2016 (12) TMI 1187 - AT - Income Tax

Rejection of appeal u/s 249(4)(a) - mandatory deposit of tax before filing of an appeal - plea of the assessee is that the cash seized by the department from the assessee firm is in excess of tax payable on the returned income - Held that - Considering the view taken by the Tribunal in the connected group of matters, we set aside the order passed by the ld. CIT(A) and direct him to verify as to whether the cash seized during the course of search is sufficient to meet the tax liability for the year under consideration and, if so, he is directed to admit the appeal to consider the issues urged before him on merits. Needless to observe that the additional grounds urged before us are purely legal issues and therefore the CIT(A) would also take these grounds under consideration. Since the matter is set aside, it is not necessary for us to go into the merits of the issues urged before us either on merits.

Issues:
1. Appeal against CIT(A) order for AY 2009-10.
2. Non-admission of appeal by CIT(A) due to non-payment of admitted tax.
3. Adjustment of admitted tax against cash seized.
4. Dismissal of appeal by CIT(A) under Sec 249(4)(a) without adjudication on merits.
5. Payment of admitted tax by assessee.
6. Request for fresh consideration of appeal by CIT(A).
7. Disagreement with AO's treatment of unrecorded cash.
8. Application of CBDT Circular No. 286/2/2003 - IT (INV).
9. No concealment of income or inaccurate particulars for penalty under section 271(1)(c).
10. Additional grounds of appeal citing National Thermal Power Co. Ltd. case.

Analysis:
1. The appeal was filed against the CIT(A) order for AY 2009-10. The assessee raised various grounds challenging the decision of the CIT(A). The main contentions included the non-admission of the appeal by CIT(A) due to non-payment of admitted tax, the request for adjustment of admitted tax against cash seized, dismissal of appeal without adjudication on merits, payment of admitted tax by the assessee, disagreement with AO's treatment of unrecorded cash, application of CBDT Circular, no concealment of income for penalty, and additional grounds citing the National Thermal Power Co. Ltd. case.

2. The assessee argued that CIT(A) erred in not admitting the appeal due to non-payment of admitted tax. The assessee contended that the admitted tax should be adjusted against the cash seized, and since the tax was paid, the appeal should be reconsidered by CIT(A) with condonation of delay. The assessee also challenged the AO's treatment of unrecorded cash and cited the CBDT Circular to support the argument against additions based solely on sworn statements.

3. The additional grounds of appeal invoked the National Thermal Power Co. Ltd. case, asserting that ITAT has jurisdiction to examine legal questions arising before them for the first time. The assessee contested the invoking of section 153C without proper satisfaction recorded, citing a High Court case to support the argument that the provisions were invalid in the absence of recorded satisfaction.

4. The ITAT admitted the appeal after considering precedents and directed CIT(A) to verify if the seized cash was sufficient to cover the tax liability. The ITAT disagreed with CIT(A)'s dismissal without considering the merits and instructed a fresh adjudication. The legal issues raised were deemed worthy of consideration, and the appeal was allowed for statistical purposes.

This detailed analysis covers the various issues raised in the judgment and the arguments presented by the assessee, providing a comprehensive overview of the legal proceedings and decisions made by the ITAT Hyderabad.

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