Section 249(4)(b) should not be rigidly when no ITR is filed & where the entire income assessed is disputed: ITAT Agra

 

The ITAT Agra ruling in Ritika Jain, Jawahar Ganj vs. Income-Tax Officer, Shivpuri (ITA No. 168/Agr/2023, dated December 3, 2024) provides significant clarification on the applicability of Section 249(4)(b) of the Income Tax Act, 1961, in cases where disputed income is the sole basis of tax liability.

1. The assessee’s appeal before the CIT(A) was dismissed as un-admitted under Section 249(4)(b) on the grounds that:
• The assessee had not filed a return of income.
• The assessee had not paid advance tax on the assessed addition of ₹16,24,600, which represented unexplained cash deposits under Section 69A.
2. The assessee contended:
• She was not liable to file a return of income since her interest income was below the taxable limit.
• The cash deposit addition was wholly disputed and formed the sole income assessed by the AO.
• The cash deposits related to recoveries from old business dealings, as her business had ceased operations in 2014 and she had moved to the USA.

Tribunal’s Observations

1. Applicability of Section 249(4)(b):
• Section 249(4)(b) requires advance tax payment for admitting an appeal where no return has been filed.
• The proviso allows exemption from this requirement if there is a “good and sufficient reason.”
• In this case, the Tribunal observed that the entire income of ₹16,24,600 was disputed and subject to appeal. There was no admitted income above the taxable threshold, and the addition under Section 69A was contested on both legal and factual grounds.

2.  Nature of Disputed Income:
• The AO assessed the unexplained cash deposit as income under Section 69A, but the assessee consistently denied it being taxable income.
• No income apart from the disputed addition was assessed, and no advance tax liability arose for the disputed addition itself, as it remained unaccepted by the assessee.

3.  Good and Sufficient Reason:
• The Tribunal cited the assessee’s explanation that her only income in India was interest income below the taxable threshold, alongside her relocation to the USA and cessation of business in 2014, as valid grounds for non-filing of the return and non-payment of advance tax.
• It referenced ITAT Raipur’s decision in Vishnusharan Chandravanshi v. ITO (2024) 161 taxmann.com 803, which provided precedence for admitting appeals under similar circumstances.

4.  Remedy
The Tribunal held that the CIT(A) had erred in dismissing the appeal as un-admitted and directed the CIT(A) to admit the appeal and adjudicate it on merits after providing due opportunity to both parties.

This ruling emphasizes that:
• Section 249(4)(b) should not be rigidly applied in cases where the entire income assessed is disputed.
• The proviso to Section 249(4)(b) allows flexibility for admitting appeals when valid reasons exist, particularly when there is no admitted taxable income.
• CIT(A) must exercise discretion judiciously, taking into account the specific facts and circumstances of each case.

The copy of the order is as under:

1733220855-Vx7jxb-1-TO