Shri Natraj Challa Vs ITO (ITAT Hyderabad)
ITAT Hyderabad: Appeal Cannot Be Dismissed u/s 249(4)(b) Without Advance Tax Liability; Demonetisation Cash Deposits to Be Examined as Business Receipts
In this case, the assessee, engaged in a medical agency business, had not filed a return and cash deposits (including during demonetisation) led to additions under section 69A and estimation of income @8% by the AO. The CIT(A) dismissed the appeal in limine under section 249(4)(b) on the ground that no return was filed and advance tax was not paid.
The ITAT held that section 249(4)(b) applies only where advance tax is payable. Since the assessee had not admitted any income, there was no liability to pay advance tax, and therefore dismissal of appeal was unjustified. The Tribunal set aside the CIT(A)’s order and restored the appeal.
On merits, the Tribunal observed that cash deposits were made throughout the year and not only during demonetisation, and that medical businesses were permitted to accept cash during that period. It directed the AO to verify monthly deposits and, if found normal, treat the demonetisation deposits as business turnover instead of unexplained income u/s 69A. The AO was further directed to estimate income on the entire turnover under section 44AD.
The appeal was thus allowed for statistical purposes with a direction for fresh examination.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
