Case Law Details
Rekha Khandelwal Vs ITO (ITAT Indore)
The appeal before the Income Tax Appellate Tribunal (ITAT), Indore Bench, arose from an order dated 01.02.2024 passed by the Commissioner of Income Tax (Appeals)-NFAC, Delhi, which in turn stemmed from an assessment order dated 26.03.2022 passed by the ITO, Rajgarh under Sections 147 read with 144 of the Income-tax Act, 1961 for AY 2014-15. The Registry reported a delay in filing the appeal. The assessee submitted an affidavit seeking condonation of delay. The Departmental Representative did not object. The Tribunal, relying on Section 253(5) of the Act and the Supreme Court decision in Collector, Land Acquisition vs. Mst. Katiji, held that sufficient cause existed and condoned the delay, adopting a justice-oriented approach.
The reassessment proceedings were initiated based on Annual Information Return (AIR) data showing cash deposits of ₹75,52,500 in a savings bank account with ICICI Bank, Rajgarh during FY 2013-14. A notice under Section 148 dated 30.03.2021 was issued. The assessee did not file a return in response and also did not comply with notices under Section 142(1) or the show-cause notice. Consequently, the Assessing Officer passed an ex parte order under Sections 147 read with 144, assessing total income at ₹75,58,232 comprising ₹75,52,500 as unexplained cash deposits under Section 68 and ₹5,732 as bank interest.
In first appeal, the CIT(A) dismissed the appeal as non-admitted on the ground of non-payment of tax under Section 249(4)(b). Before the Tribunal, it was contended that the assessee had not filed any return under Section 139 or in response to Section 148 and was a housewife with no source of income. An affidavit stated that the total family income was about ₹2,50,000 and below the taxable limit. The Tribunal observed that the AO had assessed income at ₹75,58,232 after additions, while returned income was taken as nil.
The Tribunal referred to its earlier decision in Shri Pushpendra Singh Chouhan vs. ITO and other decisions, including rulings of Mumbai and Raipur Benches, which held that in reassessment proceedings under Section 147 read with Section 144, there is no obligation to pay advance tax under Section 249(4)(b) where no advance tax liability existed. It was observed that the statutory requirement under Section 249(4)(b) is triggered only where there was an obligation to pay advance tax. Since the assessee claimed no taxable income and no advance tax liability, dismissal of the appeal by the CIT(A) on that ground was not sustainable. Maintaining consistency with earlier Tribunal decisions, the impugned order of the CIT(A) was set aside.
On merits, the Tribunal noted that the additions related to a savings bank account in the assessee’s name. However, the assessee claimed that the account was fraudulently opened and operated by employees of ICICI Bank, Rajgarh, and that all transactions were conducted by them. The assessee produced documents including a complaint letter to the bank, FIR lodged with Thana Kotwali Rajgarh, newspaper clippings, and an investigation report titled “Confidential – Rajgarh branch, MP – Investigation Report – Rekha Khandelwal.” It was acknowledged that the matter regarding the alleged fraudulent account was still pending and had not attained finality.
The Department suggested remand. The Tribunal agreed and remanded the matter to the Assessing Officer for fresh adjudication on merits after providing opportunity of hearing to the assessee and considering her submissions. The assessee was directed to participate in proceedings and avoid unnecessary adjournments, failing which the AO would be at liberty to pass an order in accordance with law. The appeal was allowed for statistical purposes.
Assessee was Represented by Shri Milind Wadhwani, CA
FULL TEXT OF THE ORDER OF ITAT INDORE
Feeling aggrieved by order of first-appeal dated 01.02.2024 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 26.03.2022 passed by learned ITO, Rajgarh [“AO”] u/s 147 r.w.s. 144 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2014-15, the assessee has filed this appeal on the grounds mentioned in Form No. 36.
2. The registry has informed that the present appeal is filed after a delay and therefore time-barred. The assessee has filed an application/affidavit for condonation of delay; the same is scanned and re-produced for an immediate reference:
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3. The averments made by assessee in above affidavit, which are self-explanatory and which do not require repetition, were discussed and the Ld. DR for revenue does not have any objection if the bench condones delay and accordingly left it to the wisdom of bench. We have considered the explanation advanced by assessee and in absence of any contrary fact or material on record, the assessee is found to have a “sufficient cause” for delay in filing present appeal. We find that section 253(5) of the Act empowers the ITAT to admit an appeal after expiry of prescribed time, if there is a “sufficient cause” for not presenting appeal within prescribed time. It is also a settled position by Hon’ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387 that whenever substantial justice and technical considerations are opposed to each other, the cause of substantial justice must be preferred by adopting a justice-oriented approach. Thus, taking into account the facts of case, the provision of section 253(5) and the decision of Hon’ble Supreme Court, we take a judicious view, condone delay, admit appeal and proceed with hearing.
4. The background facts leading to this appeal are such that the AO, on the basis of information available in Annual Information Return (AIR) revealing that the assessee made cash deposit of Rs. 75,52,500/- in SB A/c No. 076601501323 with ICICI Bank, Rajgarh during the financial year 201314 relevant to AY 2014-15 under consideration which had escaped assessment under income-tax, issued notice dated 30.03.2021 u/s 148 to undertake proceeding of assessment u/s 147 against assessee. In response to such notice, the assessee did not file any return. The AO also issued notices u/s 142(1) and show-cause notice, which again remained uncompiled by assessee. Ultimately, the AO passed ex-parte assessment-order u/s 147 r.w.s. 144 of the Act assessing total income at Rs. 75,58,232/- consisting of two components, viz. (i) unexplained cash deposits in bank a/c u/s 68 – Rs. 75,52,500/- and (ii) Interest earned by assessee in bank a/c – Rs. 5,732/-. Aggrieved, the assessee carried matter in first-appeal. The CIT(A) treated assessee’s first-appeal as deficient on the footing of non-payment of tax as required by section 249(4)(b) and accordingly dismissed assessee’s appeal as non-admitted. Now, the assessee has come before us challenging the orders of lower-authorities.
5. So far as the deficiency noted by CIT(A) for dismissal of assessee’s first-appeal is concerned, we find that the assessee has not filed any return to department u/s 139 or even in response to notice u/s 148. Further, the Ld. AR also apprised that the assessee is a housewife and does not have any source of income. Further, the Ld. AR also referred an affidavit dated 19.04.2022 filed by assessee to NFAC, placed at Page No. 62 of Paper-Book, in which the assessee made a solemnized averment that the total income of his entire family consisting of assessee, her husband and two children, was about Rs. 2,50,000/- only. Accordingly, Ld. AR narrated that the total income of assessee did not exceed the maximum amount not chargeable to tax, therefore there was neither any obligation to file return nor to pay advance-tax or self-assessment tax. The assessment-order also shows that the AO has taken returned income at Rs. Nil and assessed total income at Rs. 75,58,232/- after making additions of equal amount. In such a situation, the CIT(A) was not correct in observing that there was a non-compliance of section 249(4)(b) as held by ITAT, Indore in Shri Pushpendra Singh Chouhan Vs. ITO, ITA No. 122/Ind/2024, order dated 24.06.2024 as under:
“7. We have considered the rival submissions as well as relevant material on record. The Assessing Officer initiated proceedings u/s 147 on the basis of the AR information regarding the cash deposit of Rs.36,03,600/- in the savings bank account of the assessee. Since there was no response on behalf of the assessee to the notices issued by the Assessing Officer, therefore, the assessment was framed ex-parte as best judgment assessment thereby the Assessing Officer has assessed total income of the assessee at Rs.36,03,600/-. The assessee has explained the reasons for non-appearance before the Assessing Officer as the assessee belongs to a rural area and having no computer or internet facility in the village and therefore, the assessee was not having access to the notice issued by the Assessing Officer and consequently could not furnish any reply or submissions as well as evidence during the assessment proceedings. Further the CIT(A) has dismissed the appeal of the assessee in limine for want of payment of tax as per the provisions of Section 249(4)(b) of the Act. This is a case of reassessment framed by Assessing Officer u/s 147 r.w.s. 144 of the ACT and therefore, there is no obligation of payment of advance tax as per Clause(b) of Section 249(4) as held by the Mumbai Benches of the Tribunal in case of M/s. Nine Globe Industries Pvt. Ltd Vs. ACIT (supra) in para 4 to 6 as under:
“4. In that view of the matter, the appeal came to be dismissed on the ground that the appellant has not filed Rol as well as not paid an amount equal to the amount of advance tax, which was payable by it. It can thus be seen that the CIT(A) had no occasion to examine the merits of the impugned additions.
5. We have heard parties. Perused record. It can be seen that the case was Initially selected for scrutiny, which was completed on 29.03.2015, and there was no change in the returned income of Rs.51.80.800/- in the absence of any additions being made. It is a matter of record that originally the return was filed for the relevant year under consideration on 29.09.2012. It was not disputed during the course of hearing that the advance tax has per the assessed income of Rs. 51,80,800/- has been paid. Here is the case of reassessment which is done for the benefit of Revenue. Hence, in our view, clause (b) of Section 249(4) of the Act will not apply as there is no question of paying advance tax in reassessment proceedings, even though assessee did not file Rol.
6. In the said circumstances, we find that the impugned order dismissing the appeal on the ground of non-compliance of Section 249(4) of the Act cannot be sustained and deserves to be set-aside”.
In the case in hand the assessee has filed return of income and thereafter, the Assessing Officer has initiated reassessment proceedings and passed reassessment order. Therefore, for filing the appeal before CIT(A) the question of payment of advance tax by the assessee as per clause(b) of Sub Section 4 of Section 249 does not arise. Similarly the Raipur Bench of the Tribunal in case of Vishnusharan Chandravanshi Vs. ITO in ITA No.73/RPR/2024 order dated 10.04.2024 has also considered the identical issue in para No.10 to 15 as under:
“10. Admittedly, it is a matter of fact borne from record that the assessee had neither filed his return of income u/s 139 of the Act nor in compliance to notice issued to him u/s 142(1) of the Act, dated 10.03.2018. As the assessee had failed to file his return of income, the CIT(Appeals) had brought his case within the meaning of Clause (b) of sub-section (4) of Section 249 of the Act. For the sake of clarity, Section 249(4) of the Act is culled out as under:
“(4) No appeal under this Chapter shall be admitted unless at the time offiling of the appeal,-
a. where 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.”
The CIT(Appeals) observed that as the assessee who had not filed his return of income had neither paid an amount equal to the amount of advance tax which was payable by him; nor filed any application seeking exemption from operation of the aforesaid statutory provision for any good and sufficient reason, therefore, he had failed to comply with the statutory requirements contemplated u/s 249(4)(b) of the Act. Accordingly, the CIT(Appeals) dismissed the appeal on the said count itself.
11. Controversy involved in the present appeal lies in a narrow compass, i.e. sustainability of the view taken by the CIT(Appeals) that the appeal of the assessee who had not filed his return of income for the subject year was not maintainable for the reason that he had failed to satisfy the conditions contemplated in Section 249(4) of the Act.
12. 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(Appeals) may, for any good and sufficient reason to be recorded in writing exempt him from the operation of the aforesaid statutory provision.
13. At this stage, I may herein observe that 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 stated by the Ld. AR, and rightly so, in absence of any taxable income for the year under consideration [as was stated by him in the “SOF” filed before the CIT(Appeals)] no obligation was cast upon him to compute and pay any advance tax u/ss. 208 & 209 of the Act. Considering the fact that as no obligation was cast upon the assessee to compute/deposit any amount towards “advance tax’ for the subject year, I am unable to concur with the view taken by the CIT(Appeals) who dismissed the appeal as not maintainable for the reason of non-compliance off mandatory condition contemplated in Clause (b) of sub-section (4) of Section 240 the Act. Although, at the first blush, I was of the view that the amount assesse the A.O vide his order u/s. 144 of the Act dated 23.11.2019 of Rs. 10 lacs would saddle the assessee with an obligation to pay “advance tax”, but stood corrected a careful perusal of Section 208 and Section 209(1)(a) of the Act, which contemplates determination of the said tax liability at the behest of the assessee.
14. As in the present case, the assessee had not only before me but had in the “Statement offacts” stated before the CIT(Appeals) that he had no taxa income, therefore, in my view in absence of any obligation cast upon the ass to compute/pay “advance tax” u/ss. 208 and 209 of the Act for the subject year first appellate authority could not have held that he had failed to comply with statutory conditions contemplated in Sec. 249(4)(b) of the Act. My aforesaid we fortified by the orders of the ITAT, Bengaluru in the case of Shamama Reddy Vs. ITO, ITA No.1120/Bang/2023 dated 20.02.2024 and that of ITAT, Delhi in the of Vikram Singh Vs. ITO, ITA No.6559/Del/2019, dated 21.02.2023.
15. I, thus, in terms of my aforesaid observations, set aside the order of the CIT(Appeals) and restore the same to his file with a direction to dispose appeal after considering the merits of the case. Needles to say, the CIT( Appeals) shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee.”
8. Accordingly, to maintain the rule of consistency we follow the earlier decisions of the Tribunal cited above and consequently the impugned order of CIT(A) is set aside being contrary to the provisions of law.”
6. Thus, taking into the facts of assessee and applying the view taken by ITAT, Indore in the decision cited above, the objection raised as well as impugned order passed by CIT(A) is hereby set aside.
7. Now, we take up the merits of the case. During hearing of appeal, it emerged that the AO has passed assessment-order to the best of his judgement u/s 144 and made a total addition of Rs. 75,58,232/- consisting of two components, viz. (i) unexplained cash deposits in bank a/c u/s 68 – Rs. 75,52,500/- and (ii) Interest earned by assessee in bank a/c – Rs. 5,732/-. Both of these components of additions are relatable to a SB A/c No. 076601501323 held with ICICI Bank, Rajgarh in the name of assessee. However, the assessee’s submission is that this a/c was fraudulently opened and operated by employees of ICICI Bank, Rajgarh branch and all transactions therein were made by them only. The assessee has filed various papers at Pages 60-79 of Paper-Book which are in the nature of complaint-letter filed to bank, FIR lodged with Thana Kotwali – Rajgarh, clipings of news-papers, etc. Further, the assessee has also filed a copy of a report titled “Confidential – Rajgarh branch, MP – Investigation Report – Rekha Khandelwal”. By placing reliance upon these documents, the assessee is claiming that neither the impugned SB A/c nor the transactions made therein related to her and therefore the entire addition of Rs. 75,58,232/-made by AO in the hands of assessee is not sustainable. Accordingly, Ld. AR requested to delete the addition made by AO. In response to a query raised by bench as to whether the matter of fraudulent SB a/c opened and operated in the name of assessee, as being claimed by assessee, has reached finality or not, the Ld. AR accepted that it appears to be pending yet.
8. Replying to same, Ld. DR for revenue suggested that in the present case, it would be most appropriate to remand this matter back to the file of AO for adjudication afresh.
9. After a careful consideration, we agree to the suggestion given by Ld. DR for revenue which is also accepted by Ld. AR for assessee. Accordingly, we remand this matter to the file of AO for adjudication afresh on merit after giving opportunity of hearing to the assessee and after considering assessee’s submissions. The assessee is also directed to ensure participation in the hearings as may be fixed by AO and do not seek unnecessary adjournments failing which the AO shall be at liberty to pass appropriate order in accordance with law.
10. Resultantly, this appeal is allowed for statistical purpose.
Order pronounced in open court on 19/02/2026
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