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2025 (7) TMI 140 - AT - Income TaxNon admission of appeal by CIT(A) - appellant has not filed the return of income as well as not paid the said amount of advance tax - Tax on regular assessment - return filed by assessee was treated as invalid by CPC due to receipt of the ITR-V after due date - as per revenue provisions of section 249(4)(b) says where no return has been filed by the assessee the assessee has to pay an amount equal to the amount of advance tax which was payable by him; otherwise appeal shall not be admitted. HELD THAT - If tax is being paid for same financial year based on estimated income it would be advance tax. If tax is being paid after end of financial year it would be self-assessment tax. When Department finds that there has been under-assessment of income and resultant tax is due it computes the actual amount that ought to have been paid. This demand raised on the person is called tax on regular assessment . Tax on regular assessment is the tax which the taxpayer is required to pay against of notice of demand from the Income-tax Department normally u/s 156 of the Act. CIT(A) did not admit the appeal because the assessee had not paid an amount equal to the advance tax which was payable by it. The ld.AR has contended that the assessee did not pay any advance tax as the income was below taxable income. When total income is below taxable income during the year question of payment of advance tax does not arise and provisions of Section 249(4)(b) of the Act are not applicable. As decided in the case of Ranajitbhai B. Patel vs. ITO 2023 (11) TMI 1382 - ITAT SURAT where following the decision of Hotel Sai Siddi (P.) Ltd 2011 (7) TMI 540 - ITAT PUNE it was held that when the assessee had incurred loss while filing ROI and was not liable to pay tax an amount equal to amount of advance tax as required u/s 249(4)(b) the assessee s appeal was liable to be admitted. As assessee was claiming that it had no taxable income the Tribunal restored the case back to the file of CIT(A) with a direction to admit the appeal of the assessee and pass an order on merit. Thus we hold that the CIT(A) should have decided the issue on merits of the case. Hence the matter is restored to the file of CIT(A) with a direction to admit the appeal of the assessee and pass an order on merit. Appeal of the assessee is allowed for statistical purposes.
1. ISSUES PRESENTED and CONSIDERED
- Whether the appeal filed by the assessee before the Commissioner of Income-tax (Appeals) was rightly not admitted due to non-payment of an amount equal to the advance tax payable under section 249(4)(b) of the Income-tax Act, 1961 (the Act). - Whether the provisions of section 249(4)(b) of the Act apply to an assessee whose total income is below the taxable limit and who is therefore not liable to pay advance tax. - Whether the appeal before the Commissioner of Income-tax (Appeals) and subsequently before the Tribunal should be admitted and decided on merits despite the non-compliance with section 249(4)(b) of the Act. - Validity and applicability of reopening the assessment under section 147 of the Act and consequential additions under section 50C of the Act. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Non-admission of appeal by CIT(A) due to non-payment of advance tax under section 249(4)(b) Relevant legal framework and precedents: Section 249(4)(b) of the Income-tax Act mandates that where no return of income has been filed by the assessee, the Commissioner of Income-tax (Appeals) shall not admit the appeal unless the assessee has paid an amount equal to the advance tax payable by him. The purpose of this provision is to ensure compliance with tax payment obligations before allowing appellate remedy. Court's interpretation and reasoning: The CIT(A) relied on this provision to reject the appeal on the ground that the assessee had neither filed the return of income nor paid the advance tax amount payable, as required under section 249(4)(b). The CIT(A) verified Form 35 and found that no such payment had been made. Consequently, the appeal was not admitted. Key evidence and findings: The assessee had filed the return late, which was treated as invalid, and was treated as a non-filer. The reopening of assessment under section 147 was based on information received, and the Assessing Officer made additions under section 50C. The assessee did not pay advance tax corresponding to the demand raised. Application of law to facts: The CIT(A) correctly applied section 249(4)(b) in the context of a non-filer who had not paid advance tax. However, the Tribunal noted that the applicability of this provision depends on whether advance tax was actually payable by the assessee, which leads to the next issue. Treatment of competing arguments: The Revenue supported the CIT(A)'s approach, emphasizing statutory compliance. The assessee contended that since income was below taxable limit, no advance tax was payable, and thus the appeal should not be rejected on this ground. Conclusion: The Tribunal found that the CIT(A) erred in mechanically applying section 249(4)(b) without considering whether advance tax was due in the first place. Issue 2: Applicability of section 249(4)(b) where income is below taxable limit and no advance tax is payable Relevant legal framework and precedents: Section 139(1) requires filing of return where income exceeds taxable limits. Advance tax is payable only if tax liability arises during the financial year. The Tribunal referred to its earlier decision in ITA No.646/SRT/2023 and the co-ordinate Bench decision in Hotel Sai Siddi (P.) Ltd. vs. DCIT (2011), which held that where the assessee's income is below taxable limit and no advance tax is payable, section 249(4)(b) is not applicable. Court's interpretation and reasoning: The Tribunal emphasized that if the total income is below taxable limit, the assessee is not liable to pay advance tax. Therefore, the condition precedent for non-admission of appeal under section 249(4)(b) does not arise. The Tribunal noted that the demand raised by the Department was on account of "regular assessment tax" under section 156, which is distinct from advance tax obligations. Key evidence and findings: The assessee's income was below the taxable limit as per the return filed (though late). The demand arose from reassessment under section 147, not from advance tax default. Application of law to facts: The Tribunal applied the precedent that non-payment of advance tax is not a bar to admission of appeal where no advance tax is actually payable. The CIT(A)'s rejection of the appeal was therefore contrary to settled law. Treatment of competing arguments: The Revenue argued that the additional ground was not raised earlier and that the explanation was unacceptable. The Tribunal held that the issue was substantial and merited consideration on merits rather than rejection on procedural grounds. Conclusion: The Tribunal held that section 249(4)(b) cannot be invoked to reject the appeal in cases where no advance tax is payable due to income being below taxable limit. Issue 3: Admission and adjudication of appeal on merits Relevant legal framework and precedents: The right to appeal and have the matter adjudicated on merits is fundamental unless statutory conditions for rejection are clearly met. The Tribunal's earlier rulings and the principles of natural justice require that appeals be admitted and decided on merits where possible. Court's interpretation and reasoning: The Tribunal observed that the CIT(A) should have admitted the appeal and decided the matter on merits, considering the assessee's claim of income below taxable limit and consequent non-applicability of section 249(4)(b). Key evidence and findings: The facts were similar to the earlier cited case where the appeal was admitted and adjudicated despite non-payment of advance tax because no advance tax was due. Application of law to facts: The Tribunal restored the matter to the file of CIT(A) with directions to admit the appeal and decide on merits, granting the assessee adequate opportunity of being heard. Treatment of competing arguments: The Tribunal balanced the procedural requirements with substantive rights of the assessee, emphasizing compliance with notices and discouraging frivolous adjournments. Conclusion: The appeal was allowed for statistical purposes, and the CIT(A) was directed to proceed with adjudication on merits. Issue 4: Validity of reopening under section 147 and addition under section 50C Relevant legal framework and precedents: Section 147 allows reopening of assessment where income has escaped assessment. Section 50C mandates valuation of capital assets at stamp duty value for transfer pricing adjustments. Court's interpretation and reasoning: Though the Tribunal's order primarily focused on admission of appeal, it acknowledged that the reopening and addition were based on information received and were not under challenge at this stage. Key evidence and findings: The reopening was based on information from the ITO, and addition of Rs. 54,01,224/- was made under section 50C. Application of law to facts: The Tribunal did not adjudicate on the merits of the addition but remitted the matter for fresh consideration after admitting the appeal. Treatment of competing arguments: The Department did not dispute the reopening but relied on procedural compliance to sustain non-admission of appeal. Conclusion: The reopening and addition stand subject to fresh adjudication by CIT(A) upon admission of appeal. 3. SIGNIFICANT HOLDINGS "When total income is below taxable income during the year, question of payment of advance tax does not arise and provisions of Section 249(4)(b) of the Act are not applicable." "The demand u/s 156 of the Act was on account of regular assessment tax. Therefore, following the above decision, we hold that the CIT(A) should have decided the issue on merits of the case." "In view of the above, the Tribunal restored the case back to the file of CIT(A) with a direction to admit the appeal of the assessee and pass an order on merit." Core principles established include the non-applicability of section 249(4)(b) where no advance tax is payable due to income being below taxable limit, and the consequent right of the assessee to have the appeal admitted and adjudicated on merits despite procedural defaults related to advance tax payment. Final determinations:
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