2024 (12) TMI 250 - AT - Income Tax

Admissibility of appeal without filing a return or paying advance tax - assessee has not filed return of income and has not deposited an amount equal to the amount of advance tax which was payable by it - Addition u/s 69A - HELD THAT - Section 249(4)(b) clearly stipulates that no appeal shall be admitted by ld. CIT(Appeals) unless at the time of filing of appeal where in the cases no return has been filed by the assessee the assessee has paid an amount equal to the amount of advance tax which was payable by him. There is proviso which clearly stipulates that in a case falling under clause (b) and on an application made by the appellant in this behalf the Joint Commissioner (Appeals) or the Commissioner (Appeals) may for any good and sufficient reason to be recorded in writing exempt him from the operation of the provisions of said clause. CIT(A) dismissed the appeal as unadmitted as the assessee has not filed return of income and also the assessee has also not paid an amount equal to the amount of advance tax which was payable by her. The assessee has claimed that the amount deposited in cash in her bank account represents old recoveries from the farmers/villagers and there is no income during the year under consideration as the assessee has shifted to USA and the business has been closed down since 2014. In any case on perusal of the assessment order it is clearly discernible that there is no admitted income by the assessee and the addition as was made by the Assessing Officer which is also the assessed income in the hands of the assessee is subject matter of dispute and challenge by the assessee before the ld. CIT(Appeals) as well as before Tribunal. Thus the assessee has never admitted this addition to be her income and under these circumstances there is no advance tax liability arising on such disputed income keeping in view the claim of the assessee that she was not having any other income in India except that there was interest income which was below matter. In any case the AO has not brought to tax any income apart from this addition on account of cash deposits in the bank account. Thus so far as maintainability of appeal before ld. CIT(A) is concerned we do not find that in such circumstances the appeal will not be maintainable because entire additions as were made by the AO is subject to dispute and challenge before higher appellate authorities and that the assessee does not have other income which is above the threshold limit of being taxable as is emerging from records. Assessee has duly explained with sufficient and reasonable cause that the provisions of section 249(4)(b) is not applicable. Moreover the proviso also provides that when there is good and sufficient reasons then appeal can still be admitted and the CIT(Appeals) can exempt from operation of the provisions of that clause. See case of Vishnusharan Chandravansh 2024 (6) TMI 238 - ITAT RAIPUR Thus direct the ld. CIT(Appeals) to admit the appeal of the assessee and thereafter adjudicate the same on merits in accordance with law after providing opportunity to both the parties. The appeal of the assessee is partly allowed for statistical purposes.

Summary

Issues Involved:
1. Non-filing of return of income by the assessee.
2. Addition of Rs. 16,24,600/- under Section 69A of the Income-tax Act, 1961.
3. Applicability of Section 249(4)(b) concerning the admission of appeal without filing a return or paying advance tax.
4. Maintainability of appeal before the Commissioner of Income Tax (Appeals) [CIT(A)].

Detailed Analysis:

1. Non-filing of Return of Income:
The assessee did not file her return of income under Section 139. The Assessing Officer (AO) issued a notice under Section 142(1) requesting the assessee to file her return, which she failed to do. The assessee claimed that she had moved to the USA with her husband and was not engaged in any business activity during the year under consideration, having only interest income below taxable limits. This claim was used to justify the non-filing of the return.

2. Addition under Section 69A:
The AO observed significant cash deposits in the assessee's bank account during the demonetization period, specifically Rs. 14,14,600/- deposited in cash on a single day. The AO deemed these deposits unexplained and added Rs. 16,24,600/- to the assessee's income under Section 69A, treating it as undisclosed income. The assessee contended that these deposits were recoveries from old outstanding dues from farmers and villagers, which were used to clear bank liabilities. The AO rejected this explanation, considering it an afterthought to cover up undisclosed sources.

3. Applicability of Section 249(4)(b):
The CIT(A) dismissed the appeal as unadmitted, citing Section 249(4)(b), which mandates payment of advance tax for appeal admission where no return has been filed. The assessee argued that she was not liable to file a return due to her income being below taxable limits and thus did not have an advance tax liability. The Tribunal considered this argument, noting that the only income assessed was the disputed addition under Section 69A, and there was no other admitted income by the assessee.

4. Maintainability of Appeal Before CIT(A):
The Tribunal found that the CIT(A) erred in dismissing the appeal on the grounds of Section 249(4)(b) since the addition was disputed and there was no other income above the taxable threshold. The Tribunal highlighted that the proviso to Section 249(4)(b) allows for exemption from the requirement if good and sufficient reasons are provided. The Tribunal directed the CIT(A) to admit the appeal and adjudicate it on merits, emphasizing that the provisions of Section 249(4)(b) were not applicable in this case due to the disputed nature of the assessed income.

Conclusion:
The Tribunal set aside the CIT(A)'s order and restored the matter for a fresh adjudication on merits, instructing the CIT(A) to provide an opportunity for both parties to present their cases. The appeal was partly allowed for statistical purposes, and the Tribunal refrained from commenting on the merits of the case, focusing instead on procedural compliance and the applicability of Section 249(4)(b).