VINAY KUMAR JHA,MADHUBANI V. PCIT-2, PATNA

ITA 306/PAT/2024

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Vinay Kumar Jha appealed against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi, which was passed under section 250 of the Income Tax Act, 1961, for the assessment year 2017-18. The original assessment was made under section 144 of the Act, which was an ex parte order due to non-compliance by the assessee in filing returns and responding to notices. The CIT(A) dismissed the appeal due to non-payment of advance tax, which was a requirement under section 249(4)(b) of the Act. The Tribunal found that the CIT(A) did not specify the amount of advance tax payable nor whether section 208 was applicable, and noted that the assessee had the option to file an application for exemption from the advance tax requirement, which was not utilized. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the case for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46700 (ITAT-PATNA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 144; 142(1); 250; 139(1); 208; 69A

Judgement Text

"आयकर अपीलीय अधिकरण पटना 'एसएमसी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL PATNA ‘SMC’ BENCH AT KOLKATA [वर्चुअल कोटु] [Virtual Court] श्री संजय शमाु, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI SONJOY SARMA, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 306/PAT/2024 Assessment Year: 2017-18 Vinay Kumar Jha Vs. CIT (Appeal), NFAC (Appellant) (Respondent) PAN: AUEPJ1616M Appearances: Assessee represented by : None. Department represented by : Ashwani Kumar, Sr. DR. Date of concluding the hearing : February 3rd, 2025 Date of pronouncing the order : February 6th, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2017-18 dated 12.01.2024, which has been passed against the assessment order u/s 144 of the Act, dated 22.12.2019. Page | 2 I.T.A. No.: 306/PAT/2024 Assessment Year: 2017-18 Vinay Kumar Jha. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “1. For that the grounds of appeal hereto are without prejudice to each other. 2. For that the order of the Income Tax (Appeals) and also the learned assessing officer is bad both in law and on facts. 3. For that the Commissioner of Income Tax (Appeals) has erred in concurring. 4. For that the assessee account is operative as per Bank Statement is Current Account i.e. Business Entity Account. 5. For that the learned Commissioner of Income Tax (Appeals) has erred in dismissing the appeal on the solitary ground of non-payment of advance tax on the amount of income determined by the learned assessing officer in an ex parte order of assessment and had quantified the tax liability at 6,07,275/- notwithstanding the fact that the assessment in the present case was made to the best of judgement of the learned assessing officer ex parte under Section 144 of the Act and that liability to pay advance tax could not be saddled on the basis of an ex parte order of assessment. 6. For that the learned assessing officer has erred 4,12,000/- on account of deposit of demonetized currency in the bank account notwithstanding the fact that the same represented opening balance of cash on the date the demonetization of the currency was declared and that the same was earned/ received out of sale proceeds details whereof are furnished in appellate proceedings. 7. For that the Assessing officer has erred in adding a sum of 4,12,000/- on account of deposit of demand currency in the bank account notwithstanding the fact that income was estimated at the rate of 8% of the gross receipt and that such deposits were covered out of such estimated income only which represented sale proceeds. 8. For that the learned officer has erred in estimating the income at Rs. 10,61,896/- at the rate of 8% of the gross receipt and also added a sum of Rs.4,12,000/- on account deposit of demonetized currency in the bank account notwithstanding the fact that the same in any case higher that the actuals and not reasonable keeping in view the nature of business carried out. 9. For that in any view of the matter the order of the learned assessing officer is beyond the realm of the show cause notice under such is not sustainable in law. Page | 3 I.T.A. No.: 306/PAT/2024 Assessment Year: 2017-18 Vinay Kumar Jha. 10. For that in view of the matter the order of the learned assessing officer and also the order of the learned commissioner of Income Tax (Appeals) are bad in law and is fit to be set aside. 11. For that other various grounds which may be urged at the time of hearing.” 3. Brief facts of the case are that as per the information available on AIMS Module of ITBA, it was noticed by the Ld. AO that during the demonetization period (09.11.2016 to 30.12.2016), the assessee had made cash deposits in the bank account no. 635619797617 held in the State Bank of India, Saharghat at Rs. 11,65,500/-. No return of income was filed within the due date prescribed in section 139(1) of the Act. Therefore, a notice u/s 142(1) of the Act was issued requesting for filing the return which was not complied with. Subsequently, a show cause notice was issued which was not complied with. A perusal of the bank account sent by the State Bank of India, Saharghat showed that a sum of Rs. 85,35,700/- was deposited during FY 2016-17 including Rs. 4,12,000/- deposited during the demonetization period in Specified Bank Notes (SBNs) and the assessee was required to explain the nature of his business and file balance sheet, P&L account, audit report in case of audit, cash purchase sale book, cash flow, VAT return. Since no details were filed, therefore, a sum of Rs. 4,12,000/- deposited during the demonetization period in SBNs was added u/s 69A of the Act as the exact source of these deposits could not be explained by the assessee. It was further noticed by the Ld. AO that the trend of transaction in the assessee's bank account showed that the assessee was engaged in trade/business in the name of M/s. Tanmay Traders. So, keeping in view the narrations of statement of bank account, he treated the deposits as the turnover of the assessee. However, the turnover was taken at Rs. 81,23,700/- after excluding the addition u/s 69A of the Act of 4,12,000/- and a net profit rate of 8% was applied and income of Rs. Page | 4 I.T.A. No.: 306/PAT/2024 Assessment Year: 2017-18 Vinay Kumar Jha. 6,49,896/- was determined as the profit of business and added and the total taxable income was determined at Rs. 10,61,896/- u/s 144 of the Act. 3.1 Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who has mentioned in para 2.1 that the Ld. AO arrived at the total income of Rs. 6,07,275/- and computed the tax payable at Rs. 10,61,896/- which includes the advance tax payable for the assessee as well as the interest on account of belated payment of advance tax. However, the Ld. CIT(A) appears to have mixed up and interchanged the figures of total income and tax as the total income has been computed at Rs. 10,61,896/- and the tax liability of Rs. 10,61,896/- has been erroneously mentioned in Form 35 by the assessee himself. In column no. 8 of Form 35 the assessee has mentioned that an amount equal to the amount of advance tax as per section 249(4)(b) of the Act has not been paid. The Ld. CIT(A) examined the provision of section 249(4)(b) of the Act and issued a deficiency letter; in response to which the assessee submitted that the ITR was not filed, hence the advance tax could not be determined and deposited and he requested to accept the appeal and proceed further. The Ld. CIT(A) has further held in para 2.6 that the assessee did not offer proper clarification as to why he did not pay an amount equal to the advance tax payable before filing the appeal. Since the advance tax was not paid nor any satisfactory clarification/explanation in response to the deficiency letter was filed by the assessee therefore, the appeal was not eligible for admission and was not admitted and dismissed for statistical purposes. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. Page | 5 I.T.A. No.: 306/PAT/2024 Assessment Year: 2017-18 Vinay Kumar Jha. 4. Rival contentions were heard and the record and the submissions made were examined. Before adjudicating the appeal, it is important to refer to the provisions of Section 249(4)(b) of the Act, which is relied upon by the Ld. CIT(A) while dismissing the appeal and which is as under: “249(4)(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.” 4.1. As per the proviso thereof, there is an option available to the assessee to file an application before the Ld. CIT(A) who may dispense with the requirement of payment of advance tax on the basis of facts. Apparently, no such application was filed by the assessee and, therefore, the appeal was dismissed. 4.2. However, the liability to pay the advance tax is determined by the provisions of Chapter XVII-C relating to advance payment of tax and is governed by the provisions of section 208 as per which 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 in this regard is Rs. 10,000/- or more. Further, Section 209 of the Act r.w.s. 210 specifies the manner of computation of advance tax; section 209(1) of which is reproduced as under: “209. (1) The amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3), be computed as follows, namely :— Page | 6 I.T.A. No.: 306/PAT/2024 Assessment Year: 2017-18 Vinay Kumar Jha. (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) where the calculation is made by the Assessing Officer for the purpose of making an order under sub-section (3) of section 210, the total income of the latest previous year in respect of which the assessee has been assessed by way of regular assessment or the total income returned by the assessee in any return of income furnished by him for any subsequent previous year, whichever is higher, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year; (c) where the calculation is made by the Assessing Officer for the purpose of making an amended order under sub-section (4) of section 210, the total income declared in the return furnished by the assessee for the later previous year, or, as the case may be, the total income in respect of which the regular assessment, referred to in that sub-section has been made, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year; (d) the income-tax calculated under clause (a) or clause (b) or clause (c) shall, in each case, be reduced by the amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of this Act from any income (as computed before allowing any deductions admissible under this Act) which has been taken into account in computing the current income or, as the case may be, the total income aforesaid; and the amount of income-tax as so reduced shall be the advance tax payable: Provided that for computing liability for advance tax, income-tax calculated under clause (a) or clause (b) or clause (c) shall not, in each case, be reduced by the aforesaid amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of this Act from any income, if the person responsible for deducting tax has paid or credited such income without deduction of tax or it has been received or debited by the person responsible for collecting tax without collection of such tax.” 4.3. The Ld. CIT(A) has not specified as to how much advance tax was payable or even whether the provisions of Section 208 of the Act were applicable to the assessee or not. On the contrary, the assessee contends that since the income was below the maximum amount not Page | 7 I.T.A. No.: 306/PAT/2024 Assessment Year: 2017-18 Vinay Kumar Jha. chargeable to tax, therefore, there was no question of payment of any advance tax. Further, the Ld. CIT(A) has not decided the appeal on the merits of the case. Hence, in view of the facts, since the Ld. CIT(A) has not mentioned as to how much advance tax was payable by the assessee which has not been paid, and the assessee had the option of filing an application before the Ld. CIT(A), which however, was not filed and consequently the discretion available to the Ld. CIT(A) to exempt the assessee from the applicability of the rigours of section 249(4) could not be exercised by him and the appeal has also not been decided on merit, therefore, in the interest of justice, the order of the Ld. CIT(A) is set aside to be done afresh. The assessee may file an application for exemption from the requirement of payment of advance tax, which shall be decided by the Ld. CIT(A) in accordance with law and considering the totality of facts. The assessee shall also be at liberty to file necessary evidences in support of the relief claimed before the Ld. CIT(A) as per law. Needless to say, the assessee shall be given a reasonable opportunity of being heard and to make any further submissions he wants to make in support of the relief claimed. Accordingly, the grounds taken by the assessee in his appeal are allowed for statistical purposes. 5. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 6th February, 2025. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 06.02.2025 Bidhan (P.S.) Page | 8 I.T.A. No.: 306/PAT/2024 Assessment Year: 2017-18 Vinay Kumar Jha. Copy of the order forwarded to: 1. Vinay Kumar Jha, Village+PO- Saharghat, District- Madhubani, Bihar, 847308. 2. CIT (Appeal), NFAC. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Patna Bench, Patna. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "