CIT(A) must admit appeal despite no return filing when disputed income exceeds threshold under Section 249(4)(b)

ITAT AGRA directed CIT(A) to admit the appeal despite assessee not filing return or paying advance tax under Section 249(4)(b). The assessee challenged additions under Section 69A for cash deposits, claiming these were old recoveries from farmers and no income existed as business closed in 2014 after shifting to USA. ITAT held that since the entire assessed income was disputed and assessee had no other taxable income above threshold limits, advance tax liability did not arise on disputed income. The proviso to Section 249(4)(b) allows exemption for good and sufficient reasons, which existed here. Appeal was partly allowed for statistical purposes with directions to CIT(A) to adjudicate on merits after admitting the appeal.

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Issues Involved:
1. Non-filing of return of income by the assessee.
2. Addition of Rs. 16,24,600/- under Section 69A of the Income-tax Act, 1961.
3. Applicability of Section 249(4)(b) concerning the admission of appeal without filing a return or paying advance tax.
4. Maintainability of appeal before the Commissioner of Income Tax (Appeals) [CIT(A)].

Detailed Analysis:

1. Non-filing of Return of Income:
The assessee did not file her return of income under Section 139. The Assessing Officer (AO) issued a notice under Section 142(1) requesting the assessee to file her return, which she failed to do. The assessee claimed that she had moved to the USA with her husband and was not engaged in any business activity during the year under consideration, having only interest income below taxable limits. This claim was used to justify the non-filing of the return.

2. Addition under Section 69A:
The AO observed significant cash deposits in the assessee's bank account during the demonetization period, specifically Rs. 14,14,600/- deposited in cash on a single day. The AO deemed these deposits unexplained and added Rs. 16,24,600/- to the assessee's income under Section 69A, treating it as undisclosed income. The assessee contended that these deposits were recoveries from old outstanding dues from farmers and villagers, which were used to clear bank liabilities. The AO rejected this explanation, considering it an afterthought to cover up undisclosed sources.

3. Applicability of Section 249(4)(b):
The CIT(A) dismissed the appeal as unadmitted, citing Section 249(4)(b), which mandates payment of advance tax for appeal admission where no return has been filed. The assessee argued that she was not liable to file a return due to her income being below taxable limits and thus did not have an advance tax liability. The Tribunal considered this argument, noting that the only income assessed was the disputed addition under Section 69A, and there was no other admitted income by the assessee.

4. Maintainability of Appeal Before CIT(A):
The Tribunal found that the CIT(A) erred in dismissing the appeal on the grounds of Section 249(4)(b) since the addition was disputed and there was no other income above the taxable threshold. The Tribunal highlighted that the proviso to Section 249(4)(b) allows for exemption from the requirement if good and sufficient reasons are provided. The Tribunal directed the CIT(A) to admit the appeal and adjudicate it on merits, emphasizing that the provisions of Section 249(4)(b) were not applicable in this case due to the disputed nature of the assessed income.

Conclusion:
The Tribunal set aside the CIT(A)'s order and restored the matter for a fresh adjudication on merits, instructing the CIT(A) to provide an opportunity for both parties to present their cases. The appeal was partly allowed for statistical purposes, and the Tribunal refrained from commenting on the merits of the case, focusing instead on procedural compliance and the applicability of Section 249(4)(b).

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