2024 (6) TMI 238 - AT - Income Tax

Dismissal of appeal due to non-payment of advance tax u/s 249(4)(b) - 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 - 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) - HELD THAT - 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 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(A) may, for any good and sufficient reason to be recorded in writing exempt him from the operation of the aforesaid statutory provision. 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, we are 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 As in the present case, the assessee had not only before ITAT but had also in the Statement of facts stated before the CIT(Appeals) that he had no taxable income, therefore, 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. Thus 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.

Summary

Issues involved:
The appeal challenges the order passed by the Commissioner of Income-Tax (Appeals) under Sec. 144 of the Income-tax Act, 1961 for the assessment year 2017-18. The grounds of appeal include the addition of Rs. 10,00,000/- under sec. 69A, non-compliance with provisions of sec. 249(4)(b), and dismissal of appeal despite payment before filing.

Issue 1: Addition under sec. 69A
The Assessing Officer (A.O) noted cash deposits during demonetization period and issued notice u/s 142(1) for filing return of income. Assessee claimed deposits were from agriculture income and land sale proceeds. A.O issued show cause notice u/s 69A as source was not substantiated. CIT(Appeals) upheld A.O's decision. Assessee contended the deposits were from cash withdrawals. Tribunal found lack of evidence to support source, hence upheld A.O's decision.

Issue 2: Compliance with sec. 249(4)(b)
CIT(Appeals) dismissed appeal citing non-payment of advance tax as required u/s 249(4)(b). Assessee argued no obligation to pay advance tax due to lack of taxable income, supported by judicial precedents. Tribunal agreed, stating no obligation to pay advance tax if no taxable income, setting aside CIT(Appeals) decision and directing reevaluation.

Conclusion:
The Tribunal allowed the appeal, setting aside the CIT(Appeals) decision on both issues. The Tribunal emphasized that the assessee's lack of taxable income exempted them from the obligation to pay advance tax, as supported by legal precedents. The case was remanded back to the CIT(Appeals) for further consideration, ensuring the assessee's right to be heard.