2024 (9) TMI 520 - AT - Income Tax

Denial of admission of appeal for adjudication by Commissioner (Appeals) - non adhering to advance tax payment requirements - HELD THAT - Appeal of the assessee is not liable to be dismissed on the ground that for the purpose of admission of appeal, the assessee was under obligation to pay advance tax on the entire disputed demand relating to sale of agricultural land (which was held to be non-agricultural land for the purpose of computation of capital gains tax by the assessing officer). In the appeal filed before Ld. CIT(Appeals), the case of the assessee is that the land in question was always an agricultural land and there was no obligation on the assessee to pay any taxes on such sale of land in terms of section 2(14) of the Act. As decided in Balwinder Singh 2024 (6) TMI 325 - ITAT AMRITSAR observed that the assessee had filed documentary evidence of same before Assessing Officer demonstrating that he had no taxable income for year under appeal and his income was only agricultural income and receipts from sale proceeds sale of agricultural land was exempted income under Act and, therefore, there was no obligation to pay advance tax under section 208. The Tribunal held that Commissioner (Appeals) should have admitted appeal for adjudication on merits, and amount of advance tax payable by assessee for purpose of presenting appeal, as per provisions of section 249(4)(b), should be taken as nil. Where assessee had not filed his return of income as he had no taxable income, Commissioner (Appeals) could not have held that he had failed to comply with statutory conditions contemplated in section 249(4)(b) of the Act. In the case of T. Govindappa Setty 1997 (6) TMI 8 - KARNATAKA HIGH COURT the High Court held that where petitioner assessee disputed liability on ground that he could not have been assessed as HUF as on date of filing return and on date of assessment there was no HUF in existence, right guaranteed to petitioner to prefer an appeal could not be taken away under section 249(4) by taking view that petitioner had failed to pay tax due on income shown in return filed. The appeal of the assessee is directed to be admitted and the issue is set aside to the file of CIT(Appeals) to be decided on the merits of the case, in accordance with law. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
Appeal against order passed by Ld. CIT(A) for Assessment Year 2012-13.
1. Dismissal of appeal without providing opportunity of hearing.
2. Non-admittance of appeal under Section 249(4)(b) of the Act.
3. Dismissal without adjudicating grounds and merits.
4. Addition of capital gain on sale of land.
5. Validity of assessment order under Section 144 r.w.s. 147.
6. Non-appreciation of facts by lower authorities.
7. Confirmation of interest levied under various sections.
8. Confirmation of penalty proceedings under sections 271(1)(c) and 271F.

Analysis:

1. The appeal was filed against the order passed by the Ld. CIT(A) for Assessment Year 2012-13. The Assessee raised several grounds, including the dismissal of the appeal without providing an opportunity of hearing, non-admittance of the appeal under Section 249(4)(b) of the Act, and failure to adjudicate on the grounds and merits of the case.

2. The brief facts of the case involved the sale of immovable property by the Assessee, which the Assessee failed to disclose as capital gains. The Ld. Assessing Officer completed the assessment under Section 144 r.w.s. 147 due to the Assessee's lack of cooperation. The Ld. CIT(A) dismissed the appeal on the grounds of non-payment of due taxes and deficiencies in the appeal filing process.

3. The Assessee argued that the notices were sent to an incorrect email ID, leading to non-compliance during the appellate proceedings. The Assessee contended that no advance tax was required to be paid on the sale of agricultural land, which was the subject of the dispute.

4. The Tribunal considered precedents where the obligation to pay advance tax was not applicable when the income was exempted or no taxable income existed. Relying on these precedents, the Tribunal admitted the Assessee's appeal and directed the issue to be decided on its merits by the Ld. CIT(A).

5. Ultimately, the appeal of the Assessee was allowed for statistical purposes, and the issue was remanded to the Ld. CIT(A) for further consideration in accordance with the law.

This judgment highlights the importance of procedural compliance, the obligation to pay advance tax, and the necessity for adjudicating on the merits of a case before dismissing an appeal.