2023 (3) TMI 516

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....ncome of Rs. 11,82,60,329. The AO noticed that the assessee has not paid the tax of Rs. 5,03,22,060 on the income as per return filed in response to notice u/s. 153C. The AO treated the return as defective u/s. 139(9) and issued notice to the assessee to rectify the defect. Since the assessee did not rectify the defect, the AO proceeded to treat the return filed on 24.11.2017 in response to notice u/s. 153C as non-est. Accordingly the assessee proceeded to complete the assessment u/s. 144 by making the following additions- (i) Short term capital gains - Rs. 18,66,06,240 (ii) Long term capital gains - Rs. 1,18,90,000 (iii) Unexplained deposits - Rs. 1,16,28,191 (iv) Unexplained credit - Rs. 4,37,21,950 (v) Cash deposit - Rs. 76,000 3. The assessee filed an appeal before the CIT(A) against this order of the AO however the same was dismissed by the CIT(A). The assessee contested the order of CIT(A) before the Tribunal. The coordinate bench of the Tribunal set aside the matter back to the file of the CIT(A) vide order dated 22.07.2021 in ITA No. 1810/Bang/2019 with a direction to give an opportunity of being heard to the assessee on the i....

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....such restriction is to act in terrorem to make the people comply with the provisions of law. Therefore, the object of stipulating conditions such as demand of admitted tax is a condition precedent for entertaining the appeals and admitting the appeals is to see that the appellant obeys the law, Though the right of appeal is conferred under a statute, the said right is subjected to the restrictions imposed under the very same statute. There cannot be any absolute right de hors the provisions of the statute. 4.4 Keeping in mind, the object with which these provisions are introduced, once the assessee realises his obligations under the statute, the purpose with which these provisions in terrorem are introduced under the Act, obeys the statutory obligations, pays the tax, then he cannot be denied the right of appeal which the statute has provided to him. In the case under consideration, in response to notice under Section 153C of the Act, the appellant had filed her return of income on 24.11.2017, declaring an income of Rs. 11,82,60,329/-, thereby acknowledging her obligation to pay tax on the declared income. So even if the return of income was treated as non-est by the AO, h....

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....nd circumstances of the appellant's case. 2. The learned CIT[A] is not justified in dismissing the appeal restored by the Hon'ble ITAT holding that the same is not maintainable having regard to the provisions of section 249[4][b] of the Act, the facts and in the circumstances of the appellant's case. 2.1 The learned CIT[A] is not justified in dismissing the appeal in-limine on the ground that the tax on the income returned in the return filed in response to notice u/s. 153C of the act, was not paid and therefore, the appeal is not maintainable u/s. 249[4][b] of the Act, under the facts and in the circumstances of the appellant's case overlooking the fact that there was no obligation to pay any advance tax in order to attract the disqualification u/s. 249[4][b] of the Act under the facts and in the circumstances of the appellant's case. 2.2 The learned CIT[A] ought not to have appreciated that the provisions of section 249[4][b] of the Act were totally inapplicable to the case of the appellant in as much as the appellant had challenged the entire income determined in the assessment order of Rs. 25,39,22,381/- vide Ground No. 4 raised be....

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.... the facts and in the circumstances of the appellant's case : [1] Short term capital gains on sale of flat Rs.18,66,06,240/- [2] Long term capital gains on sale of flats Rs. 1,18,90,000/- [3] Unexplained credit in the bank accounts Rs. 1,16,28,191/- [4] Unconfirmed credits in the bank accounts Rs. 4,37,21,950/- [5] Unexplained cash deposits Rs. 76,000/- 6. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies herself liable to be charged to interest u/s. 234-A, 234-B and 234-C of the Act, which under the facts and in the circumstances of the appellant's case and the levy deserves to be cancelled. 7. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs." 6. The Ld. AR reiterated the submissions made before the CIT(A). The Ld. AR submitted that the AO in para 8 of his order has held that the return filed in response to....

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....re a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or (b) where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him: Provided that, in a case falling under clause (b) and on an application made by the appellant in this behalf, the Commissioner (Appeals) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of that clause. 9. From the above it is clear that the appeal before the CIT(A) shall not be admitted where the tax on the returned income is paid or in case where no return is filed the advance tax has not been paid. In assessee's case we notice that the CIT(A) has rejected the appeal by stating that the assessee's case fall within the purview of section 249(4)(b) and the assessee has not complied with the requirement under the proviso to the said section. This in our considered view is not correct since the assessee has already filed the return of income and therefore even if the appeal is not admitted on the ground of nonpayment of tax the same cannot....

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....udicate the appeal on merits by passing a reasoned order." 11. We further notice that the Hon'ble Karnataka High Court in the case of T Govindappa Setty (supra) has considered what is contemplated as a condition for non-admission of appeal u/s. 249(4) and held that- "The object of clause (a) of sub-section (4) of section 249 is not to entertain the appeal where the assessee fails to pay the undisputed tax liability. Section 249(4) has to be construed in the backdrop of the right to appeal provided to an assessee under section 249 of the Act. Under these circumstances, while interpreting section 249(4) of the Act, the court will have to keep in mind the object of section 249(4) and also the right to prefer an appeal guaranteed to an assessee. In that view of the matter, sub-section (4) has to be liberally construed to serve the object of the right provided to an assessee, and not with a view to deprive the right provided to an assessee to prefer an appeal. When the very liability is disputed, the right guaranteed to the assessee to prefer an appeal cannot be deprived by taking the view that the assessee has failed to pay the tax due on the income shown in the return ....