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Facts
The assessee filed an appeal against the order of the CIT(A) NFAC, which refused to admit the appeal for adjudication due to non-payment of advance tax. The CIT(A) had emanated from an order passed by the AO under section 144, which was an ex-parte order.
Held
The Tribunal held that the first appellate authority should have issued a deficiency letter before refusing to admit the appeal for violation of advance tax payment. The proviso to section 249(4)(b) allows for waiver applications if the appellant is prevented from making payment. The Tribunal condoned the delay of 36 days in filing the appeal.
Key Issues
Whether the CIT(A) was justified in refusing to admit the appeal for non-payment of advance tax without issuing a deficiency letter and providing an opportunity for waiver application? Whether the additions made by the AO and confirmed by the CIT(A) are justified?
Sections Cited
144, 250, 208, 210, 249(4)(b), 69A, 44AD, 209
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: SH. UDAYAN DAS GUPTA & SH. KRINWANT SAHAY
ORDER Per: Udayan Das Gupta, JM This appeal is filed by the assessee against the order of the CIT(A) NFAC, passed u/s 250 of the Act 1961 dated 14.09.2023 (refusing to admit the appeal for adjudication, for non-payment of advance tax), which has emanated from the order of the AO u/s 144 of the Act dated 20.12.2019 passed by ITO Ward 2(3), Jammu.
2 Assessment Year: 2017-18
The grounds of appeal
preferred by the assessee as per memorandum of appeal are as under; “1. That the order of the Assessing Officer as well as the order of Learned CIT(A) are both against the facts of the case and are untenable under the law.
2. That the worthy CIT(A) has not appreciated the facts of the case and merely relied on order of the AO and without applying his mind and without any rhyme & reason, the Ld. CIT(A) has confirmed the addition of Rs.21,71,709/- made by the AO i.e. Rs.8,52,709/- by applying a rate of 8% on the bank deposits during the year under consideration after excluding the deposits made during demonetization period which comes to Rs.1,06,58,868/- and the addition of Rs.13,19,000/- on the amount deposited during demonetization. As such the order of Ld. CIT(A) is liable to be cancelled and the addition made may be deleted.
3. That the Ld. CIT(A) did not appreciate that 20% of the total demand was duly paid by the assessee at Rs.3,62,100/- on 20/05/2023 much before the order passed by the CIT(A) on 14/09/2023. As such the worthy' CIT(A) was not justified in not admitting the appeal and as such the € 11(A) should have admitted the appeal and there was no reason and occasion for the CIT(A) for not admitting the appeal.
4. That the AO did not appreciate that no notice u/s 142(1) was served on the assessee. As such the ex-parte order u/s 144 3 Assessment Year: 2017-18 was bad in the eyes of law and the Ld. CIT(A) has also grossly erred in confirming the same.
5. That no reasonable and proper opportunity of being heard was allowed by the Assessing Officer before passing the order. Similarly, the worthy CIT (A) has also grossly erred in confirming the order of the A.O. As such the order of the CIT(A) is had in the eyes of law and the same is liable to be cancelled.
6. That the C1T(A) has grossly erred in coming to the erroneous conclusion that the assessee has not paid advance tax and as such the appeal of the assessee was dismissed.
7. That the authorities below- did not appreciate that the assessee was running the business of Electronics during the AY 2017-18 mid all these bank entries were related to business. As such the AO was not justified in applying the rate of 8% by invoking the provisions of section 44AD on the bank deposits of Rs.1,06,58,868/- i.e. amount other than deposited during demonetization period and making the addition of Rs.8,52,709/- . 1 he addition made is unjustified and uncalled for and the Ld. CIT(A) should not have confirmed the addition made by the AO. As such the addition made may be deleted. Alternatively, the addition made is very high & excessive.
8. That again the AO has grossly erred in making the addition of Rs.13,19,000/- by treating the bank deposits during 09/11/2016 to 30/12/2016 as unexplained by invoking the provisions of section 69A of the IT Act, 1961. The AO did not 4 Assessment Year: 2017-18 appreciate that these deposits were out of the business sales/rcceipts and without placing any material on record the addition was made. Thus, the addition made is unjustified and uncalled for and the Ld. CIT(A) should not have confirmed the addition made by the AO. As such the addition made may- be deleted. Alternatively, the addition made is very high & excessive.”
3. Condonation of delay It is pointed out by the Registry that the filing of this appeal is belated by 36 days. The assessee has filed an application requesting for condonation of delay on the ground that the counsel of the assessee Mr. Raj Kumar Gupta, CA was the only person who was looking after the appeal matter and the ld. CA has also certified that the appeal was filed under his personal mail id, and he learnt about the disposal of the appeal only on 21.10.2023, when he opened the portal. Thereafter, necessary steps were taken for filing this appeal before the Tribunal which was belated by 36 days. An affidavit was also filed by the assessee Mr. Abdul Mazid stating that he is located in the remote area of Poonch (J & K) which is the border area adjoining Pakistan and due to disturbance in the network connection it was not possible for him to have access to the departmental portal and he was fully relying on his counsel Mr. Raj Kumar Gupta for conducting the appellate procedure. As 5 Assessment Year: 2017-18 such, the assessee prayed that in absence of any willful neglect on his part the delay in filing the appeal may please be condoned and the appeal may please be admitted and heard on merits. 3.1 The ld. DR has no objection regarding the delay. 3.2 Considering the submission of the ld. AR of the assessee, we condone the delay of 36 days and admit this appeal for hearing on merits.
The facts of the case are that the assessee had deposited an amount of Rs.13,19,000/- in cash in his bank a/c in J & K Bank at Poonch in A/c No.XXXXXXX0003 during the demonetization period and had a total deposit of Rs.1,06,58,868/- in his bank A/cs during the F.Y. 2016-17 relevant to the assessment year under appeal, (excluding the demonetization period). 4.1 In absence of any return on record, notices were issued u/s 142(1) calling for return. However, in absence of any response to such notice u/s 142(1) and no representation to subsequent notices issued by the AO in course of assessment proceedings, the assessment has been completed ex parte u/s 144 of the Act on a total income of Rs.21,71,709/- (including Rs.13,19,000/- u/s 69A being deposit of SBN notes plus business profit determined at 8% (eight percentage) of the remaining deposit in bank account.
6 Assessment Year: 2017-18
The matter was carried in appeal before the ld. CIT(A) on various grounds contained in the memorandum of appeal in Form No. 35. However, it is seen that the assessee has not paid any advance tax for the year and has not filed any application alongwith the appeal as per proviso to section 249(4)(b) requesting the ld. First appellate authority to exempt him from the operation of the provisions of clause (b) of section 249(4).
As such this appeal has not been admitted by the ld. CIT(A) for hearing on merits in absence of any return of income being filed coupled with nonpayment of advance tax as per section 208 (r.w.s.) 210 of the Act 1961.
The ld. AR of the assessee in course of argument before the Bench stated that the assessee is not liable to pay any advance tax because his total income will be below the maximum marginal limit, not chargeable to tax. Moreover, he submitted that the ld. CIT(A) before refusing to admit the appeal u/s 249(4)(b) should have provided an opportunity to the assessee to clarify the legal aspect of the matter and should have allowed an opportunity for furnishing sufficient reasons praying for exemption, from the operation of the provisions of the said clause. 7.1 He further submitted that the assessee has already paid an amount of Rs.3,62,100/- on 20.05.2023 being 20% of the total disputed demand (copy of 7 Assessment Year: 2017-18 challan enclosed) alongwith submission on merits, but it has not been considered by the ld. CIT(A). 7.2 He further stated that the total deposits in bank are business trading receipts and the tax on business profits from the assessee business, will be covered by the amount already paid Rs.3,62,100/-. As such, he prayed that considering the facts of the case, the assessee may be allowed an opportunity to represent the case on merits and in support of his contention he relied on the judgment of the Amritsar Bench in in the case of Raj Pal Singh Sandhu vs. ITO, order dated 28.05.2024.
The ld. DR relied on the order of the ld. CIT(A) and argued that the appeal is not maintainable for nonpayment of advance tax as per the provisions of section 249(4)(b) of the Act, 1961.
It is seen that the ld. CIT(A), NFAC has refused to admit this appeal for hearing on merits u/s 249(4)(b) of the Act on the ground that advance tax has not been paid by the assessee and no return of income has been filed by the assessee, for the year under appeal. 9.1 It is seen from the memorandum of appeal in form 35 in serial no. 9, the assessee has not categorically stated whether advance tax is paid or payable by him as per provisions of section 249(4)(b) of the Act.
8 Assessment Year: 2017-18
We have heard the rival submission and considered the materials on record, and we find that the ld. First appellate authority before refusing to admit the appeal for violation of advance tax payment u/s 210 of the Act, should have issued a deficiency letter requesting the assessee to clarify and reply to this particular issue, which has not been done in this case, and we further observed that the proviso to section 249(4)(b) of the Act 61, applies in a case where advance tax ( or admitted tax ) liability exists as per section 210 , by the appellants own calculation u/s 209, and if the appellant is prevented by some reasons from making payment thereof, then in such cases the appellant is allowed a window to make an application of waiver quoting good and sufficient reasons before the first appellate authority, to exempt him from the operation of the provision of that clause. 10.1 In the instant case, the contention of the ld. AR of the assessee is that no advance tax is payable (but no computation of income has been filed before us), however, since an amount of Rs.3,62,100/- has been paid on 20.05.2023 being 20% of the assessed tax and considering the submission of the ld. AR, that provided an opportunity be given, explanation can be submitted before the ld. First appellate authority that taxes payable if any on the total income will be covered by the amount already paid and considering the fact that he has also prayed for an opportunity of hearing and also taking into account that the ld. CIT(A) has not 9 Assessment Year: 2017-18 issued a deficiency letter before refusing to admit the appeal, we consider it fit and proper in the interest of justice, to remand the matter back to the file of the ld. CIT(A) with a direction to admit the appeal for hearing on merits of the case, and to adjudicate on all the grounds contained in the memorandum of appeal in form no.35, uninfluenced by any observations we might have made in the above paragraphs. We make it clear that we have not adjudicated on merits of the case.
In the result, the appeal of the assessee bearing is allowed for statistical purposes.
Order pronounced on 10.02.2025 under Rule 34(4) of the Income Tax Appellate Tribunal Rules 1963.