Laxmanji Khodaji Solanki Vs ITO (ITAT Ahmedabad)
Advance tax liability only on admitted/undisputed income is a Precondition for Appeal – CIT(A) Erred in Dismissing Appeal for Non-Payment of Advance Tax – Tribunal Restores Case
Ahmedabad Tribunal restored matter to AO for fresh adjudication holding that CIT(A) erred in dismissing appeal as non-maintainable u/s 249(4)(b) for non-payment of advance tax.
Assessee, an illiterate farmer, had not filed return of income. AO reopened assessment based on information that Assessee purchased immovable property worth Rs.4.26 crore. As Assessee did not respond, AO completed ex-parte assessment u/s 144 treating the amount as unexplained investment u/s 69.
On appeal, CIT(A) dismissed the case as non-maintainable citing section 249(4)(b), holding that since no return was filed, Assessee was required to pay advance tax equal to tax payable. CIT(A) refused to admit appeal.
Before Tribunal, Assessee explained that he was only a confirming party in a land sale transaction by his brother, who actually received Rs.1.06 crore consideration on which TDS u/s 194-IA was also deducted under brother’s PAN. He had no source of such huge investment & had not received a single rupee. Delay in filing appeal was due to ignorance of tax proceedings.
Tribunal held that advance tax liability arises only on admitted/undisputed income & not on disputed additions made in assessment. Hence, CIT(A) wrongly dismissed appeal for non-payment of advance tax. Since Assessee remained unheard both before AO & CIT(A), matter was remanded back to AO for de novo adjudication after providing opportunity of hearing.
