Kerala HC directs to deposit 12 crore as Advance Tax for  maintaining Appeal against  Assessment Order [Read Order]

In a significant case the  Kerala high court directed to deposit 2 crore as advance tax for maintaining appeal against assessment order.

In this case the petitioner Alka Ventures Private Limited is a Private Limited Company engaged in the real estate business. For the assessment year 2016-17, the petitioner did not file a return of income. Proceedings were initiated for assessment, following which an order was issued under Section 147 r/w Section 144 and Section 144B of the Income Tax Act.

During the proceedings the AO observed that there were some transactions of purchase and sale of immovable property in that assessment year and the proceedings were finalized against the petitioner on the basis that there was unexplained investment under Section 69 of the 1961 Act. The petitioner was, therefore, assessed at the higher rate of tax by applying the provisions of Section 115 BBE of the 1961 Act.

Earlier the petitioner filed a writ petition by challenging the order of assessment . However, that writ petition was disposed of by refusing to interfere with the order of assessment.

Accordingly the petitioner filed an appeal before the authority under the Faceless Appeal Scheme, 2021.

It is the case of the petitioner that by virtue of the provisions contained in Section 249 of the 1961 Act, the Appellate Authority may having regard to the proviso to sub-section (4) of Section 249 of the 1961 Act exempt the petitioner from the requirement of paying the advance tax in cases where a return of income has not been filed by the petitioner / assessee. It is submitted that in the facts and circumstances of this case, a demand in the order of assessment (Ext.P15) is Rs.68 crores.

A.Kumar, Counsel for petitioner argued that for all the subsequent assessment years, including for the assessment year 2023-2024, the petitioner has filed a loss return and the same has been accepted along with an intimation under Section 143(1) of the 1961 Act.

Therefore the petitioner may be permitted to prosecute his appeal against assessment order without having to pay the advance tax in terms of the provision to sub-section (4) of Section 249 of the 1961 Act.

Counsel for the respondent argued that the demand relates to the assessment year 2016-17. It is submitted that even in the year 2017-18, the petitioner has made substantial investments in immovable property while not filing a return of income or paying even the admitted tax in respect of the assessment year 2016-17.

Further the counsel submitted that since the demand in order of assessment is in excess of Rs.68 crores, even if the appellate authority were to consider the case as one covered by the proviso to Section 249(4)(b) of the 1961 Act, a substantial amount will have to be remitted by the petitioner for maintaining the appeal.

After considering the both submissions the single  bench judge of Gopinath P observed that since it is not seriously disputed that the case of the petitioner falls under the proviso Section 249(4)(b) of the 1961 Act, appeal filed by the petitioner against order of assessment for the assessment year 2016-17 can be directed to be disposed of on merits after affording an opportunity of hearing to the petitioner on the condition that the petitioner remits a total sum of Rs 12 crores against the demands in order of assessment

To Read the full text of the Order CLICK HERE

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