Case Law Details
SPR Infrastructure India Limited Vs DCIT (ITAT Hyderabad)
ITAT Hyderabad held that dismissal of appeal by CIT(A) on the ground of non-deposition of self-assessment tax by the assessee needs re-verification since assessee incurred losses and therefore has a reason for not depositing the self-assessment tax. Hence, matter remanded.
Facts-Assessee company is engaged in execution of infrastructure projects and government contracts. The assessee company had not filed its return of income for A.Y .2011-12 despite having contract receipts to the tune of Rs.33,76,72,960/- as per Form 26AS. Based on the information available with this office, the case was re-opened for scrutiny and notice u/s 148 of Income Tax Act, 1961 was served on the assessee.
During the course of assessment, AO found from Form 26AS that the assessee company had contract receipts of Rs.33,74,11,042/- and interest income of Rs.52,35,248/-. Further, a show cause letter was issued to the assessee on 28.11.2018 asking why the assessment cannot be completed by treating 12% of contract receipts as income in addition to the other income available on record. AO completed the assessment by estimating the net profit of the assessee at Rs.4,04,89,325/-, which was 12% of contract receipts Rs.33,74,11,042/- and accordingly, passed order u/s 144 r.w.s 147 of the Act on 14.12.2018.
Feeling aggrieved by the order, assessee filed appeal before CIT(A) / NFAC, who dismissed the appeal of assessee. Hence this appeal.
Conclusion- Held that the assessee incurred losses and therefore was not required to pay self-assessment tax. However, this contention was required to be substantiated before the ld.CIT(A), which could have been done either in a duly filled appeal before the learned CIT(A) or by filing an application providing sufficient reasons for not depositing advance tax/self-assessment tax within the provisions of the law. In such circumstances, the assessee was obligated to file an application before the learned CIT(A) regarding the issue of self-assessment tax, and accordingly, the learned CIT(A) is duty-bound to decide the matter in accordance with the law. Hence, we deem it appropriate to remand the issue to the file of ld.CIT(A) with a direction to decide the issue after considering the documents available on record and affording the opportunities of hearing to the assessee in accordance with law.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal is filed by the assessee, feeling aggrieved by the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 05.01.2024 for the AY 2011-12.
2. The assessee has raised the following grounds :
“1. The order passed by the Ld. CIT(A) u/s 250 of the Act is erroneous both on facts and in law to the extent the order is prejudicial to the interest of the appellant.
2. The Ld. CIT(A) ought to have given reasonable opportunity of being heard to the assessee to provide clarification/ file evidences required and take necessary action with respect to the deficiency letters issued.
3. The Ld. CIT(A) ought to have appreciated the fact that the appellant had a reasonable and sufficient cause for not responding to the deficiency letters issued and another sufficient opportunity ought to have been given to take necessary action.
4. The Ld. CIT(A) ought to have admitted and heard the appeal on the basis of merit rather than dismissing the appeal on the reason of nonpayment of an amount equal to the amount of advance tax payable.
5. The Ld. CIT(A) erred in dismissing the appeal on the ground of nonpayment of advance tax without considering the fact that the appellant company has incurred loss for the Asst. year under consideration which is clearly evident from the Profit & Loss account of the company submitted in the Paperbook filed by the assessee after which the Ld. CIT(A) had passed a Remand Report.
6. The Ld. CIT(A) ought to have admitted the appeal on the basis of merits and ought to have appreciated the fact that the AO erred in passing the Assessment order u/ s 144 r.w.s 147 of the Act dt. 14.12.2018 by not providing reasonable and sufficient opportunity to the appellant to represent the case. Factual ground
7. The Ld. CIT(A) ought to have appreciated that the AO erred in considering the fact that the assessee, being a private limited company, regularly gets its books of accounts audited by a Qualified Chartered Accountant u/ s 44AB and no discrepancies were found by the chartered accountant with regard to the books of accounts maintained by the assessee.
8. The Ld. CIT(A) ought to have appreciated the fact that the AO erred in estimating the income of the assessee at 12% of the contract receipts without considering the Audit report, which is incorrect and against the principles of natural justice.
9. The Ld. CIT(A) ought to have appreciated the fact that the AO cannot make an addition under the head income from other sources after estimating the business income at 12%, which is invalid and bad in law.
10. The Ld. CIT(A) ought to have appreciated the fact that the AO erred in allowing the TDS credit of Rs. 74,03,725/- instead of actual TDS credit of Rs. 75,55,306/- which is available in Form 26AS while making the assessment.”
3. Facts of the case, in brief, are that assessee company is engaged in execution of infrastructure projects and government contracts. The assessee company had not filed its return of income for A.Y .2011-12 despite having contract receipts to the tune of Rs.33,76,72,960/- as per Form 26AS. Based on the information available with this office, the case was re-opened for scrutiny and notice u/s 148 of Income Tax Act, 1961 dated 21.03.2018 was served on the assessee.
3.1. During the course of assessment, Assessing Officer found from Form 26AS that the assessee company had contract receipts of Rs.33,74,11,042/- and interest income of Rs.52,35,248/-. Further, a show cause letter was issued to the assessee on 28.11.2018 asking why the assessment cannot be completed by treating 12% of contract receipts as income in addition to the other income available on record. However, inspite of several opportunities given, the assessee had not furnished any reply to this office. Assessing Officer completed the assessment by estimating the net profit of the assessee at Rs.4,04,89,325/-, which was 12% of contract receipts Rs.33,74,11,042/- and added the same to the income of the assessee and accordingly, passed order u/s 144 r.w.s 147 of the Act on 14.12.2018.
4. Feeling aggrieved by the order passed by the assessing officer, assessee filed appeal before the Ld. CIT(A) / NFAC, who dismissed the appeal of assessee.
5. Feeling aggrieved with the order of ld.CIT(A), assessee is now in appeal before us.
6. The ld. AR has drawn our attention to the order passed by the ld.CIT(A) wherein the ld.CIT(A) had dismissed the appeal of the assessee on the ground that the assessee has not deposited the self-assessment tax as required to be deposited u/s 249(4) of the Act and for the above said purposes, ld. AR had drawn our attention to para 3 of the order passed by the ld.CIT(A), which is to the following effect :
“3. Decision :
As per the provisions of the section 249(4)(b) of the Act, the appeal shall not be admitted, unless the appellant has paid an amount equal to the amount of advance tax which was payable by him if no return of income has been filed.
In the present case, the appellant did not file return of income. On or before filing the present appeal, the appellant has failed to make the requisite payment of the amount equal to the amount of advance tax which was required to be paid by him. Further, the appellant neither provided any clarification/explanation in response to the deficiency letter issued by this office nor did he offer any reason, leave alone any good and sufficient reasons as mandated in the proviso to sec.249(4), seeking exemption from the operation of the sec. 249(4)(b) even though sufficient opportunities were provided to him.
On careful consideration of the above facts and circumstances, as the appellant has failed to fulfill the necessary conditions for admission of appeal before CIT(A) as per sec. 249(4)(b), the present appeal is liable to be held as not eligible for admission. Accordingly, it is held that the appeal is not fit for admission and hence, the appeal is not admitted.”
7. Before us, ld. AR had submitted that the assessee has no taxable income and therefore, it has no occasion to deposit the self assessment tax. On the contrary, as per profit and loss account now filed before us, which was available before the lower authorities, the assessee was having losses and therefore, the assessee has not paid self-assessment tax. Further, as mandated by the provisions of Section 249(4)(b) of the Act, the assessee has a reason for not depositing the self-assessment and hence, he made a request before the ld.CIT(A) for attending the appeal without pressing upon payment of advance tax. However, the ld.CIT(A) has not considered the request of the assessee and dismissed the appeal of the assessee. In support of its case, ld. AR had relied upon the decision in the case of Vishnusharan Chandravanshi Vs. ITO reported in (2024) 161 com 803 (Raipur- Trib).
8. Per contra, ld. DR relied upon the provisions of Section 249(4)(b) of the Act and also on the order of lower authorities. Further, ld. DR has drawn our attention to Section 249(4)(b) of the Act, which is to the following effect :
249. 48[(4) No appeal under this Chapter shall be admitted unless at the time of filing 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, 49[in a case falling under clause (b) and] on an application made by the appellant in this behalf, the 50[* * *] 51[Commissioner (Appeals)] may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of 52[that clause].]
9. On the basis of the above, the learned DR submitted that since the assessee has not deposited the self-assessment tax, which is a condition precedent, the action of the learned CIT(A) in dismissing the appeal is correct.
10. We have heard both the parties and perused the material on record. The case of the assessee is that the assessee incurred losses and therefore was not required to pay self-assessment tax. However, this contention was required to be substantiated before the ld.CIT(A), which could have been done either in a duly filled appeal before the learned CIT(A) or by filing an application providing sufficient reasons for not depositing advance tax/self-assessment tax within the provisions of the law. In such circumstances, the assessee was obligated to file an application before the learned CIT(A) regarding the issue of self-assessment tax, and accordingly, the learned CIT(A) is duty-bound to decide the matter in accordance with the law. Hence, we deem it appropriate to remand the issue to the file of ld.CIT(A) with a direction to decide the issue after considering the documents available on record and affording the opportunities of hearing to the assessee in accordance with law
11. The assessee shall file an application wherein it will provide reasons for not depositing advance tax/self-assessment tax, or otherwise prove its case by filing the requisite documents to show that payment of self-assessment tax was not required within the provisions of the law. On such filing of application, the ld.CIT(A) shall decide the issue in accordance with law by passing detailed speaking order dealing with the contentions of the assessee. However, in case, ld.CIT(A) decide the issue against the assessee and held that the assessee was required to deposit self assessment tax, in that eventuality, 30 days shall be given to the assessee to deposit the self assessment tax and if assessee deposits the self assessment tax as per law, then the ld.CIT(A) shall decide the appeal on merits. Needless to say, we have not adjudicated any other ground, all the grounds are required to be adjudicated by the ld.CIT(A) in the remand proceedings. Accordingly, the appeal of the assessee is allowed for statistical purposes.
12. In the result, the appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the Open Court on 10th July, 2024.
Author Bio
