2023 (3) TMI 90 - AT - Income Tax

Validity of CIT(A) order u/s 250 as ex-party - Non compliance of mandatory provision of section 249(4) - AR relied on the provisions of section 207 and submitted that as the there was no liability for payment of advance tax the Assessee was not required to file the return of income, therefore, provision of section 249(4) of the Act were not applicable - HELD THAT - When read in context of section 249(4)(b) it has to be observed that where no return has been filed by the assessee, then in that case at time of appeal before the CIT(A), the assessee has to pay an amount equal to the amount of advance tax which was payable by him . Here no advance tax was payable as the assessee was over 60 years of age and not having any income from P G. Further, the proviso to the Section 249(4) of the Act provides that if sufficient reason are brought on record in writing the CIT(A) may exempt the Assessee from the operation of provision of clause 249(4)(b) of the Act. The record does not show if the Assessee has claimed before CIT(A) that it was entitled to any exemption by virtue of section 207. The impugned order was passed in the absence of Assessee and the impugned order dated 31.12.2018 in paragraph Nos. 2 to 12 mention that inspite of notice being issued the same could not be served on the Assessee and therefore, there was no representation of the Assessee before the ld CIT(A) and who proceeded to dismiss the appeal by invoking provision of section 249(4)(b) of the Act without giving taking into consideration the facts which assessee claims made him not liable to pay the advance tax. The Bench is of considered opinion that the Assessee should be given an opportunity to put across its claim of exemption from the application of section 249(4) of the Act before the ld CIT(A). The bench can rely on the Hyderabad bench s order in case of Late Smt Raful Ghani Vs. Asstt. CIT 2021 (6) TMI 1135 - ITAT HYDERABAD wherein, the Bench was confronted with similar situation. The impugned order is set aside and the issue is restored to the file of the ld CIT(A) to decide the question of applicability of section 249(4) of the Act on merits of claim of the assessee, after giving an opportunity of hearing to the Assessee. The appeal is allowed for statistical purposes.

Summary

Issues:
Jurisdiction of assessing officer, Opportunity of being heard before CIT(A), Liability for advance tax, Assessment of income tax, Exemption from advance tax, Appeal admissibility, Assessment on merits.

Analysis:
1. Jurisdiction of assessing officer: The appeal was filed against the order of the Ld. Commissioner of Income Tax (Appeals) by the Assessee, challenging the assessment order passed by the Ld. Assessing Officer under sections 144/147 of the Income Tax Act, 1961. The Assessee contended that the assessing officer had no jurisdiction, rendering the assessment order void-ab-initio.

2. Opportunity of being heard before CIT(A): The Assessee raised concerns regarding the order passed by the Ld. CIT(A) under section 250, claiming that no opportunity of being heard was provided, and an ex-parte order was made without serving any notice on the Assessee. This lack of procedural fairness was a ground for appeal.

3. Liability for advance tax: The dispute involved the liability for advance tax under section 207 of the Act. The Assessee, being a senior citizen with no income chargeable under the head "Profits and gains of business or profession," argued that advance tax was not applicable. The assessing officer, however, held the Assessee liable to file a return for Assessment Year 2010-11, requiring payment of advance tax.

4. Assessment of income tax: The assessing officer added long-term capital gains to the Assessee's income, leading to a dispute on the assessment of income tax. The Assessee contested the assessment, claiming that the assessing officer erred in computing the income tax and making additions based on cash deposits in the bank account.

5. Exemption from advance tax: The provisions of section 249(4) and section 207 were analyzed to determine the Assessee's liability for advance tax. The Tribunal examined whether the Assessee, being over 60 years and not deriving income from business or profession, was exempt from paying advance tax, as per the Act.

6. Appeal admissibility: The Assessee's appeal before the CIT(A) was dismissed for non-compliance with section 249(4)(b) of the Act. The Tribunal considered the grounds raised by the Assessee and the procedural requirements for admitting an appeal, emphasizing the necessity of paying advance tax or claiming exemption.

7. Assessment on merits: The Tribunal referred to a similar case decided by the Hyderabad bench, emphasizing the importance of allowing the Assessee to present claims for exemption from advance tax before dismissing the appeal. The Tribunal directed the matter to be reconsidered by the CIT(A) to decide the applicability of section 249(4) on the merits of the Assessee's claim.

In conclusion, the Tribunal set aside the impugned order, restoring the issue to the CIT(A) for a fresh decision on the applicability of section 249(4) based on the Assessee's claim, ensuring a fair opportunity of hearing. The appeal was allowed for statistical purposes, highlighting the need for procedural fairness and a thorough assessment of tax liabilities.