon the orders of the ld. CIT(A).
We have duly considered the rival contentions and gone through the record carefully. We find that verbatim identical situation arose before the Tribunal in the above four orders and issue is squarely covered in favour of the assessee by the decisions rendered by various Benches of the ITAT. It is pertinent to note that assessee is disputing the very demand raised by the AO. It is not exactly ascertainable whether any demand which could be construed as an advance tax liability is really assessable in the hands of the assessee or not. The AO has passed an ex-parte order. The ld. CIT(A) ought to have given a chance to the assessee for claiming exemption from invoking of Section 249(4)(b) or CIT(A) ought to have suo-moto exempted the assessee from implication of this Section and should have decided the appeal atleast on merit. On due consideration of the above facts and circumstances, we deem it appropriate to set aside the impugned order of the & 196/CHD/2024 A.Y.2012-13 5 ld. CIT(A) and restore the appeal to the ld. CIT(A) for adjudication on merit.
As far as penalty appeal is concerned, we are of the view that until and unless the quantum additions are being decided, penalty appeal cannot be taken up for hearing.
The simple reason is that computation of penalty is always dependent upon the determination of total undisclosed income of the assessee. In other words, sub-clause (iii) of Section 271(1)(c) of the Act provides the method of computation of penalty which is to be levied upon the assessee under Section 271(1)(c) of the Act. It provides that in addition to tax, if any payable by an assessee, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or furnishing of inaccurate particulars of such income. Thus, it is yet to determine whether any tax is required to be paid by the assessee in addition to the income, if any declared by him. This would indicate that first the determination of tax liability is to be achieved and thereafter computation of & 196/CHD/2024 A.Y.2012-13 6 penalty could be made. Therefore, we set aside the impugned order passed in the penalty appeal and restore this issue to the ld. CIT(A) for fresh adjudication. The penalty appeal will be decided by the CIT(A) after adjudication of the quantum appeal.
In the result, both the appeals are allowed.