DANABHAI BHARVAD,VADODARA vs. THE INCOME TAX OFFICER, WARD-1(3)(1), VADODARA

The brief facts of the case are that as per the information available with Revenue, the assessee has made cash deposit of Rs.11,65,300/- in his saving bank account during the year under consideration. The assessee did not filed return of income for the impugned assessment u/s 139. The reasons for reopening of the assessment were recorded by the AO, and the case of the assessee was reopened by the AO u/s 147. Notice u/s.148 of the Act was issued by the AO to the Page No. 3 Danabhai Bharvad v. ITO assessee, on 25/03/2017 requiring assessee to file return of income in pursuance to notice u/s 148. The assessee did not file return of income in pursuance to notice issued by the AO u/s 148. Statutory notices u/s 142(1) was issued by the AO from time to time during the course of reassessment proceedings. In response thereof, none appeared on behalf of the assessee before the AO , and no submissions were filed by the assessee. The AO also invoked provisions of Section 133(6) and called for the bank statement directly from Bank of India, Savli Branch. There were three saving bank accounts maintained by the assessee with Bank of India , as follows: Sr.No. Bank Name Branch Account No. 1. Bank of India Samlaya, Tal. Slavi 250910100004603 2. Bank of India Samlaya, Tal. Salvi 250976310000013 3. Bank of India Samlaya, Tal. Savli 250976210000013 3.2 The AO observed that the assessee has total credits of Rs.23,70,635/- in the above three bank accounts, during the year under consideration. The AO proceeded to frame best judgment assessment u/s.144 of the Act, and issued Show cause notice (SCN) to the assessee. The assessee did not appear before the AO nor made any submissions in this regard. The AO finalised the best judgment assessment u/s 144 on the basis of material available on record , and brought to tax income of Rs. 21,20,635/- in the hands of the assessee being undisclosed income with respect to credits in the aforesaid three bank accounts maintained by the assessee Page No. 4 Danabhai Bharvad v. ITO under the provisions of section 69 of the Act, vide reassessment order passed by the AO u/s 28.11.2017 u/s 144 read with Section 147 of the 1961 Act. There was an entry of returned cheque of Rs. 2,50,000/- on 09.02.2020 in the bank account, which was not added by the AO.

Aggrieved , the assessee filed first appeal with Ld.CIT(A), who dismissed the appeal of the assessee , vide appellate order dated 28.02.2024 , on the ground that the assessee has not paid advance tax on the assessed income, by invoking the provision of section 249(4) of the Act. The ld. CIT(A) observed that the assessee did not file return of income. The AO has passed assessment order u/s 144 read with Section 147. The notice of demand u/s 156 was issued by the AO , calling upon assessee to deposit Rs. 15,57,920/- . The assessee did not deposit the said demand in pursuance of notice of demand issued by the AO u/s 156. The ld. CIT(A) observed that even at the time of filing of the appeal before ld. CIT(A), the said demand remained unpaid. The assessee submitted before Ld. CIT(A) that the assessee is not liable to pay advance tax , as the assessee has earnings from agriculture income, and the assessee prayed for the admission of its appeal. This contention was rejected by Ld.CIT(A) on the ground that the AO has assessed the income under the head ‘income from other sources’ other than ‘income from agriculture’ . The ld. Page No. 5 Danabhai Bharvad v. ITO CIT(A) dismissed the appeal of the assessee as not liable to be admitted and was dismissed as ‘infructuous’ , as in view of ld. CIT(A), the assessee has not filed return of income as well not paid an amount equal to the amount of advance tax which was payable by the assessee.

The assessee filed second appeal with the Tribunal. The Ld.Counsel for the assessee at the outset submitted that the Ld.CIT(A) has dismissed the appeal of the assessee on the ground that the assessee has not deposited advance tax , and hence the appeal of the assessee before Ld. CIT(A) is not maintainable. It was submitted by Ld. Counsel for the assessee, that the assessee is farmer , and during the assessment proceedings ex-parte reassessment order was passed by the AO. It was submitted that no return of income was filed by the assessee on the bonafide belief that the assessee is not having taxable income and there is no liability to deposit advance tax. It was further submitted by ld. Counsel for the assessee that since the assessee was having agriculture income , no return of income was filed u/s.139 and 148 of the Act. It was also submitted that no return of income was filed for the earlier year also.The ld. Counsel for the assessee submitted that there was some delay in filing of the appeal before ld. CIT(A).

I have considered the contention of the both the parties and perused the materials available on record. I have observed that that the assessee has not filed its return of income u/s.139(1) of the Act. The case of the assessee was reopened by the AO based on the information available that there is a cash deposit of Rs.11,65,300/- in the saving bank account maintained by the assessee with Bank of India. The AO recorded reasons for reopening of the assessment, and notice was issued by the AO u/s.148 of the Act on 25.03.2017, requiring assessee to file return of income. The assessee did not file any return of income in pursuance to notice issued by the AO u/s 148 of the 1961 Act. The Statutory notices u/s.142(1) were issued by the AO from time to time during the course of reassessment proceedings, but there was no compliance on the part of the assessee . The AO invoked powers u/s 133(6) and called for bank statements directly from the Bank of India. The bank supplied the requisite bank Page No. 8 Danabhai Bharvad v. ITO statements and the assessee was maintaining three bank accounts with Bank of India, Samlaya, Tal. Savli, as under:

Bank of India Samlaya, Tal. Slavi 250910100004603 2. Bank of India Samlaya, Tal. Salvi 250976310000013 3. Bank of India Samlaya, Tal. Savli 250976210000013 There were total deposit/credits of Rs. 23,70,635/- in the aforesaid three bank accounts maintained by the assessee. The AO invoked provisions of Section 144 of the Act and proceeded to frame best judgment assessment , and the show- cause notice(SCN) was issued by the AO to the assessee, but still there was no reply/response by the assessee. The AO framed best judgment assessment u/s.144 r.w.s 147 of the Act , wherein total credits in the aforesaid three saving bank accounts maintained by the assessee with Bank of India, Samlaya, Tal. Savli , to the tune of Rs.21,20,635/- were brought to tax as undisclosed income of the assessee. There was one cheque deposited by the assessee in the bank account but returned unpaid by the bank of Rs. 2,50,000/- in the bank account number 250910100004603 maintained by the assessee with Bank of India, Samlaya, Tal. Savli, which was not added by the AO to the income of the assessee. The assessee filed first appeal before ld. CIT(A) who dismissed the appeal of the assessee on the grounds that the assessee did not deposited the advance tax amount on the assessed Page No. 9 Danabhai Bharvad v. ITO income, keeping in view provisions of Section 249(4)(b) of the Act. The assessee has claimed before Ld. CIT(A) in the statement of fact(SOF) filed that the assessee is not having any taxable income as the assessee is agriculturist/farmer having earnings of income from agriculture. The assessee claimed that he is not required to file return of income or to pay income-tax, and hence no return of income was filed u/s.139 and 148 of the Act, keeping in view that the assessee was having income from agriculture. The assessee has claimed to have uploaded/enclosed documents such as Land Records 7/12 and 8A as well evidence of agricultural income along with Form No. 35, as an additional evidences under Rule 46A of the 1962 Rules. The assessee has elaborately submitted in SOF filed with Form No. 35 that the assessee along with his family members holds 60 Vighas of fertile and cultivable agricultural land at Village Pratapnaga and Samlaya, Tal. Savli. The assessee has stated that the crops grown by the assessee along with family members were cotton, castor, jira, rice and other food grains such as wheat, jowar etc . These crops are sold in local markets and sales proceeds are received in cash , which stood deposited in the bank account maintained by the assessee with Bank of India. The assessee has also submitted before ld. CIT(A) that the assessee is having only income from agriculture and there is no tax liability of the assessee during the year under the consideration. The assessee has claimed Page No. 10 Danabhai Bharvad v. ITO that he is illiterate and was not aware of the income tax reassessment proceedings going on with the AO u/s 147/148 in his case, and that is the reasons for his non compliances to the notices issued by the AO. It is also claimed that no notices as well issued by the AO, were received by the assessee. It is also claimed that only when the assessee’s bank account was attached, the assessee came to know of the reassessment framed against him and tax demand raised by the AO. It is also claimed that even in the earlier years, the assessee was having agricultural income and no return of income was filed by the assessee. enjoying agriculture income . It is true that the assessee did not filed its return of income u/s 139 as well u/s 148. The reasons given by the assessee that being agriculturist he was not having any taxable income and/ or liability to pay income-tax, and there was no requirement to file return of income u/s 139. Be that it may be as it is subject to verification by authorities , but, in any case the assessee was required to file return of income in pursuance to notice u/s 148 issued by the AO. The assessee has submitted that he is an illiterate farmer/agriculturist and he was not knowing about the reassessment proceedings, and even notices were not received. It is only when the bank account is attached, the assessee came to know about the reassessment proceedings. The explanation furnished by the assessee are plausible Page No. 11 Danabhai Bharvad v. ITO explanation. All the contentions and claims made by the assessee requires verification by the assessee. If the contentions of the assessee that since he was only having income from agriculture and some minor interest income from bank and no liability to pay income-tax and/or to file return of income u/s 139, are found to be true and correct, then in my considered view, there was no liability on the assessee to deposit advance tax keeping in view provisions of Section 10(1) of the 1961 Act. However, the assessee was liable to file return of income in pursuance to notice u/s 148. The language of Section 249(4)(b) is clear that when no return of income is filed by the tax-payer , then the appeal can only be admitted by ld. CIT(A) only when the tax-payer has paid an advance tax which was payable by him. Section 249(4)(b) is subject to proviso which empowers ld CIT(A) to exempt any tax-payer from the operation of Section 249(4)(b) , provided on an application made by the tax-payer , good and sufficient reasons are shown. In the instant case, no return of income is filed by the assessee but claim is made that there is no liability to pay tax and file return of income by the assessee, in view of the assessee having only income from agriculture and some minor income from interest from bank account. The assessee by filing its appeal before ld. CIT(A) in grounds of appeal

In the result, the appeal of the assessee in 2010-11 is allowed for statistical purposes.