2025 (7) TMI 1153 - AT - Income Tax

Appeal cannot be dismissed for non-payment of advance tax when assessee has no taxable income under Section 249(4)(b)

Pradeep Singh Aswal Versus Income Tax Officer, Ward-3 (2)

ITAT AGRA ruled that an appeal cannot be dismissed solely for non-payment of advance tax when the assessee has no taxable income. The assessee's appeal ... Appeal of the assessee is not admitted for non-payment of advance tax though the assessee is not having taxable income - CIT(A) has dismissed the appeal of the assessee in limine - maintainability of the appeal of the assessee HELD THAT:- Admittedly, as per section 249(4)(b) of the Act, in a case where no return of income has been filed by the assessee, then his appeal shall be maintainable before the CIT(Appeals) only if he had paid an amount equal to the amount of advance tax which was payable by him. At the same time, the legislature had carved out an exception to the applicability of the aforesaid statutory requirement by way of a “proviso” to Section 249(4) of the Act, as per which, on an application made by the appellant, the CIT(A) may, for any good and sufficient reason to be recorded in writing exempt him from the operation of the aforesaid statutory provision. The statutory requirement contemplated in Clause (b) of sub-section (4) of Section 249 of the Act would stand triggered only where any obligation was cast upon the assessee to pay “advance tax”. As per the statement of facts and grounds of appeal filed by assessee alongwith the appeal memo, it is claimed that assessee is not having total income exceeding the maximum amount not chargeable to tax and thus in absence of any taxable income for the year under consideration, he was not under any obligation to compute and pay any advance tax. The view taken by the CIT(Appeals) while dismissing the appeal of the assessee as not maintainable for the sole reason of non-compliance of the mandatory condition contemplated in Clause (b) of sub-section (4) of Section 249 the Act is not maintainable. This view is supported by the orders of Shamama Reddy [2024 (2) TMI 1389 - ITAT BANGALORE] and also Vikram Singh [2023 (3) TMI 90 - ITAT DELHI] We set aside the order of the CIT(A) and direct the CIT(Appeals) to decide the appeal after considering the merits of the case. Appeal filed by the assessee is allowed for statistical purposes. ISSUES: Whether an appeal filed by an assessee before the Commissioner of Income Tax (Appeals) is maintainable under Section 249(4)(b) of the Income Tax Act where no return of income has been filed and no advance tax has been paid.Whether the proviso to Section 249(4) allowing exemption from payment of advance tax before admission of appeal applies when the assessee claims no taxable income and thus no obligation to pay advance tax.Whether the appellate authority can dismiss an appeal in limine solely on the ground of non-payment of advance tax without considering the merits of the case. RULINGS / HOLDINGS: The appeal is maintainable before the CIT(A) despite non-payment of advance tax where the assessee has not filed a return and claims no taxable income, thus no obligation to pay advance tax, as per the proviso to Section 249(4) of the Act.The statutory requirement under Section 249(4)(b) is triggered only if the assessee had an obligation to pay advance tax; absence of taxable income negates such obligation and the appeal cannot be dismissed solely on non-payment of advance tax.Dismissing the appeal in limine for non-compliance of Section 249(4)(b) without considering the merits is not maintainable; the appellate authority must afford a reasonable opportunity of hearing and decide on merits. RATIONALE: The Court applied the statutory framework of Section 249(4) of the Income Tax Act which mandates payment of advance tax as a condition precedent for admission of appeal where no return is filed, subject to a proviso allowing exemption for 'any good and sufficient reason to be recorded in writing.'The Court interpreted the proviso as applicable where the assessee legitimately claims no taxable income and thus no advance tax liability arises, aligning with the legislative intent to avoid unjust dismissal of appeals.Precedents from ITAT Bengaluru and ITAT Delhi were relied upon to support the interpretation that non-payment of advance tax cannot bar admission of appeal if no advance tax was payable.The decision emphasizes procedural fairness by requiring the appellate authority to consider the merits and provide a reasonable opportunity of hearing before dismissing an appeal for non-compliance with advance tax payment conditions.