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Facts
The assessee filed an appeal against the order of the CIT(A) which dismissed the appeal on the ground of non-compliance with the mandatory condition of Section 249(4)(b) of the Income Tax Act, 1961. The assessee contended that there was no obligation to pay advance tax as there was no taxable income.
Held
The tribunal held that the assessee was not obligated to pay advance tax as per Sections 208 and 209 of the Act because there was no taxable income. Therefore, the CIT(A) was not justified in dismissing the appeal on the ground of non-compliance with Section 249(4)(b) of the Act.
Key Issues
Whether the appeal filed by the assessee was maintainable before the CIT(A) despite not complying with the provisions of Section 249(4)(b) of the Income Tax Act, 1961, when there was no obligation to pay advance tax.
Sections Cited
Section 249(4)(b) of the Income Tax Act, 1961, Section 208 of the Income Tax Act, 1961, Section 209 of the Income Tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, BANGALORE “C” BENCH, BANGALORE
Muppuri Damodar The Income Tax Officer #26/1, 7th Main, SB Colony Ward - 7(2)(5) BSK III Stage, 7th Block vs. Bengaluru Bengaluru 560085 PAN – AHPPD9356E (Appellant) (Respondent) Assessee by: Ms. Sunaina Bhatia, Advocate Revenue by: Shri Ganesh R. Gale, Standing Counsel Date of hearing: 25.07.2024 Date of pronouncement: 31.07.2024 O R D E R Per: Keshav Dubey, J.M. This appeal at the instance of the assessee is directed against the order of the of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 09.02.2024 vide DIN & order No. ITBA/NFAC/S/250/2003-24/1060723928(1) passed under Section 250 of the Income Tax Act, 1961 (the Act) in respect of Assessment Year (AY) 2015-16.
The assessee has raised the following grounds of appeal: “1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case..
2. The learned CIT[A] is not justified in dismissing the appeal as not- admitted on the ground that the applicable advance tax has not been paid by the appellant before the filing of the present appeal under the facts and in the circumstances of the appellant's case.
Muppuri Damodar 2.1 The learned CIT[A] failed to appreciate that for the year under appeal the appellant has not file any return of income and that the appellant was also not liable to pay any advance-tax and therefore, the provisions of section 249[4][b] was not attracted under the facts and in the circumstances of the appellant's case.
The order of re-assessment is bad in law and void-ab-initio for want of requisite jurisdiction especially, the mandatory requirements to assume jurisdiction u/s 148 of the Act did not exist and have not been complied with and consequently, the re-assessment requires to be cancelled.
The order of re-assessment is bad in law and void-ab-initio in as much as the re-opening of the assessment in the appellant's case is barred by limitation having regard to the provisions of Section 149[1][b] of the Act under the facts and circumstances of the appellant's case and consequently, the re-assessment requires to be cancelled.
5. Without prejudice to the above, the appellant denies himself liable to the assessed on a total income of Rs. 44,35,000/- as determined in the impugned order under the facts and in the circumstances of the appellant's case.
6. The learned CIT[A] is not justified in upholding the addition of Rs. 44,35,000/- as unexplained money u/s 69A of the Act under the facts and in the circumstances of the appellant's case.
7. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies himself liable to be charged to interest u/s. 234A, 234B and 234C of the Act, under the facts and in the circumstances of the appellant's case deserves to be cancelled.
8. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.”
3. At the outset the learned A.R. of the assessee submitted that there is a delay of 77 days in filing the appeal before this Tribunal. The reason for filing the appeal belatedly has been sworn by way of an affidavit dated 25.05.2024 filed by the assessee. It is stated that the order of the CIT(A) dated 09.02.2024 was placed in the hands of the Tax Consultant named Mr. Niranjan Reddy for seeking advice and further instructions on the next course of action and the assessee was under the honest & bona fide belief that the Tax Consultant would take necessary steps in this regard. Further, the AR of the assessee submitted that the assessee is suffering from illness for past several years and Muppuri Damodar not attending his day-to-day work in a regular manner and also shifted to his native village in Chittor District. The assessee came to know the non-filing of the appeal only after he received a call from the Income Tax Department regarding the non-payment of outstanding demand. He thereafter again contacted Mr. Niranjan Reddy, his Tax Consultant who stated that he had misplaced the order of the CIT(A) due to his professional pre-occupation and accordingly the assessee immediately taken back the brief from Mr. Niranjan Reddy and handed over the same to another advocate Shri B. Srinivasan. The AR of the assessee accordingly prayed to condone the delay of 77 days as the delay was neither intentional nor deliberate and also beyond the control of the assessee.
4. On the contrary, the learned D.R. though objected could not controvert the genuineness of the fact causing the delay except arguing that no affidavit of Mr. Niranjan Reddy, the Tax Consultant has been filed by the assessee.
We have heard the arguments of the parties and satisfied that there is no malafide intention on the part of the assessee in filing the present appeal belatedly. Therefore, respectfully following the ratio laid down by the Hon'ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. reported in [1987] 163 ITR 471, the delay in filing the appeal before the Tribunal stands condoned and the appeal is admitted for adjudication.
Before us the learned A.R. of the assessee vehemently submitted that the ld. CIT(A) has not admitted the appeal of the assessee as per the provisions of s. 249(4) of the Act,. The ld. CIT(A) on the other hand observed during the appellate proceedings that there is a deficiency in the appeal filed in Form 35 and accordingly the deficiency letter was issued on 25.01.2021 on the following grounds: - “Tax on the returned income not paid/particulars of payment not mentioned”
Muppuri Damodar In response to the deficiency notice, the assessee has submitted that he has not filed any ITR and therefore the question of paying any tax on the returned income does not arise. The ld. CIT(A) was of the view that the assessee has addressed the issue arising out of s. 249(4)(a) of the Act and not addressed the issue with respect to s. 249(4)(b) of the Act. Further, the ld. CIT(A) also observed that the assessee has also not made any application as per proviso to s. 249(4)(b) and accordingly dismissed the appeal for statistical purposes.
Aggrieved by the order of the ld. CIT(A) the assessee has filed the present appeal before the Tribunal. The brief facts of the case are that the assessee being an individual derives income from the business of running a medical shop under the name and style of M/s. Cure Well Pharma. It is an undisputed fact that the assessee had not filed any return of income u/s. 139 of the Act as the assessee claimed that the income of the assessee was below the maximum amount not chargeable to tax. The learned A.R. of the assessee submitted before us that as the income was below the maximum amount not chargeable to tax and hence there was no requirement to file any return of income for AY 2015-16. Further the learned A.R. also contended that in the absence of any taxable income, there is no obligation on the part of the assessee u/s. 208 r.w.s. 209 of the Act to compute and pay any amount of advance tax for the subject year. Further the learned A.R. drew our attention to page 5 of the assessment order stating that even for the assessment years 2012- 13, 2013-14 and 2014-15, the assessee has income well below the maximum amount which is not chargeable to income tax, although the assessee had filed the return of income for these years in ITR 4S and submitted that the ld. CIT(A) is not justified in dismissing the appeal as not admitted on the ground that the applicable advance tax has not been paid by the assessee before the filing of the present appeal. The learned A.R. of the assessee also submitted a paper book consisting of the list of citations relied upon by the assessee: -
Muppuri Damodar 1. Shmanna Reddy in ITA No. 1120/Bang.2023 dated 20.02.2024, ITAT Bangalore A Bench 2. Vishnudas Chandravanshi in dated 10.04.2024, ITAT Raipur Bench 3. Balwinder Singh [2024] 163 taxmann.com 599, ITAT Amritsar Bench.
The learned D.R., on the other hand, relied upon the orders of the authorities below and highly relied upon the decision in the case of Late Smt. Rafat Ghani, dated 18.06.2021.
We have heard the rival contentions and perused the material on record. We note that the learned D.R. heavily relied on the decision of the ITAT Hyderabad “A” Bench in the case of Late Smt. Rafat Ghani v. ACIT, which in our opinion is distinguishable on the present facts and circumstances. We noticed that the assessee in that case has expired on 18.01.2020 and her legal heir has been brought on record. The assessee had entered into a development agreement for construction of a complex consisting of residential flats and the assessee also agreed to relinquish the ownership over 50% built up area in favour of the developer. The SRO value of the developed property was determined at Rs.1,15,47,000/- on which stamp duty was paid. But in spite of that the assessee failed filed the return of income for the relevant year declaring capital gain on the consideration received towards her share (50%) as per the Joint Development Agreement. In the present case, the assessee is contending that he is in the business of running a small medical shop and his income from business and other sources is well below the maximum amount which is not chargeable to income tax. Therefore and case law relied upon by the learned D.R. is distinguishable on facts and cannot be applied to the present case.
The learned A.R. of the assessee on the other hand submitted that the ld. CIT(A) has dismissed the appeal on the basis of perverse observations.
Muppuri Damodar Elaborating its contention the learned A.R. submitted that the assessee was having income from profits and gains of business and profession as well as income from other sources which were substantially lower than the basic exemption limit for the subject year and therefore no obligation was cast upon him either to file his return of income for the year under consideration or to pay advance tax u/s. 208 r.w.s. 209 of the Act. We are of the opinion that under similar facts and circumstances the issue involved in the present case has been decided by the ITAT Raipur Bench in the case of Vishnusharan Chandrvanshi v. ITO in wherein held 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: "(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 Muppuri Damodar 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 “advance tax´ for the subject year, I am unable to concur with the view taken by the CIT(Appeals) who had dismissed the appeal as not maintainable for the reason of non-compliance of the mandatory condition contemplated in Clause (b) of sub-section (4) of Section 249 of the Act. Although, at the first blush, I was of the view that the amount assessed by 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 on 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 also in the “Statement of facts” stated before the CIT(Appeals) that he had no taxable income, therefore, in my view in absence of any obligation cast upon the assessee to compute/pay “advance tax” u/ss. 208 and 209 of the Act for the subject year, the first appellate authority could not have held that he had failed to comply with the statutory conditions contemplated in Sec. 249(4)(b) of the Act. My aforesaid view is fortified by the orders of the ITAT, Bengaluru in the case of Shamanna Reddy Vs. ITO, dated 20.02.2024 and that of ITAT, Delhi in the case of Vikram Singh Vs. ITO, ITA No.6559/Del/2019, 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 off the appeal after considering the merits of the case. Needless to say, the CIT(Appeals) shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee.”
11. In the light of the aforesaid discussion and relying on the above decision in the case of Vishnusharan Chandravanshi (supra), we set aside the order of the CIT(A) and restore the same to his file with a direction to dispose of the appeal after considering the merits of the case. Needless to say that the CIT(A) shall provide reasonable opportunity of being heard to the assessee.
Muppuri Damodar 12. In the result, the appeal filed by the assessee is allowed for statistical purposes in terms of the above observations. Order pronounced in the open Court on 31st July, 2024.