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TMI Blog2023 (3) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the AO and was non-est in law. Since the revised return was treated to be non-est in law, there was no question of making payment of tax on the income declared therein - assessee has already paid the tax on the admitted income declared in the original return filed which was acted upon by the AO for framing the assessment u/s.153C of the Act. In the light of these facts, we are of the view that the CIT(Appeals) was wrong in dismissing the appeal of the assessee. In the present case Assessee has filed the original return in which the tax on the income returned is duly paid. On perusal of Form 35 filed we notice that the assessee has disputed the entire amount including what is declared in the return filed in response to notice u/s. 153C which is considered as non-est by the AO and the additions made by the AO. We also see merit in the submissions of the Ld. AR that it is the disputed taxes that is not paid and the undisputed tax on the admitted income as per the original return have been duly paid. Therefore in our considered view the ratio laid down by the Hon'ble High Court and the coordinate bench of the Tribunal is applicable to assessee's case. Accordingly we set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to the assessee on the issue of admitted tax. In the set aside proceedings the assessee submitted that there is no undisputed liability to pay tax since the return filed has been treated as non-est by the AO. Therefore the assessee submitted that provisions of section 294(4) of the Act are not attracted to assessee's case. The assessee further submitted that the tax has not been paid since the assessee was not in a good financial position. 4. The CIT(A) did not accept the submissions of the assessee and dismissed appeal as not admitted. The CIT(A) accordingly did not consider the grounds raised with respect to merits. The relevant extract from CIT(A)'s order is reproduced below- 4.2 A perusal of the above provisions shows that Section 249(4)(b) of the Act is attracted to the case of the appellant. The income of the appellant has been assessed by the AO at Rs. 25,39,22,381/-. This includes an income of Rs. 11,82,60,329/- as admitted by the appellant in her revised return of income, which was treated as non-est by the AO. In addition, the AO had made additions of Rs. 13,56,62,052/-. In the appeal under consideration the appellant has contested these additions of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the AO, her obligation to pay the tax did not diminish. In fact, in the appeal under consideration, as discussed supra, she has not contested the assessed income to the extent she had herself admitted in the return of income. So the case of the appellant falls within purview of Section 249(1)(b) of the Act. The appellant has also not shown any good and sufficient reason to claim exemption from the operation of the provision of this clause. In the case of D. Komalakshi v. Deputy Commissioner of Income-tax, Central Circle-1(3) [2007] 162 TAXMAN 16 (KAR.), the jurisdictional High Court held that the compliance of the provisions of Section 249 of the Act are mandatory. Same ratio was laid down in the case of Smt. M.R. Prabavathy v. ACIT 262 ITR 501. This was also observed so by the Hon'ble Supreme Court in the case of CIT v. Pawan Kumar Laddha 324 ITR 324 that the compliance of the provisions of Section 249(4)(a) is mandatory. In fact, in the case of Pesco Beam Environmental Solutions (P.) Ltd. v. Deputy Commissioner of Income Tax, Corporate Circle-5(2) [2020] 119 taxmann.com 123 (Madras) the High Court even held that the statute does not give any discretion to appellate autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned CIT[A] and thus, there was no admission of any income as per the non-est return of income filed in response to notice issued u/s. 153C of the Act and therefore, the appeal filed ought to have been admitted and decided on merits. 2.3 The learned CIT[A] erred in holding that the appellant had only challenged the additions made to the income returned as per the non-est return of income of Rs. 13,56,62,052/- which is clearly erroneous considering the extent of disputed additions mentioned in Form 35 as well as the Grounds raised before the learned CIT[A] and hence, the rejection of the appeal on the ground that admitted taxes were not paid is misconceived. 2.4 The learned CIT[A] failed to appreciate that the return filed by the appellant in response to notice u/s. 153C of the Act, itself was bad in law as there was no incriminating material found during the course of search warranting issuance of notice u/s. 153C of the Act by the learned A.O. under the facts and in the circumstances of the appellants case. 3. Without prejudice to the above, the invocation of jurisdiction u/s. 153C of the Act, is bad in law although the documents discovered during the course of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity exists for the income returned in the said income. Further the Ld. AR drew our attention to the Form 35 filed before the CIT(A) wherein the entire addition of Rs. 25,39,22,381 has been disputed (Refer clause 6(d) in form 35). Therefore the Ld. AR submitted that the CIT(A) is not correct in stating that the assessee is contesting only the addition made by the AO to the tune of Rs. 13,56,62,052 and not the income returned in response to notice treated as non-est by AO for an amounts Rs. 11,82,60,329. The Ld. AR further submitted that the provisions of section 249(4) cannot be applied in assessee's case here since the assessee has paid the tax due on the original return filed and that the tax liability arising out of the AO's order is fully disputed. The Ld. AR accordingly submitted that the appeal filed before the CIT(A) should not have been rejected under the provisions of section 249(4). Without prejudice the Ld. AR submitted that the CIT(A) has rejected the appeal under clause (b) of section 249(4) whereas the said clause is applicable only in cases in which return of income is not filed by the assessee whereas the assessee has filed the return of income. The Ld. AR re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has paid the tax due on the income returned, the contention of the assessee is that the taxes are duly paid on the original income returned and there is no tax liability is due as per the return filed in response to notice u/s. 153C since the same has been considered as non-est by the AO. The assessee is also drawing strength for this contention from the fact that the entire amount assessed is disputed in the appeal before the CIT(A) and therefore there is no undisputed liability that is due. The revenue's contention is that the in the return filed in response to notice u/s. 153C, the assessee herself has returned income to the tune of Rs. 11,82,60,329 thereby admitting the tax liability on the same and therefore provisions of section 249(4) is attracted. 10. We notice that the coordinate bench of the Tribunal in the case M/s. Garden City Resorts Pvt. Ltd. (supra) has considered a similar issue where the assessee has filed the original return which was initially to be treated as return filed in response to notice u/s. 153C and tax on the returned income was duly paid. The assessee had later filed a revised return u/s. 153C and did not pay the tax on the revised i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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