Only undisputed tax liability is to be paid before filing appeal to CIT(A) -ITAT

Only undisputed tax liability is to be paid before filing appeal to CIT(A)-ITAT

In a recent judgment, ITAT Pune has that objective of section 249(4)(a) is to ensure undisputed tax liability is paid before filing appeal. Self-assessment tax paid as per Return of Income is proper compliance of section 249(4)(a) of the Act -ITAT

ABCAUS Case Law Citation:
ABCAUS 4034 (2024) (05) ITAT

Important Case Laws relied upon:
T. Govindappa Setty Vs. ITO [1998] 231 ITR 892(KAR)

In the instant case, the assessee had challenged the order passed by the CIT(A) NFAC in in rejecting the appeal of the assessee on the ground that assessee is not paid the Advance Tax/Self- Assessment Tax.

The appellant assessee had sold his agricultural land during the year. The Assessing Officer (AO) issued notice u/s 148 of the Income Tax Act, 1961 (the Act). In the assessment order passed u/s 147 of the Act, the AO mentioned that assessee had filed invalid Return of Income in compliance to notice u/s 148 of the Act.

However, the AO had not specified how the Return of Income was invalid! It was further mentioned in the assessment order that since assessee had not filed valid Return of Income, notice u/s 143(2) of the Act was not issued and assessment was completed u/s.144 of the Act.

In the reassessment order, the AO had made an addition towards unexplained investment u/s 69 of the Act.

Aggrieved by the assessment order, assessee filed appeal before the CIT(A). However, the CIT(A) dismissed the appeal of the assessee in limine observing that appellant had not filed return of income as well as not paid an amount equal to the amount of advance tax which was payable.

Thus, the CIT(A) held that the appeal was not liable to be admitted and was infructous and therefore, dismissed.

Before the Tribunal the assessee submitted that he had already paid the taxes and hence CIT(A) erred in dismissing the appeal as infructuous. The attention of the Bench was invited to Form No. 35, Column No. 8 wherein the relevant question and answer given was as under:

The assessee submitted that along with the Form No. 35 in which an appeal is filed before the CIT(A), he had attached copy of self-assessment tax challan. Therefore, assessee had paid the taxes, hence, as per section 249(4), assessee’s appeal was maintainable.

The Tribunal from the copy of challan, Form 26AS and computation of tax, observed that assessee had paid self-assessment tax which was the Tax payable on the returned income. Before filing appeal, assessee had also paid regular Assessment tax and copy of the said payments was enclosed with Form No. 35.

The Tribunal opined that CIT(A) erred in not appreciating above facts, though all these facts had been mentioned by the assessee in the appeal memo and these facts were visible to the CIT(A) through Form No. 26AS as well.

The Tribunal opined that since, assessee had filed Return of Income and had also paid self-assessment tax due on the returned income, the assessee’s case falls u/s 249(4)(a) of the Act. Section 249(4) states that where a return has been filed by the assessee and paid the tax on returned income. The section 249(4) does not specify whether the return is to be filed u/s.139(1) or in response to notice u/s.148 of the Act.

The Tribunal observed that as held by Hon’ble High Court, the section 249(4) has to be interpreted in such a way keeping in mind the assessee’s right to file an appeal. The objective of section 249(4)(a) is to ensure that undisputed tax liability is paid by assessee before filing appeal.

Following the Hon’ble High Court, the Tribunal held that the Return of Income filed by the assessee in response to notice u/s 148 of the Act and self-assessment tax paid by the assessee based on the Return of Income was proper compliance of section 249(4)(a) of the Act. That the CIT(A) had erred in dismissing the appeal of the assessee in limine.

Accordingly, the Tribunal set-aside the appeal of the assessee to CIT(A) for de-novo adjudication on merits of the case.

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