Advance Tax Liability arises Only with Taxable Income, Not Otherwise: ITAT remands Matter to CIT(A) [Read Order]

The assessee, during the period of demonetization from 09.11.2016 to 30.12.2016, had made cash deposits. The AO issued a notice requesting the assessee to file a return of Income for A.Y. 2017-18. However, the assessee failed to comply with the notice, and it was also noted by the AO that the assessee had not filed a regular return of income for the A.Υ. 2017-18.

The AO thereafter issued notices, which were not complied with, and the AO also issued a show-cause notice, which was also not complied with. The AO further noted that the assessee had deposited a total sum of Rs. 63,32,892/-in various bank accounts maintained with HDFC Bank and Yes Bank, Gwalior.

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In view of the non-compliance by the assessee, the AO held that the assessee had no explanation to offer regarding the nature and source of the above amount credited in the assessee’s bank account and therefore, treated the sum of Rs. 63,32,892/- as unexplained money under Section 69A of the Income Tax Act.

Aggrieved with the said order, the assessee filed an appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee on the ground that the assessee did not pay an amount

equal to the amount of advance tax, which was payable on or before filing the appeal. Aggrieved with the said order, the assessee filed the appeal before the ITAT.

The assessee submitted that the advance tax payable was nil in the case of the assessee because, according to the assessee, his income for the year under consideration was less than the maximum amount not liable to income tax. It was further submitted that this fact was categorically mentioned at the beginning of the appeal form filed before CIT(A).

Further, the assessee also relied on the orders of the Coordinate Benches of Tribunal, in the case of Vishnusharan Chandravanshi vs. Income Tax Officer (2024), Dilip Hiralal Chaudhari vs. Income Tax Officer, Ritika Jain vs. Income Tax Officer and Neeraj Tripathi vs. Income Tax Officer, in support of his aforesaid contentions.

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The Tribunal observed that on similar facts, the co-ordinate Bench of Raipur Bench in the case of Vishnusharan Chandravanshi, held that when the assessee in “Statement of Facts” had stated before the CIT(A) that he had no taxable income, then, there was no obligation cast upon the assessee to compute/pay “advance tax” for the subject year, and, therefore, the first appellate authority could not have held that the assessee had failed to comply with the statutory conditions contemplated in section 249(4)(b) of the Income Tax Act.

A similar view was also taken by the Co-ordinate Bench of the Pune Bench in the case of Dilip Hiralal Chaudhari. In this case also, the assessee, in the statement of facts, had submitted that the income of the assessee for the year under consideration was less than the maximum amount not liable to income tax.

The Tribunal observed that in this case, the assessee in the appeal had stated that the appellant had mentioned in the statement of facts that the income was below the maximum limit and was not liable for Income Tax, as was the fact in the above two cited cases.

The Tribunal further stated that, “Moreover, we are in agreement with the view held by the Co-ordinate Bench of the Tribunal, in the case of Dilip Hiralal Chaudhari (supra), that assessee was not required to pay advance tax on the basis of assessed tax but was required to pay advance tax, if any, which was payable by him i.e. based on his undisputed admitted income.”

The two-member Bench of Sunil Kumar Singh (Judicial Member) and Brajesh Kumar Singh (Accountant Member) held that the CIT(A) erred in dismissing the appeal of the assessee, on the ground that the assessee had failed to fulfil the mandatory and essential conditions by not paying the advance tax, which was payable by him, if no return of income was filed by the assessee for admission of appeal before the CIT(A) as per section 249(4)(b) of the Income Tax Act.

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