Section 249(4)(b) does not Apply when there is No question of Advance Tax in Income Tax Reassessment Proceedings: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that Section 249(4)(b) of Income Tax Act, 1961 does not apply when there is no question of advance tax payment in the income tax reassessment proceedings.

The assessee M/s. Nine Globe Industries Pvt. Ltd filed its Return of Income (RoI) on 29.09.2012 for assessment year 2012-13 declaring a total income of Rs.51,80,800/-. The case was taken up for scrutiny and there were no additions made. Subsequently, the case was reopened on the basis of information received from DDIT (Inv.)-2, Surat.

However, assessee did not file return within 30 days of the notice issued and hence, by order dated 12.11.2019 the assessee was required to show cause why an addition of Rs.14,31,25,612/- be not made under Section 144 of the Income Tax Act, 1961 on account of sale and purchase made through accommodation entries. In response to the said notice, assessee filed RoI under Section 148 of the Act on 19.11.2019 declaring a total income of Rs.51, 80,796/-. The appellant was required to furnish requisite details and upon consideration of the same, the AO by an order dated 23.12.2019 made addition of Rs.14,31,25,612/- on account of unexplained expenditure under Section 69C of the Income Tax Act.

The bench found that the case was initially selected for scrutiny, which was completed on 29.03.2015, and there was no change in the returned income of Rs.51,80,800/- in the absence of any additions being made. It is a matter of record that originally the return was filed for the relevant year under consideration on 29.09.2012. It was not disputed during the course of hearing that the advance tax has per the assessed income of Rs.51, 80,800/- has been paid.

Here was the case of reassessment which was done for the benefit of Revenue. Hence, the two member bench of the tribunal comprising B.R.Baskaran (Accountant member) and Justice C.V Bhadang (President) observed that the clause (b) of Section 249(4) of the Income Tax Act will not apply as there was no question of paying advance tax in reassessment proceedings, even though the assessee did not file Return of Income. The ITAT bench found that the impugned order dismissing the appeal on the ground of non-compliance of Section 249(4) of the Income Tax Act cannot be sustained and deserved to be set-aside.

The impugned order dated 14.09.2023 was set-aside. The appeal filed by the assessee is restored to the file of CIT (A) for disposal according to law.

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