Vedala Krishnamurthy Sreevani Vs ITO (ITAT Hyderabad)
Hyderabad ITAT: Appeal Cannot Be Summarily Rejected for Non-Payment of Advance Tax u/s 249(4)(b); CIT(A) Must Examine Assessee’s Claim and Exemption Application
Summary: In Vedala Krishnamurthy Sreevani v. ITO, ITA Nos. 807–809/Hyd/2026, AY 2018-19, order dated 21.08.2026, the Hyderabad ITAT considered whether the assessee’s appeals could be dismissed as infructuous under Section 249(4)(b) for non-payment of an amount equal to advance tax where no return had been filed. The AO had reopened the assessment and treated bank transactions aggregating to ₹2,64,97,400 as undisclosed turnover/receipts, estimating income at 12% at ₹31,79,688, besides adding ₹69,277 as undisclosed interest, determining total income at ₹32,48,965. The CIT(A) dismissed the appeal without examining the additions on merits. The Tribunal noted that Section 249(4)(b) requires payment of the advance tax payable where no return has been filed, but its proviso permits exemption on an application for good and sufficient reasons. It further noted that neither the assessee nor the AO had calculated the advance tax under Section 209. Therefore, the assessee’s claim that no advance-tax liability arose because he had no taxable income could not have been summarily discarded. However, the assessee had also not filed the application contemplated by the proviso to Section 249(4)(b). The Tribunal accordingly set aside the quantum appeal to the CIT(A) for fresh adjudication after giving the assessee an opportunity to substantiate his claim; if Section 249(4)(b) was found inapplicable or exemption was granted, the CIT(A) was directed to decide the appeal on merits. The connected penalty appeals under Sections 270A and 271B were also restored on the same terms, and all three appeals were allowed for statistical purposes.
In Vedala Krishnamurthy Sreevani v. ITO, ITA Nos. 807–809/Hyd/2026, AY 2018-19, order dated 21.08.2026, the Hyderabad ITAT dealt with the maintainability of an appeal where the assessee had not filed a return of income and had also not paid advance tax.
The AO reopened the assessment and treated bank transactions of ₹2.64 crore as undisclosed turnover, estimating income thereon at 12% amounting to ₹31.79 lakh, besides adding ₹69,277 as undisclosed interest, determining total income at ₹32.49 lakh. The CIT(A), however, did not decide the additions on merits and dismissed the appeal as not maintainable for failure to comply with Section 249(4)(b).
The ITAT explained that where no return has been filed, Section 249(4)(b) ordinarily requires payment of an amount equal to the advance tax payable before an appeal can be admitted. However, its proviso empowers the CIT(A), on an application by the assessee and for good and sufficient reasons recorded in writing, to exempt the assessee from this requirement.
Significantly, the Tribunal noted that in this case neither the assessee nor the AO had computed any advance tax under Section 209. Therefore, the assessee’s contention that he had no taxable income and consequently no advance-tax liability could not have been summarily rejected by the CIT(A). At the same time, the assessee had also failed to make the requisite application seeking exemption under the proviso to Section 249(4)(b).
Accordingly, the ITAT set aside the CIT(A)’s order and restored the appeal for fresh adjudication. The CIT(A) was directed to consider the assessee’s contention regarding absence of advance-tax liability and give him an opportunity of hearing. If Section 249(4)(b) is found inapplicable, or the assessee is granted exemption on his application under the proviso, the CIT(A) must decide the appeal on merits.
Since the connected penalty appeals under Sections 270A and 271B had also been dismissed by the CIT(A) on the same Section 249(4)(b) ground, those matters were similarly restored to the CIT(A). Thus, all three appeals were allowed for statistical purposes.
List of Cases Discussed / Relied Upon
- Kumar Cherka Vs ITO (ITAT Hyderabad),— relevance: related Hyderabad ITAT decision concerning dismissal of an appeal under Section 249(4)(b) where advance-tax liability was in issue.
- Aneemoni Naga Raju vs. Income Tax Officer, Ward-8(1), Hyderabad, ITA No.2074/Hyd/2025, order dated 20/03/2026 — relevance: the Tribunal noted that this decision, involving the same issue, restored the matter to the CIT(A) with liberty to the assessee to file an application under the proviso to Section 249(4)(b).
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
