2025 (1) TMI 1350 - AT - Income Tax

Non-payment of advance tax in accordance with section 249(4)(b) - Validity of ex-parte order - HELD THAT - We are of the considered opinion that the advance tax if any payable as per section 249(4)(b) is to be determined at the behest of the assessee. If there is no advance tax liability according to the assessee then he need not to deposit the same CIT(A)/NFAC is required to admit the appeal of the assessee in such an event. In the instant case it is the claim of the assessee that since the assessee remained absent the assessment order was passed ex-parte whatever deductions were legally available to the assessee were not allowed by the AO. Contention of the assessee that being cooperative society the business income of the assessee was subject to deduction 80P(2)(a)(i) and 80P(2)(d) and due to ex-parte order the same deductions were not allowed which resulted in determination of unnecessary taxable income in the hands of the assessee - We find that the appeal of the assessee was dismissed in a summery manner without admitting the same for adjudication on merits of the case. It was the observation of Ld. CIT(A)/NFAC that the assessee was required to deposit advance tax in the light of section 249(4)(b) of the IT Act when the assessee was issued show cause to explain this point he did not chose to file any application to exempt him from payment of advance tax in the light of the fact that no advance tax is payable by him. Considering the totality of the facts of the case and without going into merits of the case we deem it appropriate to set-aside the order passed by CIT(A)/NFAC and remand the matter back to him with a direction to admit the appeal of the assessee adjudicate the same on merits of the case after providing reasonable opportunity of hearing to the assessee. Appeal filed by the assessee is allowed for statistical purposes.

ISSUES PRESENTED and CONSIDERED

The primary issue considered by the Appellate Tribunal was whether the appeal filed by the assessee should be admitted for adjudication on merits, despite the non-payment of advance tax as required under section 249(4)(b) of the Income Tax Act. The Tribunal also considered whether the conditions for the dismissal of the appeal by the Commissioner of Income Tax (Appeals) [CIT(A)/NFAC] were met, specifically regarding the requirement for advance tax payment.

ISSUE-WISE DETAILED ANALYSIS

Non-Payment of Advance Tax and Admission of Appeal

Relevant Legal Framework and Precedents:

The legal framework revolves around section 249(4)(b) of the Income Tax Act, which mandates the payment of advance tax as a precondition for the admission of an appeal. The Tribunal referenced precedents from other cases, such as Dilip Hiralal Chaudhari vs. ITO and Vishnusharan Chandravanshi vs. ITO, which provided guidance on similar circumstances. Additionally, the Tribunal considered the judgment by the Karnataka High Court in Govidappa Setty vs. ITO, which allowed an appeal under analogous conditions.

Court's Interpretation and Reasoning:

The Tribunal interpreted section 249(4)(b) as requiring the determination of advance tax liability at the behest of the assessee. If the assessee believes no advance tax is due, they are not obligated to pay it, and the appeal should be admitted. The Tribunal emphasized that the CIT(A)/NFAC should have considered the merits of the case rather than dismissing the appeal summarily based on non-payment of advance tax.

Key Evidence and Findings:

The Tribunal noted that the assessee was absent during the proceedings, leading to an ex-parte assessment order. The assessee claimed entitlement to deductions under sections 80P(2)(a)(i) and 80P(2)(d) of the Income Tax Act, which were not considered due to the ex-parte order. The Tribunal found that the CIT(A)/NFAC dismissed the appeal without admitting it for adjudication on the merits, solely due to the advance tax issue.

Application of Law to Facts:

The Tribunal applied the legal principles from the cited precedents to the facts of the case, determining that the CIT(A)/NFAC should have admitted the appeal for consideration on its merits. The Tribunal highlighted the importance of providing the assessee an opportunity to present their case, especially when claiming deductions that could significantly impact the taxable income.

Treatment of Competing Arguments:

The Tribunal acknowledged the arguments presented by the Department Representative, who supported the orders of the lower authorities. However, the Tribunal found that the procedural requirements for admitting the appeal were not appropriately considered by the CIT(A)/NFAC, given the circumstances of the case.

Conclusions:

The Tribunal concluded that the CIT(A)/NFAC erred in dismissing the appeal without admitting it for adjudication on the merits. It was deemed appropriate to remand the matter back to the CIT(A)/NFAC with instructions to admit the appeal and provide the assessee a reasonable opportunity to present their case.

SIGNIFICANT HOLDINGS

The Tribunal held that the requirement for advance tax payment under section 249(4)(b) should be determined based on the assessee's liability. If the assessee believes no advance tax is due, the appeal should be admitted for consideration on its merits, as supported by previous judgments. The Tribunal directed the CIT(A)/NFAC to admit the appeal and adjudicate it on its merits, ensuring the assessee is given a fair opportunity to present their case.

Core Principles Established:

The Tribunal established that procedural requirements, such as the payment of advance tax, should not impede the substantive rights of the assessee to have their appeal heard on its merits. The Tribunal emphasized the importance of considering the merits of the case, especially when potential deductions could alter the taxable income significantly.

Final Determinations on Each Issue:

The Tribunal set aside the order of the CIT(A)/NFAC and remanded the matter for a fresh adjudication on the merits. The Tribunal instructed the CIT(A)/NFAC to provide the assessee a reasonable opportunity to respond and present requisite details, cautioning against unnecessary adjournments. The appeal was allowed for statistical purposes, indicating a procedural victory for the assessee pending substantive adjudication.

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