ANEEMONI NAGA RAJU,HYDERABAD vs. ITO, WARD- 8(1), HYDERABAD

PER RAVISH SOOD, JM:

The present appeal filed by the assessee firm is directed against the order passed by the Commissioner of Income Tax (Appeals),
National Faceless Appeal Centre, Delhi, dated 30/09/2025, which in turn arises from the order passed by the Assessing Officer (for short,
“AO”) under section 147 r.w.s 144 r.w.s 144B of the Income Tax Act,

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1961 (for short, “the Act”), dated 13/03/2025 for the Assessment Year
(AY) 2020-21. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal:
1. The order of the Id. CIT(A) dated 30.09.2025 dismissing the appeal solely under section 249(4)(b) without providing an opportunity to seek exemption and without issuing a show-cause notice is not correct and is mechanical and violates natural justice.
2. The assessment u/s 147 r.w.s. 144 & 144B is invalid due to non- consideration of detailed information and explanations and submissions, and violation of natural justice.
3. The Id. AO erred in making addition of Rs.1,11,41,476/- as unexplained money u/s 69A
(25,00,000+47,00,000+
20,77,000+18,16,631+48,350), by treating all bank credits in the appellant's savings account (No.236401500040) as unexplained money under Section 69A of the Act, thereby classifying the entire amount as income from other sources.
4. With regard to the credit of ₹25,00,000/-, the appellant had duly explained that it was a hand loan extended by his friend, Mr. Mahipal
Reddy, which was repaid on 21.08.2019. The AO, without conducting proper inquiry or verifying the evidence submitted, erroneously treated the said sum as unexplained is not correct.
5. The AO wrt deposits of Rs 33,00,000/- and rs.4,00,000/-assessed as unexplained money u/s 69A as it was not tallied with the payment schedule of sale proceeds as evident from the copy of registered sale- deed dated 31.07.2019. The AO failed to observe that the appellant has two savings accounts in ICICI bank. The appellant had sold the property on 30/07/2019
for which the appellant received
Rs.49,77,220/- vide chq.no. 738275 dated 30/7/2019, which was credited in appellant savings account no.236501000386
on 02/08/2019. The appellant then transferred amount Rs 33,00,000/- and Rs.4,00,000/- to his another savings account 236401500040 on 16/08/2019 and on 04/11/2019. Hence the AO considering
Rs.47,00,000/- as unexplained money u/s 69A is not correct and fair.
6. The AO also treated cash deposits of ₹20,77,000/- as unexplained under Section 69A, despite the appellant's explanation that the funds were originally withdrawn for setting up a pharmaceutical business, which could not materialize due to the COVID-19 pandemic, resulting in re-deposit of the funds, and it can't be treated as unexplained income.
7. The learned AO has erroneously brought to tax ₹18,16,631/-being business turnover/receipts and ₹48,350/- being interest income under Section 69A of the Act, which is legally untenable.

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8. In light of the above, the appellant humbly prays that the Hon'ble
Tribunal may Set aside the order of the CIT(A); -Admit the appeal on merits; - Delete all additions made u/s 69A; - Delete consequential interest and penalties; - Grant any other relief deemed fit.”
2. Succinctly stated, the AO based on information that the assessee during the subject year had carried out substantial financial transactions, viz., (i) payments made in respect of credit card (Kotak
Mahindra Bank Ltd): Rs.1,31,230/-; (ii) Sale of immovable property:
Rs.65,00,000/-; (iii) cash deposits in bank account No.236401500040
with ICICI Bank: Rs.20,77,000/-; and (iv) cash withdrawals from bank account No.236401500040 with ICICI Bank Limited: Rs.19,00,000/-, but had not filed his return of income for the year under consideration, initiated proceedings under section 147 of the Act. Notice under section 148 of the Act, dated 27/03/2024 was issued to the assessee. However, the assessee failed to file his return of income. Also, the notices issued by the AO under section 142(1) of the Act, dated 30/07/2024,
08/10/2024, as well as show cause notices (SCNs) were not complied by the assessee.
3. The AO based on the aforesaid facts proceeded to frame the assessment to the best of his judgment under section 144 of the Act.
The AO after making two-fold additions, viz., (i) unexplained money under section 69A of the Act: Rs.1,10,93,131/-; and (ii) income from other sources: Rs.48,345/-, determined the total income of the assessee at Rs.1,11,41,480/-.

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5. Ostensibly, the CIT(A), taking cognizance of the fact that the assessee who had not filed his return of income had failed to pay the amount of advance tax as required per the mandate of section 249(4)(b) of the Act, declined to admit the appeal by treating the same as infructuous. For the sake of clarity, the observations of the CIT(A) are culled out as under:
“3.1
I have examined facts of the case as also gone through relevant provisions of Income Tax the Act, In the present case, the appellant failed to file ITR. The impugned order was passed u/s 147
r.w.s. 144 of the Act, creating demand of Rs. 1,80,07,451/-. The assessment order was passed u/s 147 r.w.s. 144 of the Act, assessing income at Rs. 1,11,41,476/-and appellant was asked by notice issued u/s 156 of the Act to deposit an amount of Rs.1,80,07,451/-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-
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Where no return has been filed by the appellant for the assessment year, whether an amount equal to the amount of advance tax as per section 249(4)(b) of the Income-tax Act, 1961 has been paid
Not applicable

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8. Shri Bhupal Goud M, CA, Learned Authorized Representative (for short, “Ld.AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the CIT(A) had grossly erred in law and facts of the case in dismissing the appeal filed by the assessee by treating it as infructuous. Elaborating on his contention, the Ld. AR submitted that though the assessee in his Memorandum of Appeal, i.e., “Form-35” had against the “Column No.9” wherein information was sought as to whether the amount equal to the amount of advance tax as per section 249(4)(b) had been paid, specifically stated that the same was “not applicable”, but the CIT(A) had summarily brushed aside the same and wrongly observed that the assessee had failed to comply with the mandate of section 249(4)(b) of the Act. The Ld. AR submitted that the CIT(A) ought to have called for an explanation from the assessee instead of summarily treating him as being in default of the aforesaid statutory compliance and dismissing the appeal by treating the same as infructuous. However, the Ld. AR on a specific query by the Bench as to whether the assessee as required per the “proviso” to section 249(4)(b) of the Act had filed any application before the CIT(A) explaining as to why it be exempted from the operation of the said statutory provision, answered in the negative. The Ld. AR submitted that as the assessee had no taxable income for the subject year, therefore, no obligation was cast upon him for either estimating the advance tax much the less payment of the said amount. The Ld. AR submitted that now when the 7
Annemoni Naga Raju vs. ITO assessee had specifically stated that obligation to pay any amount of advance tax as per section 249(4)(b) of the Act was not applicable in his case, then, there was no reason for the CIT(A) to have summarily discarded his said claim and dismiss the appeal as not maintainable for non-compliance of the said statutory provision. The Ld. AR submitted that the matter in all fairness be set aside to the file of the CIT(A) with a direction to admit the appeal and adjudicate the same on merits.
9. Per contra, Dr. Sachin Kumar, Learned Senior Departmental
Representative (for short, “Ld. Sr-DR”), submitted that as the assessee had failed to file any application based on which he had sought for an exemption from the operation of the provisions of section 249(4)(b) of the Act as was mandatorily required by the “proviso” to section 249(4) of the Act, therefore, the CIT(A) had rightly dismissed the appeal as not maintainable.
10. We have given thoughtful consideration to the contentions advanced by the Learned Authorized Representatives of both parties in the backdrop of the orders of the authorities below.
11. Before proceeding further, we deem it apposite to cull out the provisions of section 249(4) of the Act, as under:
“249. (1) to (3)………

(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 8
(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 by 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.”

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Annemoni Naga Raju vs. ITO with the satisfaction of the pre-condition. However, the said concession is available only for cases falling within the meaning of clause (b) only.
13. As in the case before us, the assessee had failed to file his return of income, therefore, his case is regulated by clause (b) of section 249(4) of the Act.
14. Controversy involved in the present case lies in a narrow compass, i.e., as to whether or not the CIT(A) is right in law and facts of the case in observing that the assessee/appellant was required to pay an amount equal to the advance tax which was due on his assessed income irrespective of the fact that the impugned additions made by the AO were assailed by the assessee in the appeal filed before him?
15. In our view, the answer to the aforesaid issue would require adverting to section 209 of the Act which contemplates the “computation of advance tax”. We find that section 209(1) of the Act envisages the determination of the amount of advance tax payable by the assessee.
We find on a careful perusal of section 209(1) of the Act, that the same encompasses two situations, viz., (i) where the computation of the advance tax is based on the estimation of the current income and the income tax by the assessee; and (ii) where the calculation of the advance tax is made by the AO. Admittedly, in the case before us there has been no calculation of the advance tax by the AO as provided in section 209(1)(b) of the Act. Also, we find there has been no calculation

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16. Considering the aforesaid facts, i.e., there has been no calculation of the advance tax payable either by the assessee or by the AO, we are of the view that the claim of the assessee that in absence of any income chargeable to tax for the subject year he was not liable for any advance tax liability could not have been summarily discarded by the CIT(A). In our view, the CIT(A) instead of calling for an explanation from the assessee as to why the obligation to pay an amount equal to the amount of advance tax as per section 249(4)(b) of the Act was not applicable in his case, had, however, wrongly summarily discarded the same. At the same time, we cannot also remain oblivion of the fact that the assessee had failed to comply with the obligation that was cast upon him as per the “proviso” to section 249(4) of the Act, where he ought to have filed an application before the CIT(A) based on which he had claimed that the obligation under section 249(4)(b) of the Act was not applicable in his case.
17. Be that as it may, we are of a firm conviction that in the totality of the facts involved in the present case, the matter requires to be set aside to the file of the CIT(A) who is directed to readjudicate the appeal taking cognizance of the fact that the assessee had specifically claimed before him that in absence of any taxable income no obligation was cast upon him to estimate the amount of advance tax and pay the same per

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Annemoni Naga Raju vs. ITO the mandate of section 249(4)(b) of the Act. Needless to say, the CIT(A) shall in the course of the set-aside proceedings afford an opportunity of being heard to the assessee regarding his claim that the provisions of section 249(4)(b) of the Act were not applicable to his case. In case, the CIT(A) finds favour with the claim of the assessee that the provisions of section 249(4)(b) were not applicable in his case; or an application filed by the assessee exempts him from the operation of section 249(4)(b), then he shall dispose of the appeal on merits. We thus, in terms of our aforesaid observations, set aside the matter to the file of the CIT(A) in terms of our aforesaid observations.
18. In the result, appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in the open court on 20th March, 2026. S -
(मधुसूदन सावͫडया)
(MADHUSUDAN SAWDIA)
लेखासदèय/ACCOUNTANT MEMBER -
(रवीश सूद)
(RAVISH SOOD)
ÛयाǓयकसदèय/JUDICIAL MEMBER d/- Hyderabad, dated 20.03.2026. OKK/sps

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आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to:-

आदेशानुसार / BY ORDER

Sr. Private Secretary
ITAT, Hyderabad.

KAMALA
KUMAR
ORUGANTI
Digitally signed by KAMALA
KUMAR ORUGANTI
Date: 2026.03.20 12:59:56
+05'30'