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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
PER DUVVURU RL REDDY, Judicial Member :
This appeal filed by the assessee is against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)-NFAC”] in DIN & Order No. ITBA/NFAC/S/250/2023-24/1060720532(1), dated 09/02/2024 arising out of the order passed U/s. 147 r.w.s 144 of the Income Tax Act, 1961 [“the Act”] for the AY 2016-17.
2 2. Briefly stated the facts of the case are that the assessee is an Association of Persons (AoP). As per the information available with the Department, the Ld. AO noted that the assessee had income chargeable to tax which was escaped assessment for the FY 2015-16 relevant to the AY 2016-17. Accordingly, the Ld. AO after recording the satisfaction ‘reasons to believe’ and obtaining the approval from the competent authority, notice U/s. 148 of the Act was issued on 30/03/2021. In response to the notice U/s. 148, the assessee was required to file the ITR within a month of receipt of the notice however, the assessee did not file the ITR. Thereafter, the Ld AO issued notice U/s. 142(1) of the Act dated 12/11/2021 and called for certain information from the assessee. But the assessee did not comply with the said notice. Therefore, again notices U/s. 142(1) of the Act dated 21/02/2022 and 01/03/2022 were issued and served on the assessee. Since there was no compliance by the assessee, the Ld. AO issued a show cause notice U/s. 144 of the Act dated 12/03/2022 requesting the assessee to explain, since there was no compliance to the notices issues, as to why the assessment should not completed to the best of judgment U/s. 144 r.w.s 147 of the Act based on the available material. However, the assessee has not responded to the show cause notice also. Therefore, in the absence of any reply 3 / explanation and submission from the assessee, the Ld. AO completed the assessment U/s. 144 r.w.s 147 of the Act based on the material available on record. During the assessment proceedings, the Ld. AO observed that the assessee made cash deposit of Rs. 1,59,00,000/- in its bank account and the assessee has not filed its return of income for the AY 2016-17 either U/s. 139 or even in response to the notice U/s. 148 of the Act. Therefore, the Ld. AO vide notice U/s. 142(1) of the Act asked the assessee to explain the source of cash deposits of Rs. 1,59,00,000/- along with documentary evidence. However, the assessee has not filed any reply / explanation / details or evidence with regard to the source of cash deposits. Therefore, the Ld. AO came to the conclusion that the said amount of Rs. 1,59,00,000/- belongs to the assessee and it was not recorded in the books of accounts. Further, the assessee has also not filed its return of income. Thus, the amount of Rs. 1,59,00,000/- remained unexplained. Accordingly, the Ld. AO invoked the provisions of section 69A of the Act and treated the said amount of Rs. 1,59,00,000/- as unexplained income of the Act and brought to tax the same U/s. 69A r.w.s 115BBE of the Act. The Ld. AO also initiated the penalty proceedings U/s. 271(1)(c) of the Act. Thus, the Ld. AO determined the total income of the assessee 4 at Rs. 1,59,00,000/- and passed the assessment order U/s. 147 r.w.s 144 r.w.s 144B of the Act, dated 30/03/2022. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A)-NFAC.
On appeal, Ld. CIT(A)-NFAC dismissed the appeal of the assessee in limine by invoking the provisions of section 249(4)(b) of the Act by observing as under:
3. Decision As per the provisions of the section 249(4)(b) of the Act, the appeal shall not be admitted, unless the appellant has paid an amount equal to the amount of advance tax which was payable by him if no return of income has been filed. In the present case, the appellant did not file return of income. The AO arrived at the total income of Rs. 1,59,00,000/- and computed the tax payable at Rs. 1,32,06,312/- which included the advance tax payable by the appellant. On or before filing the present appeal, the appellant has failed to make the required payment of the amount equal to the amount of advance tax which was payable by him. Further, the appellant neither provided any satisfactory clarification / explanation in response to the deficiency letter issued by this office nor did he offer any reason, leave alone any good and sufficient reasons, for seeking exemption from the operation of the section 249(4)(b) even though sufficient opportunities were provided to him On careful consideration of the above facts and circumstances, as the appellant has failed to fulfill the necessary conditions for admission of appeal before the Ld. CIT (A) as per section 249(4)(b), the present appeal is liable to be held as not eligible for admission and hence, the appeal is not admitted. ………….
5 4. Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee is in appeal before the Tribunal by raising the following grounds of appeal:
1. The order of the Ld. CIT(A) is contrary to the facts and also the law applicable to the facts of the case. 2. the Ld. CIT(A) is not justified in erroneously dismissing the appeal in terms of section 249(4) of the Act for alleged non-payment of the advance tax.
3. Any other grounds may be urged at the time of hearing.”
5. At the outset, the Ld. Authorized Representative [AR] submitted that the assessee has not filed his return of income U/s. 139(1) of the Act and therefore, the question of payment of advance tax does not arise as observed by the Ld. CIT(A)-NFAC. The Ld. AR further submitted that before the Ld. CIT(A)-NFAC, the assessee has challenged the entire addition made by the Ld. AO however, the Ld. CIT (A)-NFAC neither considered the submissions of the assessee nor directed the Ld. AO to estimate the income as against addition made by the AO U/s. 69A of the Act. Besides, the Ld. CIT(A)-NFAC dismissed the appeal of the assessee as inadmissible. Therefore, the Ld. AR pleaded that the assessee may be provided one more opportunity before the Ld. CIT(A)-NFAC in order to present the case effectively and the Ld. CIT(A)-NFAC may also be directed to decide the case on merits.
6. Per contra, the Ld. Departmental Representative [DR] strongly relied on the orders of the Ld. Revenue Authorities and argued in support of the same. The Ld. DR further submitted that as per the provisions of section 249(4)(b) of the Act, it is mandatory that the assessee has to pay the tax equivalent to the advance tax payable by the assessee in order to admit the appeal before the Ld.CIT(A)-NFAC since the assessee did not file the return of income. Further, the assessee has not filed any application as per the proviso to section 249(4) of the Act seeking exemption from operation of the provisions of section 249(4)(b) of the Act. Under these circumstances, the decision of the Ld. CIT(A)-NFAC cannot be faulted with and pleaded to confirm the orders of the Ld. Revenue Authorities.
We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. It is an admitted fact that the Ld. CIT(A)-NFAC has not looked into the merits of the case and dismissed the appeal of the assessee in limine by stating that the assessee has not complied with the provisions of section 249(4)(b) of the Act. We have also noticed from the assessment order that the Ld. AO has also not considered the submissions of the assessee and passed 7 the ex-parte order U/s. 147 r.w.s 144 r.w.s 144B of the Act. In our considered opinion, both the Ld. Revenue Authorities ought to have considered the submissions of the assessee and pass the orders on merits and in accordance with law instead of passing the orders ex-parte and in limine. Considering the above facts and circumstances of the case, we are of the view that the question of admitted tax does not arise in the case of the assessee since the assessee has challenged the entire addition made by the Ld. AO before the Ld. CIT(A)-NFAC. Therefore, we find force in the argument of the Ld. AR. Accordingly, we hereby set-aside the order passed by the Ld. CIT(A)-NFAC and remit the matter back to the file of the Ld.CIT(A)-NFAC with a direction to decide the case on merits after affording a reasonable opportunity of being heard to the assessee in accordance with the principles of natural justice. At the same breath, we also hereby caution the assessee to promptly co-operate before the Ld. Revenue Authorities in their proceedings failing which the Ld. Revenue Authorities shall be at liberty to pass appropriate orders in accordance with law and merits based on the materials on the record. It is ordered accordingly.
In the result, appeal of the assessee is allowed for statistical purposes as indicated herein above.
8 Pronounced in the open Court on 25th September, 2024. Sd/- Sd/- (एस बालाकृ�णन) (दु�वू� आर.एल रे�ी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सद�य/ACCOUNTANT MEMBER �याियकसद�य/JUDICIAL MEMBER Dated :25/09/2024 OKK - SPS आदेश की �ितिलिप अ�ेिषत /Copy of the order forwarded to:- 1. िनधा�रती/ The Assessee – State Board of Technical Education and Training AP, 4th Floor, Garudadri KK Towers, Near Arogyasree Bhavan, Mangalagiri, Guntur District, Andhra Pradesh-522503. 2. राज�व/The Revenue – Dy. Commissioner of Income Tax, Circle-1(1), O/o. Income Tax Office, CR Building, 1st Floor, “ANNEX”, MG road, Vijayawada, Andhra Pradesh – 520002.