HARIBABU YENUGANTI,ONGOLE V. INCOME TAX OFFICER, WARD-1, ONGOLE

ITA 1476/HYD/2025

AI Insights

The case involves Haribabu Yenuganti, who did not file his income tax return for the Assessment Year 2017-18 but was subjected to an assessment under section 147 r.w.s 144 r.w.s 144B of the Income-tax Act, 1961, resulting in a determined income of Rs. 62,94,561. The assessee appealed against this assessment, but the CIT(A) dismissed the appeal for non-compliance with section 249(4)(b), which mandates payment of an amount equal to the advance tax for those who have not filed a return. The ITAT found that the CIT(A) should have sought clarification from the assessee regarding his non-compliance and thus restored the matter to the CIT(A) for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 784914 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2017-2018
• Appeal Filed On: 18-09-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Opportunity of being heard
• Section: 147; 148; 6

Judgement Text

"आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A’ Bench, Hyderabad Įी रवीश सूद, माननीय ÛयाǓयक सदèय एवं Įी मधुसूदन सावͫडया, माननीय लेखा सदèय SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA HON’BLE ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A. No. 1476/Hyd/2025 (Ǔनधा[रणवष[/ Assessment Year: 2017-18) Haribabu Yenuganti, Ongole, Andhra Pradesh. PAN: ADFPY1484N VS. Income Tax Officer, Ongole. (अपीलाथȸ/ Appellant) (Ĥ×यथȸ/ Respondent) करदाताकाĤǓतǓनͬध×व/ Assessee Represented by : Sri K.V. Chalamaiah, CA राजèवकाĤǓतǓनͬध×व/ Department Represented by : Ms. Payal Gupta, Sr. AR सुनवाईसमाÜतहोनेकȧǓतͬथ/ Date of Conclusion of Hearing : 06/11/2025 घोषणा कȧ तारȣख/ Date of Pronouncement : 12/11/2025 ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 19/07/2025, which in turn arises from the assessment order passed by the AO under section 147 r.w.s Printed from counselvise.com 2 ITA No. 1476/Hyd/2025 Haribabu Yenuganti vs. ITO 144 r.w.s 144B of the Income-tax Act, 1961 (for short, “Act”), dated 27/03/2022 for the Assessment Year 2017-18. The assessee has assailed the impugned order on the following grounds of appeal before us: “1. The Ld. CIT(A) in law and facts to dismiss the appeal as infructuous after admitting and collecting voluminous information/documents by issue of several notices of hearing under section 250 of the Act and without information to the appellant. 2. Any other ground and grounds of appeal that may be urged at the time of hearing.” 2. Succinctly stated, the AO based on information that the assessee during the subject year i.e., AY 2017-18 had carried out certain financial transactions, viz., (i) cash deposits in current account: Rs.1,40,42,000/-; and (ii) cash withdrawals in current account: Rs. 1,13,62,000/-, but had not filed his return of income, initiated proceedings under section 147 of the Act. Notice under section 148 of the Act was issued to the assessee. 3. Thereafter, the AO vide his order passed under section 147 r.w.s 144 r.w.s 144B of the Act, dated 27/03/2022 determined the income of the assessee at Rs. 62,94,561/- after making certain additions, viz., (i) addition under section 69A of the Act (cash deposits in bank account): Rs. 33,59,000/-; (ii) estimated profit on turnover of Rs.3,36,94,509/- Printed from counselvise.com 3 ITA No. 1476/Hyd/2025 Haribabu Yenuganti vs. ITO (credit transactions in bank account): Rs. 26,95,561/-; and (iii) remuneration income from Bharat Agro Service: Rs. 2,40,000/-. 3. Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, the CIT(A) after taking cognizance of the fact that the assessee had at the stage of filing of the appeal failed to deposit the amount equal to the amount of advance tax as was required by the mandate of section 249(4)(b) of the Act, dismissed the appeal on the said count as not maintainable. For the sake of clarity, we deem it apposite to cull out the observations of the CIT(A), as under: “4. Appellate findings and decision: 4.1 I have examined facts of the case as also gone through relevant provisions of Income Tax Act (the Act). In the present case, the appellant failed to file return of income. The impugned order was passed u/s 147 r.w.s 144 r.w.s. 144B of the Act, creating demand of Rs. 56,04,796/- and the appellant was asked by notice u/s 156 of the Act to deposit the demand but it is noticed that the appellant has not deposited the demand before filing of this appeal. The appellant, at sl. no. 16 of Form-35, has stated to have made payment of appeal fee of Rs. 1,000/- only. At sl. No. 9 of Form-35, the appellant has offered 'Not applicable comments. This sl. No. 9 is reproduced below. 9 Where no return has been filed by the appellant for the assessment year, whether an amount equal to the amount of advance tax as per section 249(4)(b) of the Income-tax Act, 1961 has been paid. Not Applicable 4.2. As per provisions of section 249(4)(b) of the Act, where no return has been filed by the appellant, the appellant has to pay an amount equal to the amount of advance tax which was payable by him otherwise appeal shall not be admitted. The provisions of section 249 (4) of the Act are reproduced as under - Section 249(4) \"No appeal under this Chapter shall be admitted unless at the time of filing of the METAX DEP Printed from counselvise.com 4 ITA No. 1476/Hyd/2025 Haribabu Yenuganti vs. ITO (a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or \" (b) where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him: Provided that, 2 in a case falling under clause (b) and) on an application made by the appellant in this behalf, the 3 Deputy Commissioner (Appeals)]4 or, as the case may be, the Commissioner (Appeals)] may, for any good and sufficient reason to be recorded in writing exempt him from the operation of the provisions of 5 that clause]. 4.3 As per provisions of section 234B(1), read with provisions of section 208 of the Act, the liability to pay advance tax, in a case where returned income is less than the assessed income, is calculated on the basis of assessed income. The provisions of section 234B(1) and provisions of section 208 of the Act are reproduced below – Section 234B(1) \"(1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent of the assessed tax, the assessee shallbe liable to pay simple interest at the rate of two per cent for every month or part of a month comprised in the period from the 1st day of April next following such financial year3 to the date of determination of total income under sub-section (1) of section 1434 and where a regular assessment is made, to the date of such regular assessment, on an amount]] equal to the assessed tax or, as the case may be on the amount by which the advance tax paid as aforesaid falls short of the assessed fax.5 Explanation 1-in this section,\" assessed tax\" means,- (a) for the purposes of computing the interest payable under section 140A, the tax on the total income as declared in the retum referred to in that section; (b) in any other case, the tax on the total income determined under sub-section (1) of section 143 or on regular assessment, as reduced by the amount of tax deducted or collected at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income.] Explanation 2.- Where in relation to an assessment year, an assessment is made for the first time under section 147, the assessment so made shall be regarded as a regular assessment for the purposes of this section. 6 Explanation 3.- In Explanation 1 and in sub-section (3).\" tax on the total income determined under sub- section (1) of section 143\" shall not include the additional income-tax, if any, payable under section 143]\" FAX DEPARTMEN 4.4 Section 208 Printed from counselvise.com 5 ITA No. 1476/Hyd/2025 Haribabu Yenuganti vs. ITO \"208. Conditions of liability to pay advance tax Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is one thousand five hundred rupees or more.\" 4.5. The appellant has offered 'Not applicable' comments at sl. No. 9 of Form-35 and the appellant failed to made payment of amount equal to the advance tax which was due on its income. It is, therefore, clear that information, given at sl. no. 9 of Form-35 is not correct and the appellant has not made payment of amount equal to the advance tax which was due on its income. The appellant has also not requested for exemption from operation of the provisions of clause (b) of sub section (4) section 249 of the Act. 5. Since the appellant had not filed return of income as well as not paid an amount equal to the amount of advance tax which was payable by it, present appeal is not liable to be admitted. The appeal is infructuous and is, therefore, dismissed. 6. In the result, the appeal of the appellant is dismissed.” 4. Being aggrieved with the order of the CIT(A), the assessee is in appeal before us. 5. We have heard the Learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record. 6. Admittedly, it is a matter of fact borne from the record that the assessee had failed to file his return of income for the subject year. Thereafter, the AO vide his order passed under section 147 r.w.s 144j r.w.s 144B of the Act determined the income of the assessee at Rs. 62,94,561/-. Printed from counselvise.com 6 ITA No. 1476/Hyd/2025 Haribabu Yenuganti vs. ITO 7. Thereafter, the assessee had carried the matter in appeal before the CIT(A), but without complying with the provisions of section 249(4)(b) of the Act, which contemplates that where the assessee who has not filed his return of income is obligated to deposit the amount of advance tax which was payable by him failing which the appeal shall not be admitted. For the sake of clarity, we deem it apposite to cull out the provisions of section 249(4) of the Act, as under: “(4) No appeal under this Chapter shall be admitted unless at the time of filing of the appeal,— (a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or (b) where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him: Provided that, in a case falling under clause (b) and on an application made by the appellant in this behalf, the [Joint Commissioner (Appeals) or the] Commissioner (Appeals) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of that clause.” 8. Ostensibly, clause(b) of section 249(4) of the Act obligates the assessee who has not filed his return of income to deposit an amount equal to the amount of advance tax which was payable to him as a precondition for filing of an appeal before the CIT(A). However, we find that “proviso” to section 249(4) of the Act carves out an exception, as per which, where an application is made by the assessee appellant, then, the CIT(A) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of clause(b) of section 249(4) of the Act. Printed from counselvise.com 7 ITA No. 1476/Hyd/2025 Haribabu Yenuganti vs. ITO 9. We find substance in the Ld. AR’s contention that as the assessee had remained under a bona fide belief that as he had no taxable income, therefore, no obligation was cast upon him to deposit any amount of advance tax to facilitate filing of an appeal before the First Appellate Authority. In our view, the failure on the part of the assessee to file an application before the CIT(A) for seeking exemption from the application of the pre-condition contemplated under section 249(4)(b) of the Act was prompted by a bona fide reason i.e., a belief that in absence of any income no obligation was cast upon him to deposit any amount of advance tax. 10. Be that as it may, we are of a firm conviction that as the assessee at Sl. No.9 of “Form-35”, wherein he was called upon to state as to whether an amount equivalent to the amount of advance tax as per section 249(4)(b) of the Act has been paid by him, stated that the same was “not applicable”, therefore, the CIT(A) in the back drop of the aforesaid fact ought to have called for a clarification from the assessee as to on what basis no obligation was cast upon him to deposit the amount of the advance tax as contemplated under section 249(4)(b) of the Act. Having not so done, we are of the view that the assessee had remained divested of an opportunity to put forth his case before the CIT(A) and explain before him the reason as to why he was not Printed from counselvise.com 8 ITA No. 1476/Hyd/2025 Haribabu Yenuganti vs. ITO obligated to pay an amount equal to the amount of advance tax under section 249(4)(b) of the Act. 11. We are of the considered view that in the backdrop of the facts involved in the case before us, as the assessee had remain divested of an opportunity to put forth his explanation as regards the exemption sought by him from the application of section 249(4)(b) of the Act, which as observed by us herein above is apparently prompted by a bona fide reason, therefore, the matter, in all fairness, requires to be restored to the file of the CIT(A). We, thus, restore the matter to the file of the CIT(A) with a direction to the CIT(A) who shall afford an opportunity of being heard to the assessee to put forth an explanation based on which he seeks exemption from the application of section 249(4)(b) of the Act. Before parting, we may herein observe that as we have on a simpliciter basis set aside the matter to the file of the CIT(A) for the limited purpose of affording a reasonable opportunity to the assessee to put forth an explanation within the meaning of “proviso” to section 249(4)(b) of the Act, therefore, we are expressing no view regarding the exercising of such discretion by the CIT(A) who shall remain at liberty to take a fair view in the back drop of the explanation provided by the assessee before him, if any. 12. Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations. Printed from counselvise.com 9 ITA No. 1476/Hyd/2025 Haribabu Yenuganti vs. ITO Order pronounced in the open court on 12th November, 2025. S Sd/- Sd/- (मधुसूदन सावͫडया) (MADHUSUDAN SAWDIA) लेखासदèय/ACCOUNTANT MEMBER Sd/- Sd/- (रवीश सूद) (RAVISH SOOD) ÛयाǓयकसदèय/JUDICIAL MEMBER d/- Sd Hyderabad, dated: 12.11.2025. OKK/sps Printed from counselvise.com 10 ITA No. 1476/Hyd/2025 Haribabu Yenuganti vs. ITO आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to:- 1. Ǔनधा[ǐरती/The Assessee : Haribabu Yenuganti, Kamepallivaripalem, Mangamur, Santhanuthalapadu, Prakasam, Ongole, Andhra Pradesh- 523225. 2. राजèव/ The Revenue : Income Tax Officer, Ward-1, Ongole, Andhra Pradesh-523225. 3. The Principal Commissioner of Income Tax, Guntur. 4. ͪवभागीयĤǓतǓनͬध, आयकरअपीलȣयअͬधकरण /DR,ITAT, Hyderabad. 5. The Commissioner of Income Tax 6. गाड[फ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Hyderabad. Printed from counselvise.com "