No Obligation to pay Advance Tax if Assesses denies his Income Tax Liability: ITAT [Read Order]

No obligation-ITAT-taxscan

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently held that no obligation can be imposed on the assessee to pay advance tax if he alleges that his income is not taxable under the provisions of the Income Tax Act, 1961.

Based on the AIR information, the assessing officer had re-opened the assessment completed against the assessee wherein an addition of Rs.43,61,300/- was made on account of a cash deposit in a bank account. It was also held that the assessee defaulted his obligation to pay advance within the prescribed time limit.

Before the appellate authorities, the assessee argued that the income of the assessee was below the taxable limit and, therefore, the assessee was under no obligation to pay advance tax as per the provisions of the law. It was further argued that the CIT(A) dismissed the appeal of the assessee as not maintainable by invoking the provisions of section 249 (4)(b) of the Act.

While considering the second appeal filed by the assessee, the Tribunal observed that “once the assessee alleged that his income is not taxable during the provisions of the Act there cannot be any obligation upon the assessee to pay advance tax. My view is fortified by the affidavit of the assessee filed before me. I find that the first appellate authority has not decided the appeal on merits of the case, therefore, in the interest of justice and fair play I deem it fit to restore the appeal to the files of the CIT(A).”

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