Sunil Shivdatta Rithe Vs CIT(A) (ITAT Nagpur)
Non-Filer Can Seek Exemption From Section 249(4)(b) Payment Requirement: ITAT Restores Appeal Dismissed at Threshold
Background of the Case
The assessee challenged the dismissal of his first appeal on account of non-payment of tax or advance tax under Section 249(4)(b) of the Income-tax Act, 1961. The underlying assessment arose from information available on the Department’s Insight Portal under the category “Risk Management Strategy—Non-filing of Return PAN Cases”. The information indicated that the assessee had purchased an immovable property during Financial Year 2017-18 but had not filed his return of income for Assessment Year 2018-19. The Assessing Officer initiated reassessment proceedings and issued a notice under Section 148 after following the prescribed process. The subsequent dispute concerned both the source of the property investment and the statutory conditions for admission of the assessee’s appeal.
Addition Concerning Property Investment
During the reassessment proceedings, notices under Section 142(1) were issued on various dates, calling upon the assessee to explain the source of funds used to acquire the property. The assessee furnished clarifications and documentary evidence, which were discussed in the assessment order. However, the Assessing Officer was not satisfied with the explanation. He consequently made an addition of ₹32,31,000 and assessed total income at the same amount through an order dated 13 November 2025, passed under Section 147 read with Sections 144 and 144B. The Tribunal’s order contains an internal variation in describing the applicable provision: its opening and concluding discussion refer to Section 69, while the factual narration describes the addition as having been made under Section 69A. The Tribunal did not resolve this variation, since its decision concerned restoration of the appeal.
CIT(A) Refuses to Admit the Appeal
The assessee filed an appeal before the CIT(A)/NFAC against the assessment. On examining the grounds of appeal, statement of facts, assessment findings and Form 35, the CIT(A) found that the assessee had not paid the relevant tax or advance tax. Since no return of income had been filed, the CIT(A) considered that Section 249(4)(b) applied. A communication was issued seeking compliance. However, the assessee did not respond. The CIT(A) therefore dismissed the appeal in limine as unadmitted, without adjudicating the substantive challenge to the investment addition. The assessee approached the Tribunal against that order dated 24 February 2026.
No Appearance Before the Tribunal
No one appeared on behalf of the assessee when the Tribunal heard the matter. The Tribunal proceeded after hearing the Departmental Representative and examining the available record. It acknowledged that the CIT(A) had issued a communication and provided an opportunity, but the assessee had neither responded nor appeared. Nevertheless, the Tribunal considered that there could be reasons for the earlier non-appearance or non-compliance which could not be ruled out. It also examined the statutory relief available in a case falling under Section 249(4)(b).
Exemption From the Payment Condition Is Available
The Tribunal noted that, where an assessee has not filed a return and the case falls under Section 249(4)(b), the provision permits the assessee to apply to the appellate authority for exemption from the payment requirement. Such an application must explain good and sufficient reasons for seeking that exemption. This statutory opportunity was central to the Tribunal’s decision. The assessee’s failure to satisfy the payment condition did not eliminate the possibility of seeking relief through the mechanism available under the provision. The Tribunal therefore considered that the assessee should receive another opportunity to present his case before the CIT(A).
Entire Dispute Restored to the CIT(A)
Having regard to the facts and principles of natural justice, the Tribunal set aside the CIT(A)’s order and restored the entire disputed issues to the CIT(A) for fresh consideration. The restoration enables the assessee to explain the circumstances relevant to Section 249(4)(b) and seek exemption on good and sufficient grounds. The Tribunal did not itself grant exemption from the payment requirement. That question remains for consideration by the appellate authority in the restored proceedings. The appeal was allowed for statistical purposes.
Scope and Significance of the Decision
The ruling concerns the admission of the first appeal, rather than the correctness of the ₹32,31,000 addition. The Tribunal did not delete the addition, accept the source of investment or hold that the payment requirement could be ignored. It restored the opportunity to invoke the statutory exemption mechanism and pursue the appeal accordingly. The decision also specifically concerns clause (b), applicable where no return has been filed. Its reasoning should not be treated as a general dispensation from every payment condition governing first appeals.
Author’s Comments
The practical significance lies in recognising the relief mechanism within Section 249(4)(b). A non-filer whose appeal faces rejection for non-payment should place a properly supported application before the appellate authority, explaining the good and sufficient reasons for exemption. Here, the Tribunal preserved that opportunity despite earlier non-compliance. The relief remains an opportunity for fresh consideration, with exemption and the substantive assessment dispute still awaiting adjudication.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT NAGPUR
The appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals)/NFAC (for short, “CIT(A)”) dated 24.02.2026 passed u/sec 250 of the Income Tax Act, 1961 (for short, “Act”) which is arising out of assessment order dated 13.11.2025 passed u/sec. 147 r.w.s. 144 r.w.s. 144B of the Act for the A.Y. 2018-19. The assessee has raised the grounds of appeal challenging the order passed by the Ld.CIT(A) in sustaining the addition u/sec69 of the Act made by the Assessing officer.
2. The brief facts of the case are that, the income tax department in the Insight portal under ‘Risk Management Strategy (RMS) Non-filing of Return PAN Cases’ find that the assessee has purchased immovable property during the F.Y. 2017-18 and the assessee has not filed the return of income for the A.Y. 2018-19. The Assessing officer (A.O) has reason to believe that the income has escaped assessment and after following due process of law has issued notice u/sec148 of the Act Further, the AO has issued notice u/sec. 142(1) of the Act on various dates to explain the source of acquisition of the property and the assessee has filed clarifications along with documentary evidences dealt in the assessment order. .Whereas the AO was not satisfied with the submissions and made addition of Rs.32,31,000/- as unexplained investment u/sec. 69A of the Act and assessed the total income of Rs.32,31,000/- and passed the order u/sec. 147 r.w.s. 144 r.w.s. 144B of the Act dated 13.11.2025
3. Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) has considered the grounds of appeal, statement of facts, findings of the AO and Form no 35 and find that the assessee has not paid the taxes and the provisions of section 249(4)(b) of the Act are attracted and has issued letter and since there was no compliance by the assessee, the CIT(A) has dismissed the appeal in limine. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Hon’ble Tribunal. None appeared on behalf of the assessee.
4. Heard the Ld.DR submissions and perused the material on record. Prima-facie the CIT(A) has passed the order considering the fact that there is no compliance to the letter nor appearance in spite of providing adequate opportunity of hearing. Therefore, the CIT(A) was of the opinion that the assessee is not interested and find that as per Form no 35, the assessee has not paid the taxes/advance tax and the provisions of section 249(4)(b) of the Act are attracted and the CIT(A) has issued letter and there was no response and hence the CIT(A) has dismissed the appeal as un admitted. Whereas the assessee has raised grounds of appeal challenging the addition/sec69 of the Act made by the A.O and there could be various reasons for non-appearance/compliance which cannot be overruled. Further, in the case, were the return of income is not filed by the assessee and the case falling under section 249(4)(b) of the Act, there is a provision, provided that, the assessee can make an application to appellate authority explaining the good and sufficient reasons for claiming the exemption. Therefore, considering the facts and principles of natural justice, we shall provide with one more opportunity to the assessee. Accordingly, set aside the order of the CIT(A) and remit the entire disputed issues to the file of the CIT(A) as discussed above. And, allow the grounds of appeal of the assessee for statistical purpose.
5. In the result, the appeal filed by assessee is allowed for statistical purposes.
Order pronounced in the open Court on 12th October, 2026.
