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Facts
Two appeals were filed by the same assessee for AY 2009-10. One appeal (ITA No. 130/Ind/2025) concerned an assessment order where the assessee's income was increased significantly, and the CIT(A) dismissed the appeal for non-payment of advance tax. The second appeal (ITA No. 131/Ind/2025) was against a penalty imposed for non-compliance with notices during assessment proceedings.
Held
The Tribunal held that the dismissal of the first appeal by the CIT(A) for non-payment of advance tax was incorrect as no advance tax was payable by the assessee. The matter was restored to the CIT(A) for adjudication on merits. The Tribunal upheld the penalty in the second appeal, finding the assessee's explanation for non-compliance insufficient.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal for non-payment of advance tax when none was payable by the assessee; and whether the penalty imposed for non-compliance with notices was sustainable.
Sections Cited
249(4), 144, 147, 271(1)(b), 273B, 253(5)
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI
आदेश/ O R D E R
Per B.M. Biyani, AM:
The captioned two appeals are filed by same assessee; relate to same assessment-year [“AY”] 2009-10 and the parties have been represented by same counsels. Hence, these appeals were heard together at the request of parties and are being disposed by this single order.
This appeal is directed against order of first appeal dated 24.01.2024 passed by learned Commissioner of Income-tax (Appeals), NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 05.12.2016
Page 1 of 11 & 131/Ind/2025- AYs:2009-10 passed by ITO-OSD, Ujjain [“AO”] u/s 144/147 of the Income-tax Act, 1961 [“the Act”] for AY 2009-10.
The registry has informed that the present appeal is delayed by 312 days and therefore time-barred. Ld. AR for assessee submitted that the assessee has filed a condonation-application supported by an affidavit.
Referring to the contents of same and also referring to the orders of lower- authorities, Ld. AR explained that the assessee is a senior citizen and pure agriculturist. That, the assessee has never filed any income-tax return and the assessment-order in present case was also passed by AO as ex-parte u/s 144 in the category of “Non-PAN” case. That, the assessee is not aware of technological aspects and legal proceedings and the email id of assessee was even created for the first time to enable filing of first-appeal. That, on 11.03.2023 during the proceedings of first appeal, the assessee e-filed a reply to CIT(A) with an application under Rule 46A of Income-tax Rules, 1962 for admission and consideration of additional evidences (copy at Pages 5-50 of Paper-Book) but the Ld. CIT(A) has passed impugned order without taking cognizance of assessee’s reply. That, the Ld. CIT(A) has wrongly treated assessee’s first-appeal as deficient on the footing of non-payment of advance tax in terms of section 249(4)(b) and wrongly dismissed as ‘non- admitted’ whereas the factual position of assessee’s case is such that no advance tax or self-assessment tax was payable by assessee. That, the assessee was not aware of the impugned order passed by CIT(A) and it is only on 12.12.2024 when the assessee received a speed-post containing one
Page 2 of 11 & 131/Ind/2025- AYs:2009-10 notice dated 06.12.2024 bearing DIN: ITBA/PNL/F/17/2024-25/ 1070955329(1) from the office of AO show-causing assessee for non- compliance in another penalty proceedings u/s 271(1)(c) [i.e. penalty qua the addition made in assessment-order] that the assessee consulted his counsel and became aware of the impugned order having been passed by CIT(A). Immediately thereafter, according to the consultation given by counsel, the appeal fee was paid on 24.01.2025 and present appeal was filed without further delay. Ld. AR very humbly submitted that there is no lethargy, negligence, mala fide intention or ulterior motive of assessee in making delay and the assessee does not stand to derive any benefit because of delay. He further submitted that the sole reason of delay is as explained in condonation-application. He submitted that there is “sufficient cause” for delay and hence the delay should be condoned. Ld. DR for Revenue left the matter to the wisdom of Bench without raising any objection. We have considered the explanation advanced by assessee and in absence of any contrary fact or material on record, the assessee is found to have a “sufficient cause” as narrated by Ld. AR for delay in filing present appeal.
We find that section 253(5) of the Act empowers the ITAT to admit an appeal after expiry of prescribed time, if there is a “sufficient cause” for not presenting appeal within prescribed time. It is also a settled position by Hon’ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387 that whenever substantial justice and technical considerations are opposed to each other, the cause of Page 3 of 11 & 131/Ind/2025- AYs:2009-10 substantial justice must be preferred by adopting a justice-oriented approach. Thus, taking into account the facts of case, the provision of section 253(5) and the decision of Hon’ble Supreme Court, we take a judicious view, condone delay, admit appeal and proceed with hearing.
On merit of the case, Ld. AR made two-fold submissions:
(i) Firstly, it is submitted that the CIT(A) has wrongly dismissed assessee’s first-appeal. That, the assessee has not filed any return to department u/s 139 or even in response to notice u/s 148 because the assessee has income solely from agriculture and the total income of assessee did not exceed the maximum amount not chargeable to tax, therefore there was neither any obligation to file return nor to pay advance-tax or self- assessment tax. The assessment-order also shows that the AO has taken returned income at Rs. Nil and assessed total income at Rs. 11,95,000/- after making an addition of equal amount. In such a situation, the CIT(A) was not correct in observing that there was a non-compliance of section 249(4)(b) as held by ITAT, Indore in Shri Pushpendra Singh Chouhan Vs. order dated 24.06.2024 as under:
“7. We have considered the rival submissions as well as relevant material on record. The Assessing Officer initiated proceedings u/s 147 on the basis of the AR information regarding the cash deposit of Rs.36,03,600/- in the savings bank account of the assessee. Since there was no response on behalf of the assessee to the notices issued by the Assessing Officer, therefore, the assessment was framed ex-parte as best judgment assessment thereby the Assessing Officer has assessed total income of the assessee at Rs.36,03,600/-. The assessee has explained the reasons for non-appearance before the Assessing Officer as the assessee belongs to a rural area and having no computer or internet facility in the village and therefore, the Page 4 of 11 & 131/Ind/2025- AYs:2009-10 assessee was not having access to the notice issued by the Assessing Officer and consequently could not furnish any reply or submissions as well as evidence during the assessment proceedings. Further the CIT(A) has dismissed the appeal of the assessee in limine for want of payment of tax as per the provisions of Section 249(4)(b) of the Act. This is a case of reassessment framed by Assessing Officer u/s 147 r.w.s. 144 of the ACT and therefore, there is no obligation of payment of advance tax as per Clause(b) of Section 249(4) as held by the Mumbai Benches of the Tribunal in case of M/s. Nine Globe Industries Pvt. Ltd Vs. ACIT (supra) in para 4 to 6 as under: “4. In that view of the matter, the appeal came to be dismissed on the ground that the appellant has not filed Rol as well as not paid an amount equal to the amount of advance tax, which was payable by it. It can thus be seen that the CIT(A) had no occasion to examine the merits of the impugned additions.
We have heard parties. Perused record. It can be seen that the case was Initially selected for scrutiny, which was completed on 29.03.2015, and there was no change in the returned income of Rs.51.80.800/- in the absence of any additions being made. It is a matter of record that originally the return was filed for the relevant year under consideration on 29.09.2012. It was not disputed during the course of hearing that the advance tax has per the assessed income of Rs. 51,80,800/- has been paid. Here is the case of reassessment which is done for the benefit of Revenue. Hence, in our view, clause (b) of Section 249(4) of the Act will not apply as there is no question of paying advance tax in reassessment proceedings, even though assessee did not file ROI.
6. In the said circumstances, we find that the impugned order dismissing the appeal on the ground of non-compliance of Section 249(4) of the Act cannot be sustained and deserves to be set-aside”. In the case in hand the assessee has filed return of income and thereafter, the Assessing Officer has initiated reassessment proceedings and passed reassessment order. Therefore, for filing the appeal before CIT(A) the question of payment of advance tax by the assessee as per clause(b) of Sub Section 4 of Section 249 does not arise. Similarly the Raipur Bench of the Tribunal in case of Vishnusharan Chandravanshi Vs. ITO in order dated 10.04.2024 has also considered the identical issue in para No.10 to 15 as under: “10. Admittedly, it is a matter of fact borne from record that the assessee had neither filed his return of income u/s 139 of the Act nor in compliance to notice issued to him u/s 142(1) of the Act, dated 10.03.2018. As the assessee had failed to file his return of income, the CIT(Appeals) had brought his case within the meaning of Clause (b) of sub-section (4) of Section 249 of the Act. For the sake of clarity, Section 249(4) of the Act is culled out as under:
Page 5 of 11 & 131/Ind/2025- AYs:2009-10 "(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 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 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." The CIT(Appeals) observed that as the assessee who had not filed his return of income had neither paid an amount equal to the amount of advance tax which was payable by him; nor filed any application seeking exemption from operation of the aforesaid statutory provision for any good and sufficient reason, therefore, he had failed to comply with the statutory requirements contemplated u/s 249(4)(b) of the Act. Accordingly, the CIT(Appeals) dismissed the appeal on the said count itself.
Controversy involved in the present appeal lies in a narrow compass, i.e. sustainability of the view taken by the CIT(Appeals) that the appeal of the assessee who had not filed his return of income for the subject year was not maintainable for the reason that he had failed to satisfy the conditions contemplated in Section 249(4) of the Act.
Admittedly, as per section 249(4)(b) of the Act, in a case where no return of income has been filed by the assessee, then his appeal shall be maintainable before the CIT(Appeals) only if he had paid an amount equal to the amount of advance tax which was payable by him. At the same time, the legislature had carved out an exception to the applicability of the aforesaid statutory requirement by way of a "proviso" to Section 249(4) of the Act, as per which, on an application made by the appellant, the CIT(Appeals) may, for any good and sufficient reason to be recorded in writing exempt him from the operation of the aforesaid statutory provision.
At this stage, I may herein observe that the statutory requirement contemplated in Clause (b) of sub-section (4) of Section 249 of the Act would stand triggered only where any obligation was cast upon the assessee to pay "advance tax". As stated by the Ld. AR, and rightly so, in absence of any taxable income for the year under consideration [as was stated by him in the "SOF" filed before the CIT(Appeals)] no obligation was cast upon him to compute and pay any advance tax u/ss. 208 & 209 of the Act. Considering the fact that as no obligation was cast upon the assessee to compute/deposit any amount towards
Page 6 of 11 & 131/Ind/2025- AYs:2009-10 "advance tax' for the subject year, I am unable to concur with the view taken by the CIT(Appeals) who dismissed the appeal as not maintainable for the reason of non-compliance off mandatory condition contemplated in Clause (b) of sub-section (4) of Section 240 the Act. Although, at the first blush, I was of the view that the amount assesse the A.O vide his order u/s. 144 of the Act dated 23.11.2019 of Rs. 10 lacs would saddle the assessee with an obligation to pay "advance tax", but stood corrected a careful perusal of Section 208 and Section 209(1)(a) of the Act, which contemplates determination of the said tax liability at the behest of the assessee.
As in the present case, the assessee had not only before me but had in the "Statement of facts" stated before the CIT(Appeals) that he had no taxa income, therefore, in my view in absence of any obligation cast upon the ass to compute/pay "advance tax" u/ss. 208 and 209 of the Act for the subject year first appellate authority could not have held that he had failed to comply with statutory conditions contemplated in Sec. 249(4)(b) of the Act. My aforesaid we fortified by the orders of the ITAT, Bengaluru in the case of Shamama Reddy Vs. ITO, dated 20.02.2024 and that of ITAT, Delhi in the of Vikram Singh Vs. ITO, dated 21.02.2023.
I, thus, in terms of my aforesaid observations, set aside the order of the CIT(Appeals) and restore the same to his file with a direction to dispose appeal after considering the merits of the case. Needles to say, the CIT( Appeals) shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee.”
8. Accordingly, to maintain the rule of consistency we follow the earlier decisions of the Tribunal cited above and consequently the impugned order of CIT(A) is set aside being contrary to the provisions of law.” (ii) Secondly, it is submitted that the AO has passed assessment-order u/s 144 and made addition of Rs. 11,95,000/- treating the deposits in bank as unexplained for want of details/documents. However, the assessee has sufficient evidences to satisfy the AO regarding source of deposits. Ld. AR submitted that the assessee is ready and willing to make a proper representation before AO if an opportunity is given and prays that in the interest of justice, the present matter should be remanded to the file of AO for a fresh adjudication.
Page 7 of 11 & 131/Ind/2025- AYs:2009-10
5. Ld. DR for revenue is fair enough in not objecting to the above submissions and prayer of Ld. AR for remanding this case to the file of AO.
He, however, makes a request to direct the assessee to represent his case before AO and do not seek unnecessary adjournments.
Considering above submissions of parties; having regard to the principle of natural justice; and also bearing in mind that no prejudice would be caused to revenue if the present matter is restored at the level of AO since the remanding would only result in enabling the assessee to make submission before AO so that the AO can take a reasoned decision and arrive at correct taxable income/tax liability of assessee in accordance with law, we remand this matter back to the file of AO for adjudication afresh, at the risk and responsibility of assessee. The AO shall give necessary opportunity of hearing to assessee and pass an appropriate order uninfluenced by his earlier order. The assessee is also directed to remain vigilant and ensure participation in the hearings as may be fixed by AO and do not seek unnecessary adjournments failing which the AO shall be at liberty to pass appropriate order in accordance with law. Ordered accordingly. Accordingly, this appeal is allowed for statistical purpose.
ITA No. 131/Ind/2025:
This appeal is directed against order of first appeal dated 15.03.2024 passed by learned Commissioner of Income-tax (Appeals), NFAC, Delhi [“CIT(A)”] which in turn arises out of penalty-order dated 20.06.2017
Page 8 of 11 & 131/Ind/2025- AYs:2009-10 passed by ITO-Ward-1, Dewas [“AO”] u/s 271(1)(b) of the Income-tax Act, 1961 [“the Act”] for AY 2009-10.
There is a delay of 216 days in filing this appeal. The reasoning of assessee came to know of impugned order on 12.12.2024 when he got a show-cause notice dated 06.12.2024 in the matter of penalty u/s 271(1)(c). condoned following the same adjudication as made by us in earlier part of
Coming to the issue involved in appeal, the assessee is aggrieved by a penalty of Rs. 10,000/- imposed by AO for failure to comply with the notice dated 17.11.2016 issued by AO u/s 142(1) during assessment proceeding.
Having heard learned Representatives of both sides and on perusal of case record, we find that during assessment proceeding the AO issued notice dated 17.11.2016 u/s 142(1) requiring the assessee to make compliance by 24.11.2016 but there was a failure on the part of assessee to comply with such notice (1st stage). Therefore and thereafter, the AO issued a show-cause notice dated 05.12.2016 u/s 274 giving opportunity to assessee to explain as to why the penalty u/s 271(1)(b) should not be imposed for the said failure. The AO initially fixed hearing date on 30.12.2016 but finding no response from assessee, issued follow up notices dated 19.04.2017 and 15.05.2017 fixing new hearings suo moto but the Page 9 of 11 & 131/Ind/2025- AYs:2009-10 assessee still remained non-responsive. Ultimately, the AO imposed penalty (2nd stage). Thereafter, during first-appeal before CIT(A) the assessee again remained non-compliant to the notices of hearing sent by CIT(A) (3rd stage). Thus, the assessee has remained non-compliant at all three stages of proceedings. When asked as to the reason of non-compliance, Ld. AR initially advanced an argument that the assessee e-filed a reply dated 25.02.2023 (Copy at Page No. 5-11 of Paper-Book) to CIT(A) and hence there was a compliance at 3rd stage but this argument was rejected after noticing that the CIT(A) allowed time to file reply by 22.02.2023 but the assessee filed reply on 25.02.2023 after expiry of designated time. Then, the Ld. AR’s endeavour is to convince us by submitting that the assessee is an agriculturist and not familiar with the legal proceedings, hence the penalty should be deleted having regard to the provisions of section 273B. However, Ld. DR for revenue made a strong opposition by contending that there are failures of assessee at all three stages of proceedings as narrated earlier and the reason cited by Ld. AR does not constitute a ‘reasonable cause’ for the failure; hence the assessee cannot be granted benefit of section 273B. After careful consideration, we find a strong merit in the submission of Ld. DR for revenue. Hence, we uphold the penalty imposed by AO. The assessee fails in this appeal. Accordingly, this appeal is dismissed.
Page 10 of 11 & 131/Ind/2025- AYs:2009-10 is dismissed.
Order pronounced in open court on 31/07/2025