Recently, the Income Tax Appellate Authority ( ITAT ) of Hyderabad remanded a case back to the Commissioner of Income Tax (Appeals) [ CIT (A) ] in a matter concerning non-payment of advance tax under Section 249(4)(b) of the Income Tax Act, 1961 due to financial loss.
The appellant/assessee, SPR Infrastructure India Limited, an entity involved in infrastructure projects and government contracts, did not file its income returns for the assessment year 2011-12 despite having substantial contract receipts.
The Income Tax AO found significant contract receipts of Rs. 33,74,11,042/- and interest income of Rs. 52,35,248/-, .and issued show cause letter to the company asking why the assessment cannot be completed at 12% of the contract receipts as income in addition to the other income available on record. Despite getting several opportunities, the assessee still didn’t furnish any reply. Finally the AO estimated the net profit at 12% and added the same to the income of the assessee and passed an assessment order under Section 144 and 147 of the Income Tax law.
Feeling aggrieved, the assessee appealed against the decision before CIT(A), arguing that the AO’s decision was against the principles of natural justice and also was inconsiderate of the relevant year’s audit report. But the CIT(A) also dismissed the appeal. Consequently the assessee appealed against the CIT(A)’s decision before the ITAT.
Before the tribunal, the assessee argued that the Commissioner of Income tax appeals didn’t give a reasonable opportunity of being heard so as to provide clarification/evidence required and to take necessary action with respect to the deficiency letters issued.
It was also argued that the income tax appellate commissioner dismissed the appeal not on the basis of merit, but because the assessee failed to deposit advance self-assessment tax as required under Section 249(4)(b) of Income Tax statute. The assessee submitted that it suffered loss and had no taxable income, and thus had no occasion to deposit the self-assessment tax. The assessee argued that this was not considered while dismissing the appeal.
After hearing both sides, the appeal was allowed for statistical purposes. The bench comprising Mr. Laliet Kumar and Mr. Manjunatha remanded the case back to the CIT(A) for re-evaluation, while directing the appellant to file an application explaining the non-payment of advance tax and also to provide necessary documentation to prove the same.
The CIT(A) was directed to decide the issue in accordance with the law after considering the appellant’s submissions. If the CIT(A) rules against the appellant, the appellant will be given 30 days to deposit the self-assessment tax, after which the appeal will be decided on its merits.
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