MAROOFALI I SHAIKH ,BAGALKOT V. INCOME TAX OFFICER, WARD-1 & TPS, BAGALKOT

ITA 981/BANG/2024

AI Insights

The case involves Maroofali I Shaikh, the appellant, who contested the order passed by the CIT(A)/NFAC for the assessment year 2015-16. The primary contention was regarding the non-admission of his appeal by the CIT(A) due to alleged non-payment of the required advance tax as stipulated under Section 249(4)(b) of the Income Tax Act, 1961. The ITAT found that the CIT(A) had misinterpreted the section, leading to the dismissal of the appeal. The ITAT noted that the assessee had indeed paid the entire admitted tax before filing the appeal, thus meeting the requirements of the section.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470425 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 31-07-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 20-05-2024
• Other Referred Cases: Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471), NTPC Vs. CIT 229 ITR 383 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V. PARITHIVEL
• Assessee Lawyers: RAVISHANKAR
• Keywords: Condonation of delay; Opportunity of being heard; Question of law; Principle of natural justice
• Section: 147; 148; 142(1); 250; 208; 44AD; 13; 69A; 139; 207; 101

Judgement Text

"ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot IN THE INCOME TAX APPELLATE TRIBUNAL “C’’ BENCH: BANGALORE BEFORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.981/Bang/2024 Assessment Year: 2015-16 Maroofali I Shaikh Maroof Cement Articles Muchakhandi Cross Belgaum Road Bagalkot 587 101 PAN NO : BSVPS0669D Vs. ITO Ward-1 & TPS Bagalkot APPELLANT RESPONDENT Appellant by : Sri Ravishankar, A.R. Respondent by : Sri V. Parithivel, D.R. Date of Hearing : 31.07.2024 Date of Pronouncement : 14.10.2024 O R D E R PER KESHAV DUBEY, JUDICIAL MEMBER: This appeal by the assessee is directed against the order of CIT(A)/NFAC dated 30.1.2024 vide DIN & Order No.ITBA/NFAC/250/2023-24/1060250952(1) for the AY 2015-16 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”). 2. This appeal is filed before this Tribunal belatedly by 51 days. The assessee has submitted an affidavit along with a petition for condonation of delay which are reproduced below: ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 2 of 17 ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 3 of 17 ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 4 of 17 ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 5 of 17 ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 6 of 17 ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 7 of 17 2.1 In our opinion, the explanation given is bona fide and it is a good and sufficient reason to condone the delay in filing the appeal before us. It is noted that there is no malafide intention on behalf of assessee in not filing the present appeal within time. In these circumstances, it cannot be said that assessee is very callous in its approach in filing the appeal before us. 2.2 At this stage, it is appropriate to refer to the judgement of Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471), Hon’ble Supreme Court laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder: “(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late. (2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 8 of 17 second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner. (4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 2.3 Being so, when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non-deliberate delay. In our opinion, this is a fit case to condone the short delay of 51 days in filing the appeal before this Tribunal. Accordingly, the delay is condoned and the appeal is taken up for adjudication on merits. 3. The assessee has raised following grounds of appeal:- 1. “The order passed by the authorities below insofar as it is against the Appellant, is opposed to law, weight of evidence, natural justice and probabilities on the facts and circumstances of the Appellant's case. 2. The Appellant denies himself liable to be assessed at Rs.1,56,92,000/- for the assessment year 2015-16, on the facts and circumstances of the case. 3. Grounds on dismissal on first appeal under section 249(4)(b) of the Act: a. The learned CIT(A) is not justified in dismissing the appeal in limeine by relying on the provisions of section 249(4) of the Act, on the facts and circumstances of the case. b. The learned CIT(A) has erred in arriving at a conclusion that the appellant is required to 90% of the disputed demand of Rs.1,40,27,642/- which is an incorrect interpretation of section 249(4) of the Act, on the facts and circumstances of the case. c. The learned CIT(A) has failed to appreciate that the appellant has admitted tax liability of Rs.64,460/- which has been discharged vide ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 9 of 17 challan dt:15.04.2022 before instituting the first appeal, on the facts and circumstances of the case. 4. Grounds on addition made under section 69A of the Act, Rs.1,56,92,000/-: a. The learned assessing officer has erred in considering that a sum of Rs.1,56,92,000/- has been deposited in the bank account, whereas the actual cash deposits made in Rs.77,98,300/-, on the facts and circumstances of the case. b. The cash deposits is out of the sale proceeds and the cash withdrawals made from the bank account, thus, the provisions of section 69A of the Act finds no applicability on the facts and circumstances of the case. 4, c. The learned assessing officer has erred in treating the entire cash deposits as unexplained and ought to have estimated the profit from business on the facts and circumstances of the case. d. The learned assessing officer has failed to appreciate that the power to invoke the rigours of section 69A of the Act is directory in nature and not mandatory on the facts and circumstances of the case. 5. The appellant denies the liability to pay interest under section 234A, 234B and 234C of the Act in view of the fun that there is no liability to additional tax as determined by the learned assessing officer. Without prejudice the rate, period and on what quantum the interest has been levied are not in accordance with law and further are not discernable from the order and hence deserves to be cancelled on the facts and circumstances of the case. 6. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 7. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed and appropriate relief be granted in the interest of justice and equity.” 3.1. The assessee has raised following additional grounds of appeal: 1. Grounds on reopening: a. The notice issued under section 148 of the Act is bad in law. ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 10 of 17 b. The learned assessing officer has failed to strike off the irrelevant portion in the 148 notice, thereby rendering the reopening as void ab initio on the facts and circumstances of the case. c. The reopening is based on suspicion and that there are no reasons to believe that the income of the appellant has escaped assessment, on the facts and circumstances of the case. d. The learned assessing officer is not justified in issuing notice under section 148 of the Act for making enquires with respect to the cash deposits made, on the facts and circumstances of the case. e. The learned assessing officer has failed to follow the mandatory procedures for assessment under section 147 of the Act, on the facts and circumstances of the case. f. The learned assessing officer has failed to obtain the mandatory sanction for reopening. Without prejudice, the sanction obtained, if any, is not in accordance with law, on the facts and circumstances of the case. 2. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 3. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed and appropriate relief be granted in the interest of justice and equity.” 4. We have heard the both the parties on admission of additional grounds. In our opinion, all the facts are already on record and there is no necessity of investigation of any fresh facts for the purpose of adjudication of above grounds. Accordingly, by placing reliance on the judgement of Hon’ble Supreme Court in the case of NTPC Vs. CIT 229 ITR 383 (SC) we inclined to admit the additional grounds for the purpose of adjudication as there was no investigation of any fresh facts otherwise on record and the action of the assessee is bonafide as the assessee has raised the pure question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee. ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 11 of 17 5. Brief facts of the case are that the assessee is an individual and during the FY 2014-15, the assessee has deposited huge amount of cash at Rs.1,56,92,000/- in his savings bank account maintained with SBI vide saving account No.11029313443. However, assessee had not filed his return of income as per provision section 139 of the Act for FY 2014-15 relevant to AY 2015- 16. Accordingly, notice u/s 148 of the Act was issued to the assessee on 31.3.2021. In response to the notice the assessee has also not filed his return of income within stipulated time. The case was then transferred to the ReFAC(AU) on 10.12.2021. Accordingly, notices u/s 142(1) of the Act along with questionnaire were issued but no reply was received from the assessee. In the absence of any details/submission from the assessee, the AO passed assessment order by observing that the assessee has made substantial cash deposits in the bank accounts totalling to Rs.1,56,92,000/- and since proper explanation was not given by the assessee regarding source of deposit, the AO treated entire deposit as unexplained money u/s 69A of the Act and added to the total income of the assessee and accordingly computed the tax and interest payable at Rs.1,40,27,642/-. Aggrieved, the assessee went in appeal before ld. CIT(A)/NFAC. 6. During the course of First Appellate proceedings in response to deficiency letter dated 10.1.2024 and reminder letter dated 17.1.2024 the assessee had neither complied nor furnished any documentary evidence showing that the assessee has paid an amount equal to the amount of advance tax which was payable by him as required u/s 249(4)(b) of the Act. The assessee has also not made any application as per the proviso to section 249(4)(b) of the Act due to which there is no opportunity for the ld. CIT(A) to examine the reason for exemption from the operation of provisions of clause (b) to subsection (4) of the section 249 of the Act. As per the ld. CIT(A) the disputed demand is at Rs.1,40,27,642/- and as ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 12 of 17 per the provisions of the Act, the advance tax payable is 90% of the disputed demand amount i.e. Rs.1,26,24,879/- and the assessee has made payment of Rs.64,460/- only as advance tax, which is less than the amount equal to the advance tax to be payable on or before filing appeal. The ld. CIT(A) held that as per section 249(4)(b) of the Act, the appeal shall not be admitted, unless the assessee has paid an amount equal to the amount of advance tax which was payable and since the applicable advance tax has not been paid by the assessee before filing the appeal, the ld. CIT(A) has not admitted and dismissed the appeal. Aggrieved, assessee is in appeal before us. 7. The ld. A.R. submitted that the ld. AO has erred in considering that a sum of Rs.1,56,92,000/- has been deposited in the bank account, whereas the actual cash deposits made was Rs.77,98,300/- only, which were out of sale proceeds and the cash withdrawals made from the bank account and thus, the provisions of section 69A of the Act had no applicability on the facts and circumstances of the case. Further, the ld. CIT(A) has erred in arriving at a conclusion that the assessee is required to pay 90% of the disputed demand of Rs.1,40,27,642/- which is incorrect interpretation of section 249(4) of the Act, where as assessee has the admitted tax liability of Rs.64,460/-, which has been discharged fully vide challan dated 15.4.2022 before instituting the appeal before the ld. CIT(A). Hence, he prayed to allow the appeal of the assessee by quashing the order of ld. CIT(A) based on the provisions of section 249(4) of the Act. 8. The ld. D.R. on the other hand relied on the orders of the authorities below and argued that the appeal of the assessee may be dismissed. 9. We have heard the rival submission and perused the materials available on record. It is an undisputed fact that before filing an appeal before the ld. CIT(A) on 15.4.2022, the assessee ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 13 of 17 had declared the income based on presumptive basis by applying section 44AD of the Act amounting to Rs.5,51,864/- and paid the admitted tax entirely amounting to Rs.64,460/- on 15.4.2022 i.e. on or before the filing the appeal before the first appellate authority. This fact of payment of entire admitted tax was disclosed by the assessee to the ld. CIT(A). In our view, the payment of advance tax is based on an estimation of total income that is chargeable to tax. 9.1 Before we proceed further, it would be handy to refer to the provisions relating to payment of advance tax under the Act. Chapter XVII-C of the Act which deals with “Advance payment of tax” contains section 208 to 219 w.r.t. payment of advance tax under the Act. Advance tax is the tax payable on the estimated total income of the relevant financial year, which is chargeable to tax in the assessment year but is payable in that very financial year. Section 207 of the Act is based on the principle that “pay as you earn”. Section 207 of the Act lays down the liability for payment of advance tax as follows: Section 207 of the Act: “Liability for payment of advance tax. “207. (1) Tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 (both inclusive), in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as \"current income\". (2) The provisions of sub-section (1) shall not apply to an individual resident in India, who— (a) does not have any income chargeable under the head \"Profits and gains of business or profession\"; and (b) is of the age of sixty years or more at any time during the previous year.” Conditions of liability to pay advance tax: “208. Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during the year, as computed in accordance with the provisions of this Chapter, is (ten thousand) rupees or more] ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 14 of 17 Computation of advance tax: 209 (1) The amount of advance tax payable by an assessee in the financial year shall, subject to the provision of sub-sections (2) and (3), be computed as follows, namely:- (a) Where the calculation is made by the assessee for the purposes of payment of advance tax under sub-section (1) or sub-section(2) or sub- section (5) or sub-section (6) of section 210, he shall first estimate his current income and income-tax thereon shall be calculated at the rates in force in the financial year. (b) ………………………………… Payment of advance tax by the assessee of his own accord or in pursuance of order of Assessing Officer. “210. (1) Every person who is liable to pay advance tax under section 208 (whether or not he has been previously assessed by way of regular assessment) shall, of his own accord, pay, on or before each of the due dates specified in section 211, the appropriate percentage, specified in that section, of the advance tax on his current income, calculated in the manner laid down in section 209.” 9.2 From the plain reading of the above provisions, we can safely say that firstly for the purposes of payment of Advance tax, the assessee shall first estimate his current income (Section 290(1)(a) of the Act), secondly the advance tax shall be payable during the financial year where the amount of tax payable is Rs.10,000/- or more (Sec.208 of the Act) and thirdly every person liable to pay advance tax shall, of his own accord pay on or before each of the due dates specified in section 211 of the Act (Sect 210(1) of the Act). 9.3 In the present case, it is an undisputed fact that the assessee could not file his return of income for the assessment year 2015-16 and therefore, the provisions of section 249(4)(b) of the Act will be clearly applicable to the assessee. The provisions of section 249(4) of the Act is reproduced below for ease of reference and convenience: Section 249(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; ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 15 of 17 Provided that, [in a case falling under cluse (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]]. 9.4 Thus, from the plain reading of above provisions of law, we can safely infer that if the assessee has not filed any return of income, then no appeal shall be admitted unless at the time of filing of the appeal, the assessee has paid an amount equal to the amount of advance tax which was payable by him. The legislature at their full wisdom had used the term “Amount equal to the amount of advance tax which was payable by him”. As discussed earlier, the advance tax is the tax payable on the estimated total income of the relevant financial yar, which is chargeable to tax in the assessment year but is payable in that very financial year. A catena of decisions by various High Courts has reiterated that the advance tax payable under chapter XVII is based on an estimate of the total income of the assessee. An estimate always has an element of guess work. There could be various reasons due to which an estimate may be faulty and inaccurate which is why, there is a provision for payment of interest on deficient or excess payment of advance tax when there is variation between advance tax paid and actual liability to tax. 9.5 Section 249(4)(b) of the Act which states that the assessee has paid an amount equal to the amount of advance tax which was payable by him can never even stretch of imagination be treated as “advance tax payable on 90% of the disputed demand as held by ld. CIT(A). In our opinion, the ld. CIT(A) in para 2.3 although reproduced the provisions of section 249(4) of the Act and accepted the fact that the assessee has not filed the return of income and therefore, the second part of the provision is applicable to the case of the assessee but grossly erred in holding that as per the provisions of the Act, the Advance tax payable is 90% of the disputed demand amount i.e. Rs.1,26,24,879/- and the assessee has paid only Rs.64,460/- and ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 16 of 17 accordingly, not admitted the appeal as per provisions of section 249(4) of the Act. 9.6 We are of firm opinion that in the present case, before filing the appeal, the assessee has on his own accord computed the taxable income for the assessment year 2015-16 and the entire admitted tax has also been paid on or before the filing of appeal. Further, the assessee had also submitted the computation of income and copy of challans paid at the time of filing the appeal and therefore, the order of ld. CIT(A) in not admitting the appeal is illegal and bad in law. 9.7 Further, the question of filing of an application as per the proviso to section 249(4) of the Act also does not arise as the assessee has paid the entire admitted tax on or before the filing of appeal before first appellate authority. 9.8 With the above observations, we remit the entire issue in dispute to the file of ld. CIT(A) for fresh consideration and to decide the same on merits in accordance with law after giving reasonable opportunity of being heard to the assessee. 10. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 14th Oct, 2024 Sd/- (Laxmi Prasad Sahu) Accountant Member Sd/- (Keshav Dubey) Judicial Member Bangalore, Dated 14th Oct, 2024. VG/SPS ITA No.981/Bang/2024 Maroofali I Shaikh, Bagalkot Page 17 of 17 Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. "