Bhagyashree Abhijit Bhatkhande Vs ITO (ITAT Mumbai)
No Return, No Advance Tax, No Appeal?—ITAT Directs CIT(A) to First Decide Applicability of s.249(4)(b) Before Burying ₹99.38 Lakh Appeal
The controversy
The assessee, Ms. Bhagyashree Abhijit Bhatkhande, did not file her return of income u/s 139(1) for AY 2018-19. Information available on the Insight Portal showed that she had jointly purchased an immovable property along with Mr. Abhijit Bhatkhande for a total consideration of ₹1.89 crore.
Based on this information, proceedings were initiated by issuing notice u/s 148A on 6 August 2024. After passing an order u/s 148A(d), the AO issued notice u/s 148 on 29 August 2024.
The assessee did not file a return in response to the notice u/s 148. The subsequent statutory notices, communications & show-cause notices issued during the reassessment proceedings also remained unanswered.
Property purchase treated as unexplained
The property was situated at Borivali West, Mumbai, and had been purchased under a registered deed dated 10 November 2017. The AO called upon the assessee to explain the source of investment and furnish the registered document, bank statements & supporting evidence.
In the absence of compliance, the AO treated the investment as unexplained. After including stamp duty, registration charges & incidental expenses, the total cost was computed at ₹1,98,76,240. Since the property was jointly acquired, the assessee’s share was taken at 50%, namely ₹99,38,120.
The assessment was accordingly completed u/s 147 r.w.s. 144 & 144B, determining the assessee’s income at ₹99,38,120 by invoking s.69. The AO also applied s.115BBE and initiated penalty proceedings u/s 271AAC(1).
Appeal stopped at the entrance
The assessee filed an appeal before the CIT(A) on 13 December 2025 against the assessment order dated 4 November 2025.
The CIT(A) noticed that the assessee had neither filed a return of income nor paid an amount equal to the advance tax payable on the assessed income. In Form No.35, the assessee had stated that the requirement of s.249(4)(b) was “not applicable.”
Under s.249(4)(b), where no return has been filed by the assessee, an appeal shall not be admitted unless the assessee has paid an amount equal to the advance tax payable by her. The proviso authorises the appellate authority, for any good & sufficient reason recorded in writing, to exempt the appellant from the operation of this requirement upon an application being made.
The CIT(A) held that the assessee was required to pay an amount equal to advance tax on the assessed income. Since she had neither made the payment nor applied for exemption, the appeal was dismissed as not maintainable. Consequently, the addition of ₹99,38,120 u/s 69 was not examined on merits.
Assessee’s case before the ITAT
Before the Tribunal, the assessee challenged the applicability of s.249(4)(b). It was contended that the provision applies only where an obligation to pay advance tax was otherwise cast upon the assessee.
According to the assessee, she had no taxable income and, therefore, there could be no requirement to pay advance tax. It was also argued that the condition contemplated by s.249(4) applies to an original return required to be filed u/s 139 and cannot be mechanically applied to reassessment proceedings merely because no return was filed in response to notice u/s 148.
The assessee also raised substantive grounds challenging the addition made u/s 69.
ITAT’s ruling
The Mumbai ITAT noticed that the CIT(A) had dismissed the appeal solely for alleged non-compliance with s.249(4)(b), without adjudicating any of the grounds on merits.
Considering the facts and in the interest of substantial justice, the Tribunal held that the matter required reconsideration by the CIT(A). It accordingly set aside the appellate order and restored the matter for fresh adjudication.
The CIT(A) was directed to first examine the applicability of s.249(4)(b) and determine the maintainability or admissibility of the appeal. If satisfied regarding its admissibility, the CIT(A) must thereafter adjudicate the assessee’s grounds on the merits of the addition u/s 69.
The assessee was permitted to furnish all relevant documents & submissions and was to be granted an adequate opportunity of hearing. The CIT(A) was also directed to pass a speaking & reasoned order in accordance with law.
The appeal was thus allowed for statistical purposes.
Author’s comments
The order does not hold that s.249(4)(b) is inapplicable to reassessment proceedings. Nor does it decide that an assessee having no returned income can automatically avoid the statutory pre-deposit. The Tribunal has consciously left these questions open for examination by the CIT(A).
The expression used in s.249(4)(b) is “an amount equal to the amount of advance tax which was payable by him.” It is not expressly linked to tax on the income ultimately assessed by the AO. Therefore, computing the condition merely with reference to a disputed best-judgment addition may require careful scrutiny.
Further, the statutory proviso confers power upon the CIT(A) to exempt the assessee from s.249(4)(b) for good & sufficient reasons. Where the assessee disputes the very existence of taxable income or pleads genuine financial difficulty, a specific exemption application should prudently be filed instead of merely stating in Form No.35 that the provision is inapplicable.
The practical lesson is clear: when no return was filed, the appeal must squarely address s.249(4)(b), quantify the amount allegedly payable & alternatively seek exemption under the proviso. Otherwise, a strong case on merits may never cross the admission counter.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Present appeal filed by the assessee arises out of the order dated 24/02/2026 passed by NFAC, Delhi [hereinafter referred to as “Ld.CIT(A)”] for AY 2018-19, on the following grounds of appeal:-
“1) The Ld. CIT(A) erred in ignoring that the provisions of section 249(4)(b) apply, only WHARE an obligation is cast upon the assessee to pay advance tax. It is submitted that the assessee had categorically stated before the CIT(A) that she had no taxable income and hence sec.249(4)(b) would not apply
2) The Ld. CIT(A) failed to appreciate that 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 return of income
3) The Ld. CIT(A) fell in error of law in not appreciating that the conditions prescribed in the provisions of section 249(4) of the Act shall apply to original return of income required to be filed u/s. 139 of the Act and the same will not apply to the reassessment proceedings
4) The appellant craves leave to add, alter, amend, modify any grounds of appeal.”
2. Brief facts of the case are as under:-
The assessee is an individual and a resident. For the impugned assessment year, the assessee did not file her return of income u/s. 139(1) of the Income-tax Act, 1961. Based on information flagged through the Risk Management Strategy of the CBDT and available on the Insight Portal, it was noticed that during FY 2017-18 relevant to AY 2018-19, the assessee had jointly purchased an immovable property along with Shri Abhijit Bhatkhande for a total consideration of Rs. 1,89,00,000/-. Accordingly, notice u/s. 148A was issued on 06/08/2024. After considering the submissions furnished by the assessee, an order u/s. 148A(d) was passed on 29/08/2024, holding that income chargeable to tax had escaped assessment. Consequently, notice u/s. 148 was issued on 29/08/2024 and the proceedings were thereafter transferred to the Faceless Assessing Officer.
2.1. During the reassessment proceedings, notices u/s. 142(1) were issued on 06/06/2025 and 29/08/2025, followed by a centralized communication dated 31/07/2025, issue letter dated 16/09/2025 and show-cause notices u/s. 144 dated 23/09/2025 and proposing variations dated 08/10/2025. However, as recorded by the Ld. AO, no compliance or response was received from the assessee. The assessee also did not file any return of income in response to the notice u/s. 148.
2.2. The Ld. AO noted that the assessee and Shri Abhijit Bhatkhande had jointly purchased an immovable property situated at Flat No. 501, 5th Floor, 1 Wing, Ashok Nagar Complex, Village Eksar, Vazira Naka, Borivali (West), Mumbai – 400092, vide registered deed dated 10/11/2017, for a consideration of Rs. 1,89,00,000/-. The Ld. AO required the assessee to explain the source of investment and to furnish the registered deed, bank statements and other related documentary evidence. In the absence of any compliance, the Ld. AO treated the source of investment as unexplained. Taking into account the consideration of Rs. 1,89,00,000/- along with stamp duty, registration charges and other incidental expenses, the total cost of acquisition was worked out at Rs. 1,98,76,240/-. Since the property was jointly purchased, the assessee’s share was taken at 50%, amounting to Rs. 99,38,120/-, which was treated as unexplained investment u/s. 69 of the Act.
2.3. The assessment was accordingly completed u/s. 147 r.w.s. 144 read with section 144B of the Act vide order dated 04/11/2025, determining the income of the assessee at Rs. 99,38,120/-. The Ld. AO also invoked the provisions of section 115BBE and initiated penalty proceedings u/s. 271AAC(1) of the Act.
Aggrieved by the aforesaid assessment order, the assessee preferred an appeal before the Ld. CIT(A).
3. Before the Ld. CIT(A), the appeal was instituted on 13/12/2025 against the assessment order dated 04/11/2025. The Ld. CIT(A), while examining the appeal, noted that the assessee had not filed her return of income and had also not paid the amount equal to the advance tax payable on the assessed income. The Ld. CIT(A) observed that, in terms of section 249(4)(b) of the Act, where no return of income has been filed, an appeal cannot be admitted unless the assessee has paid an amount equal to the advance tax payable, subject to the statutory power of exemption upon an application made by the appellant for good and sufficient reasons.
3.1. The Ld. CIT(A) further observed that the assessee had, in Form No. 35, stated that the requirement of section 249(4)(b) was “Not applicable”, whereas, according to the Ld. CIT(A), the assessee was required to pay the amount of advance tax payable on the assessed income. It was also noted that the assessee had neither made such payment nor sought exemption from the operation of section 249(4)(b). Accordingly, the Ld. CIT(A) held that the appeal was not liable to be admitted.
3.2. The Ld. CIT(A), therefore, dismissed the appeal as infructuous on the ground of non-compliance with the mandatory requirement prescribed u/s. 249(4)(b) of the Act, without adjudicating the merits of the addition of Rs. 99,38,120/- u/s. 69 of the Act. Aggrieved by the aforesaid order of the Ld. CIT(A), the assessee is in appeal before the Tribunal.
We have perused the submissions advanced by both sides in light of the record placed before us.
4. It is observed that the Ld. CIT(A) dismissed the appeal of the assessee without adjudicating the grounds raised on merits, solely on the ground of non-compliance with the provisions of section 249(4)(b) of the Act. The assessee, before us, has challenged the applicability of the said provision and has also raised substantive grounds against the addition made u/s. 69 of the Act.
4.1. Considering the facts and circumstances of the case and in the interest of substantial justice, we are of the considered view that the matter requires reconsideration by the Ld. CIT(A). Accordingly, the impugned order dated 24/02/2026 is set aside and the matter is restored to the file of the Ld. CIT(A) for adjudication afresh in accordance with law.
4.2. The Ld. CIT(A) shall first examine the issue relating to the applicability of section 249(4)(b) of the Act and, upon satisfying himself regarding the maintainability/admissibility of the appeal, shall adjudicate the grounds raised by the assessee on merits of the case. Needless to state, the assessee shall be afforded adequate opportunity of being heard and shall be at liberty to furnish all relevant documents and submissions in support of her case. The Ld. CIT(A) shall thereafter pass a speaking and reasoned order in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 17/08/2026.
