No pre-deposit requirement of tax/advance tax u/s 249(4)(b) before appeal to CIT(A) in case of no admitted or undisputed tax – ITAT
In a recent judgment, the Hon’ble ITAT has held that in case of no admitted or undisputed tax, pre-deposit requirement under Section 249(4)(b) of the Income Tax Act, 1961 (the Act) not applicable.
ABCAUS Case Law Citation:
ABCAUS 3907 (2024) (03) ITAT
Important Case Laws relied upon by parties:
CIT v. Smt. Deivamalar [2009] 329 ITR 249
T. Govindappa Setty 231 1TR 892 (Karn)
Hotel Sai Siddi P. Ltd 13 taxmann.com 155
In the instant case, the assessee had challenged the order passed by the CIT(A) OF National Faceless Appeal Centre (NFAC) holding that since the appellant had not filed the return of income as well as not paid an amount equal to the amount of advance tax which was payable by the appellant on assessed income, the appeal by the appellant was not liable to be admitted.
Appellant had not filed any Return of Income u/s 139 of the Act as his income was below taxable limit. For the same reasons, he did not file any return in response to the notice issued u/s 148 also.
The case of the assessee was that there is no admitted tax or undisputed tax in the present matter as all the assessed income was disputed by the assessee. Therefore, there was no liability of appellant to pay any Advance Tax, as per the provisions of Section 2(1) 208 & 209(1)(a) of the Act.
It was submitted that the scheme of the Act in particular with the provision of Section 249(4), the tax to be paid by the appellant before filing of appeal to the CIT (A) is in the case of cases falling u/s 249(4)(a) where return of income is filed, the tax payable on the amount of returned income and where the case falls u/s 249(4)(b) where no return of income was filed by the appellant, the tax equal to amount of Advance Tax which was payable by him, which clearly refers to undisputed income of the appellant.
It was the submission of the assessee that the scheme of the Act in both the cases, falling in 249(4)(a) or 249(4)(b) to pay the amount of tax payable on undisputed income of the appellant, which in the instant case is Nil. Any other interpretation would lead to forfeiture of ‘right to appeal’, which is statutory and inherent right of the appellant and will cast an obligation on the appellant to estimate the high pitched assessment which may be framed by the AO and to pay tax thereon, which can never be the intention of the legislature.
The Tribunal went through the relevant provisions of the Act namely section 249(4) as under
249(4) No appeal under this Chapter shall be admitted unless at the time of filing of the appeal:
(b) 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 when was payable by him
The Tribunal found merit into the contention of the assessee that the CIT(A) wrongly applied the provisions of Section 249(4)(b) as in the instant case there was no admitted or undisputed tax. In the case in hand the undisputed income is Nil. therefore, there was no liability to pay advance tax as per the relevant provisions.
The ITAT noted that the coordinate Bench has observed that the provision of section 249 deals with form of appeal and limitation. Sub-section (4) of sectior 249 deals with admission of appeal. According to the provision of section 249(4)(a), no appeal shall be admitted unless at the time of filing of the appeal, the assessee has paid the tax due or the income returned by him. As per provision of section 249(4)(b) the appeal will not be admitted unless at the time of filing the appeal, the assessee has paid an amount equal to the amount of advance tax which was payable by him at the time of filing an appeal. There is also proviso to section 249(4), according to which, on an application made by the assessee in this behalf, 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.
The Co-ordinate Bench further observed that on plain reading. The proviso to section 249(4) is applicable to a situation where no return has been filed by the assessee and the assessee is supposed to pay an amount equal to the amount of advance tax which was payable by him. It is obvious that Legislature intended that where the assessee has taken advantage of appeal under Chapter XX he should have paid at least admitted tax payable before the appeal is admitted. The opening words are clear enough to cover all kinds of appeal contemplated under Chapter XX and restricted meaning cannot be given or for that matter section cannot be read down. In case there is a dispute with regards to payment of admitted tax then the matter may be remitted to CIT(A) to decide on merit for verification of payments of tax on admitted income as held by the High Court.
The Tribunal opined that the CIT(A) had wrongly applied the provisions of Section 249(4)(b) on the facts of this case. As a result, ITAT set aside the impugned order of CIT(A) and restored the matter to the file of CIT(A) to decide the appeal of the assessee, on merit of the impugned addition.
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