ITAT Sets Aside Dismissal under Section 249(4)(b) and Restores Rs. 4.26 Crore Addition u/s 69 for Fresh Adjudication

ITAT Sets Aside Dismissal under Section 249(4)(b) and Restores Rs.4.26 Crore Addition u/s 69 for Fresh Adjudication

The assessment was reopened on the basis of information regarding investment in immovable property worth Rs. 4,26,00,000. Since no return was filed and statutory notices went unanswered, the assessment was completed ex parte under Section 144, adding the entire amount as an unexplained investment under Section 69.

In the first appeal, the case was rejected as non-maintainable on Section 249(4)(b) grounds by holding that no pre-paid advance tax had been made. In the second appeal, a delay of 198 days was accounted for. The appellant raised the fact that he was a farmer and an illiterate person having no acquaintance with income tax issues earlier, that the property transfer concerned his brother’s field with consideration to be paid in full to the brother, and that he was just a confirming party was also explained that TDS had been deducted under Section 194-IA in the brother’s PAN, establishing that the appellant had not received any money from the transaction.

Central Issue: Whether the delay of 198 days should be condoned and whether dismissal of the appeal under Section 249(4)(b) for non-payment of advance tax was valid in law when the entire tax demand arose from additions disputed by the appellant.

ITAT’s Decision: The Tribunal waived the delay, noting that the assessee had not spoken at either the earlier stages and had presented sufficient cause. It is accepted that a denial to approve would put severe liability on contentious additions, which would be inequitable in the circumstances.

On the legal question, the Tribunal found that dismissal under Section 249(4)(b) was misconceived. Advance tax liability under Sections 208-211 arises only on admitted or undisputed income, not on additions contested in appeal. It held that the appellate authority erred in rejecting the appeal as non-maintainable. Thus, the order was set aside, and the matter was restored to the Assessing Officer for fresh adjudication after granting due opportunity of hearing. The appeal was allowed for statistical purposes.

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