2024 (6) TMI 273 - AT - Income Tax

Appeal allowed as advance tax under section 249(4)(b) refers to undisputed income, not assessed tax liability

Dilip Hiralal Chaudhari Versus ITO, Ward-Nandurbar

ITAT Pune allowed the assessee's appeal against CIT(A)/NFAC's dismissal for non-payment of advance tax under section 249(4)(b). The tribunal held that ... Dismissal of appeal due to non-payment of advance tax u/s 249(4)(b) - assessee has not furnished return of income within time allowed as per section 139(1) of the IT Act but in response to notice u/s 142(1) - HELD THAT:- We find that the appellant assessee did not respond to the notice issued by LD CIT(A)/NFAC, wherein the assessee was asked to clarify that whether he has made payment of tax which includes the element of advance tax. But the appellant assessee failed to reply to the above notice & also did not filed any application seeking exemption from payment of advance tax, which compelled LD CIT(A)/NFAC to dismiss the appeal in limine. But at the same time LD CIT(A)/NFAC also referred section 234B(1) for the purposes of calculation of interest on advance tax & hold that advance tax is to be calculated on the basis of assessed tax & the assessee has not paid advance tax on the basis of assessed tax. We find that, as per section 234B(1) of the IT Act for the purposes of calculation of interest on advance tax, advance tax is calculated on the basis of assessed tax, whereas in section 249(4)(b) the words- advance tax which was payable by him are used. If the intention of the legislature would have been same than in both the sections same wording could have been used. But we do not find so. It is the contention of the counsel of the assessee that clause (b) of section 249(4) contemplates that advance tax payable by him, means according to the assessee & not according to the assessed income. We are in agreement with the contention of the counsel of the assessee & hold that in the instant case the assessee was not required to pay advance tax on the basis of assessed tax but was required to pay advance tax, if any, which was payable by him i.e. on the basis of his undisputed admitted income. Assessee has admitted the taxable income in belated income tax return, & due income tax was sought to be adjusted from TCS - instead of advance tax whole of the tax payable on undisputed admitted income of the assessee was already deposited in the shape of TCS & therefore there was no further advance tax liability remained to be paid - In our considered opinion LD CIT(A)/NFAC erred in dismissing the appeal of the assessee on the limited ground of non payment of advance tax, because whole of the income tax on the undisputed income declared in the belated income tax return of the assessee was already paid in the shape of TCS, hence there was no requirement as per section 249(4)(b) of the IT Act to pay any further tax in the shape of advance tax by the assessee. Hence without going into merits of the case we set-a-side the order passed by LD CIT(A)/NFAC & remand the matter back to the file of LD CIT(A)NFAC with direction to admit the appeal for adjudication on merits of the case after providing the assessee a reasonable opportunity of hearing. CIT(A)NFAC shall pass the order as per facts & law & on grounds of appeal after providing reasonable opportunity of being heard to the assessee. The assessee is also hereby directed to respond to the notice issued by the ld. CIT(A)/NFAC and submit the requisite details on the appointed date without seeking any adjournment under any pretext, failing which CIT(A)/NFAC is at liberty to pass appropriate order as per law. Appeal of the assessee stands allowed for statistical purposes. Issues Involved:1. Non-admittance of appeal due to non-payment of advance tax u/s 249(4)(b).2. Interpretation of section 249(4)(b) regarding advance tax payment.3. Consistency in judicial decisions.Summary:Issue 1: Non-admittance of Appeal Due to Non-Payment of Advance Tax u/s 249(4)(b):The learned CIT(A) dismissed the appeal on the ground that the assessee had not satisfied the condition of payment of advance tax as specified u/s 249(4)(b). The CIT(A) noted that the appellant failed to file a return of income and did not deposit the demand before filing the appeal. The appellant had also not provided any comments regarding the payment of advance tax in Form-35.Issue 2: Interpretation of Section 249(4)(b) Regarding Advance Tax Payment:The appellant argued that the condition of advance tax payment was not applicable as the taxes on the declared income were already paid through TCS. The Tribunal found that section 249(4)(b) requires the payment of advance tax on the undisputed income, not on the assessed income. The Tribunal agreed with the appellant's contention that the advance tax payable should be based on the admitted income, not the assessed income. The Tribunal noted that the appellant had already paid the tax on the admitted income through TCS, fulfilling the requirement of section 249(4)(b).Issue 3: Consistency in Judicial Decisions:The appellant highlighted that in a similar case involving a cousin, the CIT(A) had admitted and allowed the appeal on merits. The Tribunal emphasized the importance of consistency in judicial decisions and directed the CIT(A) to follow the same approach in the appellant's case.Conclusion:The Tribunal set aside the order of the CIT(A) and remanded the matter back to the CIT(A) with directions to admit the appeal for adjudication on merits. The Tribunal held that the appellant had fulfilled the requirement of section 249(4)(b) by paying the tax on the admitted income through TCS. The CIT(A) was directed to provide a reasonable opportunity of hearing to the appellant and pass an order as per facts and law. The appeal of the assessee was allowed for statistical purposes.