2024 (6) TMI 325 - AT - Income Tax

Non admission of appeal for non-payment of advance tax u/s 249 (4)(b) - HELD THAT - The documentary evidences filed by the assessee, of course, has been filed before the AO in course of assessment proceedings (as seen from the computer printout of the on line response sheet needs filed before us), but we are not expressing any opinion on the same because we are not adjudicating on the merits of the case and our opinion are only restricted to the applicability of section 249(4)(b) of the Act 61. We find that the assessee has declared, before the AO that he has no taxable income for the year under appeal and his income is only agricultural income, and receipts from sale proceeds sale of agricultural land which is exempted income under the Act 61 and the computation filed, shows non-taxable Income, and has filed documentary evidence of the same before the AO, as evident from the assessment order, and in the computation of income filed by the assessee before the Tribunal, he has declared NIL taxable income, thereby indicating that he is not liable to pay any advance tax as per provisions of section 207 of the Act 61 because he has no total income which would be chargeable to tax and computation of advance tax, as per sec 209 of the Act is NIL, and according to the assessee the payment of advance tax u/s 210 of the Act, of his own accord, does not arise in this case. We also note that the assessee has filed a reply before the first appellate authority to the deficiency letter, dated 15/01/2024, stating that he has no taxable income and not liable to file return of income. As such, considering all materials on record, we are of the opinion, that the assessee has presented a prima facie case, of no obligation, to make payment of advance tax u/s 208 of the Act 61, for the year under appeal, and we hold that the CIT(A) should have admitted the appeal for adjudication on merits, and the amount of advance tax payable by the assessee, for the purpose of presenting the appeal, as per provisions of section 249(4)(b), should be taken as NIL. Accordingly, we set aside the order of the CIT(A) and restore the same to his file, for adjudication on merits, on the grounds contained in Form 35, after causing all necessary verification of all documentary evidences as he deems fit and proper, as per procedure of law, (un influenced by any observation we might have made in the above paragraphs), and after allowing proper opportunity to the assessee of being heard. Appeal of the assessee allowed for statistical purposes.

Summary

Issues involved:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for non-payment of advance tax u/s 250 of the Income Tax Act 1961, arising from an order passed u/s 147 rws 144/144B of the Act 61.

Admission of appeal for non-payment of advance tax:
The CIT (A) refused to admit the appeal for hearing due to nonpayment of advance tax as per provisions of section 249(4)(b) of the Act 61. The grounds of appeal challenged this decision, arguing that the requirement of payment of tax before filing the first appeal is directory, not mandatory.

Assessment and grounds of appeal:
The assessee derived income from agriculture and received substantial amounts from the sale of agricultural lands and advance for sale. Despite filing written submissions and providing documentary evidence, the AO assessed the total income at Rs. 89,42,000. The appeal filed before the CIT (A) raised various grounds challenging the addition made by the AO.

Deficiency notice and response:
In response to a deficiency notice, the appellant explained that no income tax return was filed, hence no tax was deposited. The CIT (A) found the reply unsatisfactory and noted the absence of an application for exemption from the provision of section 249(4)(b) along with the appeal.

Arguments and decision:
The AR argued that the assessee had no taxable income and therefore no liability to pay advance tax. The AR cited relevant provisions and a precedent to support the argument that the appeal should not be rejected for non-payment of advance tax. The ITAT held that the assessee had no obligation to pay advance tax for the year under appeal and directed the CIT (A) to admit the appeal for adjudication on merits.

Conclusion:
The ITAT allowed the appeal for statistical purposes, setting aside the order of the CIT (A) and directing a review of the case on its merits. The decision emphasized the absence of taxable income for the assessee and the consequent lack of obligation to pay advance tax, leading to the appeal being considered valid for further proceedings.