Bhagyashree Abhijit Bhatkhande Vs ITO (ITAT Mumbai)
No Return, No Advance Tax, No Appeal?—ITAT Directs CIT(A) to First Decide Applicability of s.249(4)(b) Before Burying ₹99.38 Lakh Appeal
The controversy
The assessee, Ms. Bhagyashree Abhijit Bhatkhande, did not file her return of income u/s 139(1) for AY 2018-19. Information available on the Insight Portal showed that she had jointly purchased an immovable property along with Mr. Abhijit Bhatkhande for a total consideration of ₹1.89 crore.
Based on this information, proceedings were initiated by issuing notice u/s 148A on 6 August 2024. After passing an order u/s 148A(d), the AO issued notice u/s 148 on 29 August 2024.
The assessee did not file a return in response to the notice u/s 148. The subsequent statutory notices, communications & show-cause notices issued during the reassessment proceedings also remained unanswered.
Property purchase treated as unexplained
The property was situated at Borivali West, Mumbai, and had been purchased under a registered deed dated 10 November 2017. The AO called upon the assessee to explain the source of investment and furnish the registered document, bank statements & supporting evidence.
In the absence of compliance, the AO treated the investment as unexplained. After including stamp duty, registration charges & incidental expenses, the total cost was computed at ₹1,98,76,240. Since the property was jointly acquired, the assessee’s share was taken at 50%, namely ₹99,38,120.
The assessment was accordingly completed u/s 147 r.w.s. 144 & 144B, determining the assessee’s income at ₹99,38,120 by invoking s.69. The AO also applied s.115BBE and initiated penalty proceedings u/s 271AAC(1).
Appeal stopped at the entrance
The assessee filed an appeal before the CIT(A) on 13 December 2025 against the assessment order dated 4 November 2025.
The CIT(A) noticed that the assessee had neither filed a return of income nor paid an amount equal to the advance tax payable on the assessed income. In Form No.35, the assessee had stated that the requirement of s.249(4)(b) was “not applicable.”
Under s.249(4)(b), where no return has been filed by the assessee, an appeal shall not be admitted unless the assessee has paid an amount equal to the advance tax payable by her. The proviso authorises the appellate authority, for any good & sufficient reason recorded in writing, to exempt the appellant from the operation of this requirement upon an application being made.
The CIT(A) held that the assessee was required to pay an amount equal to advance tax on the assessed income. Since she had neither made the payment nor applied for exemption, the appeal was dismissed as not maintainable. Consequently, the addition of ₹99,38,120 u/s 69 was not examined on merits.
Assessee’s case before the ITAT
Before the Tribunal, the assessee challenged the applicability of s.249(4)(b). It was contended that the provision applies only where an obligation to pay advance tax was otherwise cast upon the assessee.
According to the assessee, she had no taxable income and, therefore, there could be no requirement to pay advance tax. It was also argued that the condition contemplated by s.249(4) applies to an original return required to be filed u/s 139 and cannot be mechanically applied to reassessment proceedings merely because no return was filed in response to notice u/s 148.
The assessee also raised substantive grounds challenging the addition made u/s 69.
ITAT’s ruling
The Mumbai ITAT noticed that the CIT(A) had dismissed the appeal solely for alleged non-compliance with s.249(4)(b), without adjudicating any of the grounds on merits.
Considering the facts and in the interest of substantial justice, the Tribunal held that the matter required reconsideration by the CIT(A). It accordingly set aside the appellate order and restored the matter for fresh adjudication.
The CIT(A) was directed to first examine the applicability of s.249(4)(b) and determine the maintainability or admissibility of the appeal. If satisfied regarding its admissibility, the CIT(A) must thereafter adjudicate the assessee’s grounds on the merits of the addition u/s 69.
The assessee was permitted to furnish all relevant documents & submissions and was to be granted an adequate opportunity of hearing. The CIT(A) was also directed to pass a speaking & reasoned order in accordance with law.
The appeal was thus allowed for statistical purposes.
Author’s comments
The order does not hold that s.249(4)(b) is inapplicable to reassessment proceedings. Nor does it decide that an assessee having no returned income can automatically avoid the statutory pre-deposit. The Tribunal has consciously left these questions open for examination by the CIT(A).
The expression used in s.249(4)(b) is “an amount equal to the amount of advance tax which was payable by him.” It is not expressly linked to tax on the income ultimately assessed by the AO. Therefore, computing the condition merely with reference to a disputed best-judgment addition may require careful scrutiny.
Further, the statutory proviso confers power upon the CIT(A) to exempt the assessee from s.249(4)(b) for good & sufficient reasons. Where the assessee disputes the very existence of taxable income or pleads genuine financial difficulty, a specific exemption application should prudently be filed instead of merely stating in Form No.35 that the provision is inapplicable.
The practical lesson is clear: when no return was filed, the appeal must squarely address s.249(4)(b), quantify the amount allegedly payable & alternatively seek exemption under the proviso. Otherwise, a strong case on merits may never cross the admission counter.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
