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Facts
The Assessee's appeal was dismissed by the CIT(A) on the grounds of not paying advance tax, despite the appeal being against a penalty under Section 271B. The Assessee argued that the requirement for advance tax payment was not applicable to penalty appeals.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal solely on the ground of non-payment of advance tax, as this provision is applicable to assessment orders, not penalty orders. The Tribunal set aside the CIT(A)'s order and directed fresh adjudication.
Key Issues
Whether the appeal against a penalty order under Section 271B could be dismissed for non-payment of advance tax, and whether principles of natural justice were violated.
Sections Cited
250, 271B, 249(4)(b), 143(3), 144, 44AA, 44AB, 271A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
order : 20.08.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member:
1. 1. The present appeal preferred by the Assessee is directed against the order, dated 29/05/2025, passed by the National Faceless Aplpeal Centre, Delhi [hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 25/07/2024, passed under Section 271B of the Act for the Assessment Year 2019-2020.
2. The Assessee has raised following grounds of appeal :
A. The order of the Appellate Authority to the extent objected to herein is illegal, arbitrary and unauthorized. Assessment Year 2019-2020 B. That the Learned CIT(A) grossly erred in law in holding that the appeal is infructuous for non-payment of advance tax without appreciating that the provisions of section 249 (4) (b) of the Income-tax Act, 1961, which require payment of advance tax as a precondition for admission of an appeal, are applicable only in cases where the appeal is preferred against an "assessment order" and not against a "penalty order". The impugned order being an appeal against penalty levied under sections 271B. the condition stipulated under section 249(4) (b) is inapplicable and the rejection of the appeal on this ground is bad in law and liable to be set aside. C. That the CIT(A) failed to appreciate that the appeal was against a penalty order under sections 271B and not against assessment under section 143(3) or 144. D. That the CIT(A) erred in not adjudicating the matter on merits and denying the appellant an opportunity of being heard as required under principles of natural justice. E. That the CIT(A) erred in not providing a chance to appellant before dismissing the appeal by invoking section 249(4)(b) and thereby the right of the appellant to respond. F. That on the fact and circumstance of the case, the Ld. CIT NFAC has ignored the law settled in the judicial pronouncements submitted to the Ld. CIT NFAC in Grounds of Appeal and Statement of Facts before Ld. CIT NFAC. G. That the Assessing Officer erred in levying penalty under section 271B when the precondition under section 44AA (maintenance of books) was not met, as acknowledged in the assessment order itself. H. NFAC ought to have consider the fact that, the provisions of section 44AB of the Act can be invoked only when the Appellant has complied with the provisions of section 44AA of the Act.
1. That the CIT(A) failed to appreciate that when books are not maintained, the question of auditing under section 44AB does not arise, and hence, penalty under section 271B is not sustainable. J. That the NFAC has been erred to not consider about the facts charging of penalty under section 271A for not maintaining books of accounts and 2718 for not getting the books audited simultaneously is against the provisions of section 271B. K. On facts and circumstances of the case, the NFAC have erred in charging the levy of penalty of Rs. 93,341/-u/s 271B of IT Act ignoring the fact that above penalty order has been passed without taking prior approval of Joint Commissioner of Income Tax and therefore, such order needs to be deleted.
2 Assessment Year 2019-2020 L. That the NFAC has been erred in charging penalty by merely mentioning in the penalty order that, reply of the Appellant is perused, but not accepted and also erred to explain why the reply of Appellant was not acceptable. M. That the orders passed by both the Assessing Officer and CIT(A) are bad in law, arbitrary, and deserve to be quashed.”
When the appeal was taken up for hearing, none was present on behalf of the Assessee. We have heard the Learned Departmental Representative and have perused the material on record.
Paragraph Nos. 7.4 to 9 of the order impugned read as under: “7.4. Section 208 "208. 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 one thousand five hundred rupees or more." 7.5. In the case of the appellant, another appeal was filed by him on 21.02.2024 against the order dated 23.01.2024, passed u/s 147 r.w.s. 143(3) of the Act for AY 2019-20. In that case, the appellant offered 'Not Applicable' comments at sl. No. 9 of Form- 35, it was asked vide DIN & letter no. ITBA/NFAC/F/APL_1/2024-25/ 1066413966(1) dated 04.07.2024 to intimate whether it has made payment of tax-which includes element of advance tax also and date of compliance was fixed for 11.07.2024 but the appellant failed to contradict the information given at sl. no. 9 of Form-35 and, therefore, his appeal was dismissed vide order dated 24.10.2024. The present appeal also pertains to AY 2019-20 and the facts of the present case are similar to the case decided earlier. It is, therefore, clear that information, given at sl. no. 9 of Form-35 is not correct and the appellant has not made payment of amount equal to the advance tax which was due on its income. The appellant has also not requested for exemption from operation of the provisions of clause (b) of sub-section (4) of section 249 of the Act. 8. Since the appellant has not filed return of income as well as not paid an amount equal to the amount of advance tax which was payable by it, present appeal is not liable to be admitted. The appeal is infructuous and is, therefore, dismissed. 9. The appeal is dismissed.”
On perusal of the above, it emerges that the appeal preferred by the Assessee was dismissed by the Learned CIT(A) in limini on the 3 Assessment Year 2019-2020 ground that the Assessee had failed to deposit advance tax. On perusal of Form No.35 filed by the Assessee before the Learned CIT(A), we find that the Assessee has challenged the levy of penalty under Section 271B of the Act for failure to get the books of accounts audited and therefore, the provisions pertaining to advance tax were not applicable in the facts of the present case. Since, the Learned CIT(A) had erred in invoking the provisions contained in section 249(4)(b) of the Act while dismissing the appeal, we deem it appropriate to set aside the Order, dated 29/05/2025, passed by the learned CIT(A) with a direction to adjudicate the grounds raised by the Assessee in appeal before the Learned CIT(A) afresh after granting the Assessee a reasonable opportunity of being heard. The Assessee would be at liberty to raise all rights and contentions before the CIT(A). In terms of the aforesaid, Ground No. A to D raised by the Assessee are allowed while the balance grounds are dismissed as having been rendered infructuous.
In result, in terms of paragraph 5 above, the appeal preferred by the Assessee is allowed for statistical purposes.