SRI. B.S. MANJUNATH,BANGALORE vs. DCIT, BANGALORE

O R D E R PER SHRI PAVAN KUMAR GADALE, JM : These are the appeals filed by the assessee for different assessment years against the common order of Commissioner of Income Tax (Appeals)-11, Bangalore passed under Section 153C r.w.s. 143(3) and 250 of the Income Tax Act, 1961 (the Act). Since the appeals have a common issues and identical, they are heard together and consolidated order is passed. For the sake of convenience,

4. The Brief facts of the case are that there was search under Section 132 of the Act on 8.12.2011 and 14.12.2011 based on the warrant issued in the case of M/s. SPR Developers (P) Ltd. to search residence of assessee and survey under Section 133A of the Act at the office of the assessee and certain materials have been seized / impounded. Further Books of accounts and document belonging to the assessee are seized from the residence of the assessee. Subsequently, Notice under Section 153C of the Act dt.23.7.2013 was issued requiring the assessee to file the Return of Income. In response the assessee filed the Return of Income on 1.1.2014 with total income of Rs.78,55,300. The assessee was also provided copies of the seized material and the objections of the assessee for initiation of proceedings under Section 153C of the Act were dealt. The Assessing Officer observed that the assessee has not filed Return of Income and wherever the Returns are filed, they are defective within the meaning of Section 139(9) of the Act and 7 to 456/Bang/2016 the assessee has not paid self-assessment tax due on total income disclosed in the Return of Income. Further as on the date of passing the order, the assessee has not cured defects and therefore Return of Income for the Assessment Years 2009-10 to 2012-13 are treated as invalid and opportunity was provided to the assessee. Since there is no valid Return of Income filed by the assessee, the Assessing Officer completed the assessment under Section 144 of the Act and additions based on the information and submissions dealt in the assessment order at pages 7 to 26 and assessed the total income of Rs.1,19,98,803 and passed the order under Section 153C r.w.s. 144 of the Act dt.25.3.2014. Aggrieved by the order, the assessee filed an appeal with the learned CIT(Appeals) and the learned CIT(Appeals) has dealt on the issue of non-payment of tax on admitted income in the Return of Income and of the opinion that the appeal can be decided on merits only when provisions under Section 249(4)(a) of the Act are complied. The learned CIT (Appeals) relied on the decision of Hon'ble Apex Court in the case of CIT Vs. Pavan Kumar Laddha 324 ITR 324 at page 4 which read as under :

Further the learned CIT(Appeals) observed relying on the judicial decision that the assessee has to pay taxes due on returned income before filing the appeal under Section 246A of the Act and hence cannot be admitted as per the provisions of Section 249(4)(a) of the Act. Hence the appeal was not admitted and treated as dismissed. Aggrieved by the CIT (Appeals) order, the assessee has filed an appeal with the Tribunal.

and made submissions that the Assessing 9 to 456/Bang/2016 Officer has treated the Return of Income filed by the assessee as invalid and tax payments on invalid return is not in accordance with law. Hence the assessment be cancelled and relied on judicial decisions and prayed for allowing the appeal. Contra, the learned Departmental Representative supported the orders of learned CIT(Appeals) and filed written submissions.

6. We heard the rival contentions and perused the material on record. The ld. AR has argued on additional grounds of appeal and emphasized that paying of taxes on invalid Return of Income does not arise and dismissing the appeal in limine by the learned CIT(Appeals) is bad in law. The learned Authorised Representative relied on the judicial decisions to support that taxes cannot be paid on invalid Return of Income. We found on perusal of the assessment order at para 7, the Assessing Officer has not dealt on the Return of Income and observed that wherever returns are filed, they are defective under Section 139(9) of the Act and further the assessee has not paid self-assessment tax on returned income. In spite of issuing Notices and granting the time to cure the defects, the assessee has not made good for various reasons which could not be explained by him in the assessment proceedings. Further, the Assessing Officer observed that since the defects are not cured and there is no valid return and whereas the assessee has filed Return of Income under 153C of the Act. Aggrieved by assessment order under Section 153C r.w.s. 144 dt.25.3.2014, assessee filed appeal with CIT (Appeals) whereas learned CIT(Appeals) has dismissed the appeal in limine as the assessee 10 to 456/Bang/2016 has not paid the taxes on returned income. We found that the assessee has filed the Return of Income and there are defects identified under Section 139(9) of the Act by the revenue which are to be cured within the prescribed time. The assessee chooses not to cure the defects and therefore considering the time limit for passing the order under Section 153C of the Act, the Assessing Officer has treated the Return of Income as invalid in the eyes of law. The Assessing Officer at the time of passing the assessment order under Section 153C of the Act relied on the Return of Income filed by the assessee where the admitted taxes are not paid by the assessee which is not disputed and the assessee has kept the tax liability pending as per assessment order and filed appeal with the CIT (Appeals). We considered it appropriate to refer the provisions of Section 249(4) of the Act which read as under :

249(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.

We found as per Section 249(4) (a) of the Act, the assessee has to pay the taxes due on the Return of Income otherwise the appeal cannot be admitted. We found the learned CIT(Appeals) has issued Show Cause Notice to assessee on 4.1.2016 11 to 456/Bang/2016 why the appeal should not be dismissed as the taxes due on returned income has not been paid according to the provisions of Section 249(4)(a) of the Act and whereas the assessee has filed reply dt.12.01.2016 requesting for time to pay the taxes due. We consider it proper to refer to the submissions referred at page 2 para 3 of CIT(Appeals) order which read as under : “I respectfully submit with respect to the tax dues referred to in the subject hereinabove, due to my ill health I require some more time to pay the tax dues. I have undergone an open heart surgery on 9.6.2014 and subsequently I have developed Air passage disease. Due to this reason I am having an unstable hypertension and acute breathlessness. This has affected my working and consequently my earnings. Wherefore I respectfully pray that some time be granted to pay the tax dues in the interest of justice.” It is clear that till 12.01.2016 also, he has not been paid the taxes.