CAN CIT(A) REJECT APPEAL FOR NON PAYMENT OF TAX ON REGULAR ASSESSMENT CREATED THROUGH SECTION 156 NOTICE?

Respected Members

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Short note of today's case law for quick reference:

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[2024] 112 ITR (Trib) (S.N.) 39 (Surat)

[BEFORE THE INCOME-TAX APPELLATE TRIBUNAL — SURAT BENCH]

(hybrid hearing)

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ROHINI ENTERPRISES P. LTD.

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INCOME-TAX OFFICER

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1. The assessee has not filed his return of income for the A.Y. 2011-12 & A.Y. 2012-13.

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2. The notice u/s 148 was issued to the assessee and assessee did not file the return in response of the notice u/s 148 also.

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3. Assessee submitted computation of income along with profit & loss account and balance sheet showing business loss.

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4. Assessee could not file the return because according to him he is defaulter of bank and multiple legal proceedings are undertaken against him by various departments.

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5. A.O. made several additions by rejecting books of accounts and created demand u/s 156.

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6. Assessee could not pay this demand and filed CIT(A).

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7. Under section 249(4)(b) of the Act, where no return has been filed by the assessee, the assessee has to pay an amount equal to the advance tax which was payable by the assessee, otherwise the appeal shall not be admitted.

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8. Since the assessee had not filed a return nor paid advance tax, the CIT(A) dismissed the appeal.

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9. ITAT held that:

The assessee had shown loss of Rs. 87,64,489/- therefore it was not liable to pay the advance tax because the estimated income was negative.

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10. The demand u/s 156 of the Act was for regular assessment.

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11. If the tax is being paid for the same financial year based on estimated income, it would be advance tax.

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12. If the tax is being paid after the end of F.Y., it would be self-assessment tax.

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13. When the department finds that there has been under assessment of income and as a result tax is due, it computes the actual amount that ought to have been paid.

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14. This demand raised on the assessee is called tax on regular assessment.

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15. Tax on regular assessment is the tax which the taxpayer is required to pay against notice of demand from department, normally u/s 156 of the Income Tax Act.

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16. ITAT remanded the matter to CIT(A).