NON-PAYMENT OF ADVANCE TAX

[DR.MARIAPPAN GOVINDARAJAN]

In SMT. PRAMEELA PARAMESHWAR SHETTIGAR VERSUS ITO WARD-2 (1) , MANGALORE - 2024 (8) TMI 1180 - ITAT BANGALORE, an information was received from National e-Assessment Centre, Delhi by the Authorities.  In the information it was informed that the assessee had bought an immovable property from Shri Madhava Gatti for sale consideration of Rs. 45 Lakhs on 07.10.2017. The Authorities found from the copy of the Form 61A forwarded by the National e-Assessment Centre and after perusal of e-filing portal, that the assessee has not filed her return of income for the said assessment year 2018-19 disclosing the said transactions.

A notice under section 148 of the Income Tax Act, 1961 (‘Act’ for short) was issued to the assessee.  The assessee filed reply to the notice.  She disputed the sales value of Rs.45 lakhs.  She has purchased the said property only for Rs.31 lakhs for which she obtained a bank loan.  The assessment is made based on the reply of the assessee.  An addition of Rs.14 lakhs was made (Rs.45 lakhs – Rs.31 lakhs) in the assessment order as unexplained income under Section 69A of the Act read with section 115BBE of the Act.

Being aggrieved against the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals).  She contended before the Commissioner of Income Tax (Appeals) that the document on which the assessment proceedings initiated itself is based on the wrong information.  She challenged the entire addition and she was not liable to pay advance tax.  Her income does not exceed maximum amount and is not chargeable to tax thus there is no liability to pay any advance tax.  The Commissioner of Income Tax dismissed the appeal filed by the assessee.

Therefore, the assessee filed the present appeal before the Income Tax Appellate Tribunal (‘ITAT’ for short).  The appeal before the ITAT is on the following grounds-

• The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
• The Commissioner of Income tax (Appeals) erred in dismissing the appeal holding that the appellant has not paid the amount equal to advance tax as required u/s. 249(4) of the Act and hence, the appeal filed cannot be admitted without appreciating that the provisions of section 249(4) of the Act have no application at all under the facts and in the circumstances of the appellant's case.
• The order of re-assessment is bad in law and void-ab-initio for want of requisite jurisdiction especially, the mandatory requirements to assume jurisdiction under Section 148 of the Act did not exist and have not been complied with and consequently, the re-assessment requires to be cancelled.
• The Commissioner of Income Tax is not justified in sustaining the addition of Rs. 14,00,000/- made as unexplained money under Section 69A read with Section 115BBE of the Act under the facts and in the circumstances of the appellant's case.
• The Commissioner of Income Tax (Appeals) ought to have appreciated that the provisions of Section 69A of the Act is not attracted under the facts and in the circumstances of the appellant's case.
• The Commissioner of Income Tax is not justified in upholding the tax imposed under the provisions of section 115BBE under the facts and in the circumstances of the appellant's case.
• Without prejudice to the right to seek waiver with the Commissioner of Income Tax/Director General, the appellant denies herself liable to be charged to interest u/s. 234B of the Act, which under the facts and in the circumstances of the appellant's case and the same deserves to be cancelled.
• The appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.

The appellant submitted the following before ITAT-

• The assessment was initiated on wrong information. 
• It was alleged that the property was Rs.45 lakhs but the actual value is Rs.35 lakhs.
• When the assessee has disputed the entire addition itself and the tax liability payable by the assessee, the question of paying advance tax does not arise.
• The assessee was put to great hardship due to high handed action of the department.

Therefore, the appellant prayed the ITAT to allow the appeal. 

The Revenue submitted the following-

• As per section 249(4) of the act, the assessee shall pay advance tax.
• The assessee has not utilized the proviso to section 249(4) by making an application from exempt her from the operation of the provision of the said clause.
• Therefore, the appeal of the assessee is devoid of merit thus sought for dismissal of the appeal.

The ITAT heard the submissions of the appellant and the Revenue.  The ITAT analyzed the entire facts of the case and also the documents available on record.  The ITAT observed that the assessee to pay the advance tax, therefore in the opinion of ITAT invoking the provision of section 249(4) of the act by the Commissioner of Income Tax (Appeals) is erroneous. The assessee has produced her sale deed depicting that Mr. Madhava Gatti has sold a property bearing R.S. No. 189/2A measuring 0-05.75 acres situated at Kotekar Village, Mangalore Taluk for a sale consideration of 31 Lakhs. Thus, it is crystal clear that the Assessing Officer made addition on the basis of wrong assumption of facts observing that assessee has made purchase of property for Rs. 45 Lakhs, contrary to the fact that the assessee had purchased the property for Rs. 31 lakhs. Apart from the same, assessee has also produced the source for the said transaction which being a loan availed from Vijaya Bank, Mangalore. Thus, the basis for making the addition itself does not survive. Considering the above facts and circumstances of the case.

Therefore. the ITAT allowed the appeal by deleting the addition of Rs.14 lakhs made by the Assessing Officer under Section 69A of the Act in the appellant’s case.