Loading judgment…
Facts
The assessee, a charitable society, did not file its return of income for AY 2017-18. The AO made an addition of Rs. 65,25,985/- on account of unexplained cash deposits. The CIT(A) dismissed the assessee's appeal without deciding on merits, citing violation of Section 249(4)(b) of the Income Tax Act.
Held
The Tribunal held that Section 249(4)(b) of the Act was not applicable as the assessee, being a charitable society, was not obliged to file a return and had no tax payable. Therefore, the CIT(A) erred in dismissing the appeal as not maintainable.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal on the ground of violation of Section 249(4)(b) without adjudicating on the merits of the case.
Sections Cited
144, 142(1), 69A, 115BBE, 249(4)(b), 139, 1023C(iiiab)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “C”: NEW DELHI
Before: SHRI M. BALAGANESH & SHRI SUDHIR KUMAR
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in AY 2017-18, arise out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. NFAC‟, in short] in Appeal No. ITBA/NFAC/S/250/2023-24/1059673558(1) dated 12.01.2024 against the order of assessment passed u/s 144 of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 19.12.2019 by the Assessing Officer, ITO, Exemption Ward, Rohtak (hereinafter referred to as „ld. AO‟).
The assessee has raised the following grounds of appeal:-
“1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in dismissing the appeal by applying the provisions of section 249(4)(b), however, the said section is not applicable in the present case.
2. That in any case and in any view of the matter, action of Ld. CIT(A) in dismissing the appeal by applying the provisions of section 249(4)(b), is bad in law and against the facts and circumstances of the case.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) ought to have decided the appeal on merits and should have deleted the aggregate addition of Rs.65,38,985/- made by Ld. AO and that too without any basis and without appreciating the facts and circumstances of the case.
That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
We have heard the rival submissions and perused the materials available on record. The only effective issue to be decided in this appeal is as to whether the ld NFAC was justified in dismissing the appeal on the ground of violation of provisions of section 249(4)(b) of the Act in the facts and circumstances of the instant case. The learned AO got the information that assessee had made cash deposits in its bank account during the demonetization period in the total sum of Rs 65,25,985/-. Since the assessee had not filed its return of income for the assessment year 2017-18, notice under section 142(1) of the Act was issued to the assessee on 12-12-2017 requiring the assessee to prepare a true and correct return of its income for assessment year 2017-18. But no complaince was made to the said notice by the assessee. Later during the course of assessment proceedings, the learned AO gave several opportunities to the assessee and all the notices stood uncomplied by the assessee. Hence the learned AO was compelled to complete the assessment under section 144 of the Act treating the cash deposits of Rs 65,25,985/- as unexplained money under section 69A read with section 115BBE of the Act. The learned CITA dismissed the appeal of the assessee as unadmitted by applying the provisions of section 249(4)(b) of the Act stating that assessee had not deposited advance tax on the income. Aggrieved, the assessee is in appeal before us.
4. At the outset, we find that the appeal has been preferred by the assessee before us with a delay of 398 days. Considering the reasons adduced in the condonation petition, in the interest of substantial justice, we are inclined to condone the delay as assessee was prevented from sufficient cause from not filing the appeal in time and admit the appeal of the assessee for adjudication. The learned AR before us stated that assessee is a charitable society claiming exemption under section 1023C(iiiab) of the Act and hence not obliged to file any return of income. Accordingly, there was no tax payable by the assessee. Since there is no tax payable by the assessee, the provisions of section 249(4)(b) of the Act would not be applicable at all. He submitted that this fact was not properly appreciated by the learned CITA and learned CITA erred in dismissing the appeal as unadmitted.
We find that the assessee had not filed its return of income u/s 139 of the Act or in response to notice u/s 142(1) of the Act. Hence there was no admission of any income by the assessee in the entire proceedings for the year under consideration. While this is so, there cannot be any advance tax liability that could be fastened on the assessee. Once there is no question of payment of advance tax, the provisions of section 249(4)(b) of the Act cannot be pressed into service. Hence we hold that the Learned CITA erred in dismissing the appeal as not maintainable without deciding the grounds on merits. In the interest of justice and fairplay, we deem it fit and appropriate to restore this appeal to file of Learned CITA for de novo adjudication of the grounds raised by the assessee before the Learned CITA in accordance with law. The assessee is also entitled to raise additional grounds, if any, and file additional evidences, if any, in support of his contentions, if he so desires. Needless to mention the assessee be given reasonable opportunity of being heard. The assessee is directed to cooperate with Learned CITA for expeditious disposal of the appeal by not taking unwarranted adjournments except due to bonafide and exceptional circumstances. Hence, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 30/09/2025.