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Facts
The assessee failed to file an income tax return and pay advance tax. The Assessing Officer (AO) made an addition under Section 50C. The Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the appeal for non-admission due to non-payment of advance tax as per Section 249(4)(b).
Held
The Tribunal noted that the assessee claimed to have income below the taxable limit, thus not liable to pay advance tax. Following precedents where similar issues arose, the Tribunal held that the CIT(A) should have decided the appeal on its merits.
Key Issues
Whether the CIT(A) was justified in not admitting the appeal on the ground that the assessee had not paid advance tax when the assessee claimed to have income below the taxable limit.
Sections Cited
147, 144B, 50C, 250, 249(4)(b), 139(1), 156
AI-generated summary — verify with the full judgment below
Before: SHRIPAWAN SINGHAND SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the appellant emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’)dated 29.11.2023by the Commissioner of Income-tax(Appeal),Surat [in short, ‘CIT(A)’], for the Assessment Year (AY) 2014-15.
The grounds of appeal raised by the assessee are as under:
1. “1. The Learned CIT(Appeals) has erred in law and on facts of the case in not admitting the appeal of the assessee.
2.The appellant craves leave to add, amend or alter the grounds of appeal at the time of hearing, if need arise.”
The facts of the case in brief are that the return filed by assessee on 31.03.2016 for AY.2014-15 was treated as invalid by CPC due to receipt of the ITR-V after due date. The assessee was treated as a non-filler. Subsequently, based on the information from ITO – 1(3)(2), Surat, the case was reopened u/s 147 of the Act. After hearing the assessee, the Assessing Officer (in short, ‘AO’) passed order u/s 147 r.w.s. 144B of the Act by making addition of Rs.54,01,224/- u/s 50C of the Act.
Aggrieved by the order of AO, the assessee filed appeal before CIT(A).
The CIT(A) passed his order u/s 250 of the Act on 29.11.2023. In the order, he hasdiscussed about the provisions of section 249(4)(b) of the Act that where no return has been filed by the assessee, the assessee has to pay an amount equal to the amount of advance tax, which was payable by him; otherwise, appeal shall not be admitted. He verified Form 35 and found that the appellant has not made payment of the amount equal to the advance tax, which was due on his income. Since the appellant has not filed the return of income as well as not paid the said amount of advance tax, which was payable by him, the appeal filed by the assessee was not admitted.
Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee raised an additional ground about time barring nature of the order u/s 147 of the Act.
He also submitted that since the income of the assessee was below the taxable limit, the assessee was not required to file income tax return u/s 139(1) of the Act. Hence, question of payment of advance tax does not arise.In view of the above, the ld. AR submits that the appeal may be set aside directing the CIT(A) not to invoke Section 249(4)(b) of the Act and decide the matter on merit.
On the other hand, learned Senior DepartmentalRepresentative (ld.Sr.
DR) for the revenue has strongly relied on the orders of authorities below. He submitted that the additional ground was not raised before the lower authorities. He also submitted that the explanation given by the assessee cannot be accepted.
We have heard both the parties and perused the materials available on record. Since the assessee has not filed ROI as well as not paid an amount equal to the advance tax which was payable by it, the appeal was not admitted by the CIT(A). It may be stated that if tax is being paid for same financial year based on estimated income, it would be advance tax. If tax is being paid after end of financial year, it would be self-assessment tax. When Department finds that there has been under-assessment of income and resultant tax is due, it computes the actual amount that ought to have been paid. This demand raised on the person is called tax on “regular assessment”. Tax on “regular assessment” is the tax which the taxpayer is required to pay against of notice of demand from the Income-tax Department, normally u/s 156 of the Act. The CIT(A) did not admit the appeal because the assessee had not paid an amount equal to the advance tax, which was payable by it. The ld.AR has contended that the assessee did not pay any advance tax as the income was below taxable income. When total income is below taxable income during the year, question of payment of advance tax does not arise and provisions of Section 249(4)(b) of the Act arenot applicable. We find that similar issue had come up for consideration before this Bench in in the case of Ranajitbhai B. Patel vs. ITO, dated 28.11.2023, where following the decision of co-ordinate Benches of Pune in the case of Hotel Sai Siddi (P.) Ltd. vs. DCIT (2011) 13 taxmann.com 155 (Pune), it was held that when the assessee had incurred loss while filing ROI and was not liable to pay tax an amount equal to amount of advance tax as required u/s 249(4)(b), the assessee’s appeal was liable to be admitted. Following the ratio of the decision cited above and keeping in view that assessee was claiming that it had no taxable income, the Tribunal restored the case back to the file of CIT(A) with a direction to admit the appeal of the assessee and pass an order on merit. Facts of the present case of the assessee are similar to the fact of the case cited above. In this case, assessee has shown total income which is below taxable limit. Therefore, he was not liable to pay any advance tax. The demand u/s 156 of the Act was on account of regular assessment tax. Therefore, following the above decision, we hold that the CIT(A) should have decided the issue on merits of the case.
Hence, the matter is restored to the file of CIT(A) with a direction to admit the appeal of the assessee and pass an order on merit.He shall grant adequate opportunity of being heard to assessee. The assessee is also directed to comply with the notices issued by the AO and not to seek any adjournment withoutvalid reason.
In the result, appeal of the assessee is allowed for statistical purposes.
Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 13/05/2025.