lipped from: https://taxguru.in/income-tax/appeal-dismissed-non-payment-advance-tax-taxable-income-exists.html
James Ivan Dantis Vs ITO (ITAT Mumbai)
In James Ivan Dantis vs ITO (ITAT Mumbai), the Tribunal condoned a delay in filing the appeal, accepting that the assessee, a non-resident working in Nigeria, faced genuine difficulties such as reliance on a power of attorney, limited presence in India, and missed communications. The core issue was whether the CIT(A) rightly dismissed the appeal under section 249(4) for non-payment of advance tax. The Tribunal held that since the assessee claimed no taxable income in India, there was no obligation to pay advance tax, making the dismissal on technical grounds invalid. It emphasized that procedural rules should not defeat substantial justice. As the assessment was completed ex parte and without considering the assessee’s explanation regarding property investment, the matter was remanded to the Assessing Officer for fresh adjudication. Consequently, the penalty proceedings were also set aside as they were dependent on the quantum assessment.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The assessee has filed the present appeals against the separate impugned orders of even date 06/11/2024, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], which in turn arose from the assessment order passed under section 147 read with section 144 of the Act and the penalty order passed under section 271(1)(c) of the Act, for the assessment year 2015-16.
2. This appeal is delayed by 130 days. The assessee has filed an application seeking condonation of delay, which is duly supported by the affidavit of the assessee. In its application seeking condonation of delay, the assessee has submitted as follows: –
“1. The Appellant Mr. James Ivan Dantis (PAN: AHFPD2364L), aged 50 years, is non- resident. Since 2008, the Appellant has been employed at “Apex Paints Limited,” located at Km. 8, Abeokuta-Lagos Road, P.O. Box 2073, Abeokuta, Ogun State, Nigeria, where the Appellant serves as the Manager of Industrial Coating Analyst presently residing at B 702, Kailash Park, Tulshet Pada, Bhandup, Mumbai-400078.
2. The Appellant designated her wife as the Power of Attorney to sign the income tax documents and manage the income tax processes. This procedure is time-consuming as the papers were sent to Nigeria for signatures, followed by notarization and other essential tasks.
3. However, the appeal is being filed on 10/06/2025, which is late by 155 days, and during that tenure, the Appellant was in Nigeria. The delay in filing the ITAT (Appeal) had occurred under bona fide reasons and compelling circumstances beyond my control, stated as under,
I. The appellant does not reside in India. He lives in Nigeria and travels to India only during holidays or emergencies. As stated in the Offer of Employment letter dated 07/11/2008, he is entitled to only 30 days of leave per year. Additionally, based on the immigration stamp on his passport, he has spent a total of 320 days in India over the past 8 years.
II. The delay in filing of appeal was due to genuine bona-fide reasons beyond the control and gained nothing by not filing the form within the permitted time.
III. The delay in filing of the form is due to lack of knowledge and ignorance of the fact by the appellant and not due to intention to jeopardize the interest of the revenue by delaying the filing of the form-36.
IV. A liberal approach is required to be adopted on principle, as ordinarily, a litigant does not stand to benefit by filing the form late. Further refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and the cause of M justice being defeated.
V. The appellant, being a non-resident was unable to attend the notice issued by the Ld. A.O., the appellant, did not consistently check his email, and additionally, correspondence regarding Income Tax ended up in the spam folder. He stated that the email address displayed was donotreply@incometax.gov.in. As a result, he had no inclination to open such emails to prevent any potential cyber issues. As he was not aware about the Income tax emails. Thus, the applicant was unable to attend the assessment proceedings and appellate proceedings before Ld. Commissioner of Income Tax (Appeals).
VI. Appellant states and declares that there is no wilful or deliberate attempt or failure to furnish the details and documents on the assessment record and there is no gross negligence on my part; however, non-participation during assessment had occurred due to the bonafide reasons and compelling circumstances as stated herein above.
Prayer
1.0 Appellant make a humble and respectful prayer before Hon’ble Income Tax Appellate Tribunal (ITAT) to condone the delay in filing the appeal and his non-participation during the course of assessment and admit the enclosed documents as additional evidence and decide the case on merits.”
3. We find that the reasons stated by the assessee for seeking condonation of delay fall within the parameters for grant of condonation laid down by the Hon’ble Supreme Court in the case of Collector Land Acquisition, Anantnag Vs. MST Katiji and others: 1987 SCR (2) 387. It is well established that rules of procedure are handmaid of justice. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. In the present case, the assessee did not stand to benefit from the late filing of the appeal. In view of the above and having perused the application and affidavit filed by the assessee, we are of the considered view that there exists sufficient cause for not filing the present appeal within the prescribed limitation period. Therefore, we condone the delay in filing the appeal by the assessee, and we proceed to decide the same.
4. In this appeal, the assessee has raised the following grounds: –
“The appellant prefers an appeal against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 06/11/2024, on the following amongst other grounds, each of which is without prejudice to any other:-
1.0 The notice issued u/s 148 of the Act is in gross violation of the provisions of Section 151A, as the notice was issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO). Hence, the impugned. notice issued under the Income Tax Act, 1961 void ab initio, and the same should be quashed.
2.0 The Ld. CIT(A) erred in passing the impugned order u/s 250 of the Income Tax Act, 1961, rejecting the appeal filed by the assessee on the technical ground without considering the merit of the case. Hence, the order passed under Section 250 of the Act is bad in law, and the same may be quashed.
3.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the addition made by the Assessing Officer under section 69 of the Income Tax Act, 1961, treating the investment in property as unexplained, without considering the genuineness of the transaction.
4.0 The assessee has no taxable income. As a result, he is not obligated to submit his income tax return under section 139(1) of the Income Tax Act, 1961. Consequently, the CIT(A) was incorrect in rejecting the appellant’s appeal on a technical basis. Therefore, the order issued should be annulled.
5.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in not considering the bonafide reasons that had precluded the appellant from furnishing the details/documents on the assessment record and further erred in not deciding the appeal on merits,
6.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the addition made u/s.69 the purchase of residential property for a consideration of Rs. 51,86,875/- and payment of TDS for Rs. 1,84,650/-aggregating to Rs. 53,71,525/-;
7.0 The Ld. CIT(A), before confirming the addition u/s.69 of Rs.53,71,525/-, erred in not considering the understated vital facts, being.
a) The source of payment made towards the purchase of residential property from the Housing Bank Loan of Rs.40,00,000/-
b) The balance amount paid towards the purchase of the abovementioned property from his savings;
5. The solitary grievance of the assessee is against the dismissal of its appeal by the learned CIT(A) by invoking the provisions of section 249(4) of the Act.
6. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is an individual and, for the year under consideration, did not file his return of income. On the basis of the specific information as per the Risk Management Strategy, it was observed that the assessee had entered into transaction of purchase of immovable property during the year under consideration. Since the assessee did not file his return of income for the year under consideration, an opportunity of hearing was granted under section 148A(b) of the Act. The assessee was requested to furnish the explanation, along with supporting documents/evidence, in respect of the information available with the Department. However, the assessee did not respond to any of the communications issued by the Department. Accordingly, after obtaining prior approval from the specified authority, an order under section 148A(d) of the Act was passed and a notice under section 148 of the Act was issued on 21/04/2022. However, the assessee neither respond to the notice issued under section 148 of the Act were not responded to any of the statutory notices issued under section 142(1) of the Act. In the absence of any reply from the assessee, the Assessing Officer (“AO”), vide order dated 15/02/2024 passed under section 147 read with section 144 of the Act, after considering the agreement of purchase of property received from the office of the Sub Registrar held that the assessee has made a payment of INR 53,71,525 including the TDS under section 194-IA of the Act without providing any explanation regarding the source of payment. Accordingly, the AO made an addition of INR 53,71,525 as unexplained investment under section 69 of the Act and added the same to the total income of the assessee.
7. Being aggrieved, the assessee filed an appeal before the learned CIT(A). Vide impugned order, the learned CIT(A) dismissed the appeal filed by the assessee, in limine, on the basis that the assessee has failed to make the payment of the amount of advance tax which was due on its income, and thus, as per the provisions of section 249(4) of the Act, the appeal is not maintainable.
8. During the hearing, the learned Authorised Representative (“learned AR”) submitted that the assessee is an NRI and lives and works in Nigeria. The learned AR submitted that all his income is taxable in Nigeria and no income was earned in India during the year under consideration. Accordingly, it was submitted that the assessee did not file its return of income. The learned AR further submitted that the assessee is also not liable to pay any advance tax in the year under consideration. Thus, in column No. 9 of Form-35, the assessee mentioned “not applicable”.
9. Before proceeding further, it is relevant to note the provisions of section 249(4) of the Act, which reads as follows: –
“(4) No appeal under this Chapter shall be admitted unless at the time of filing of the appeal,—
(a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or
(b) where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him:
Provided that, in a case falling under clause (b) and on an application made by the appellant in this behalf, the Commissioner (Appeals) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of that clause.”
10. Therefore, as per the provisions of section 249(4) of the Act, an appeal before the learned CIT(A) is not admitted unless the assessee has paid the taxes due on the income returned by him or in a case where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him. In the present case, it is an admitted fact that the assessee did not file his return of income for the year under consideration. Further, as regards the conditions laid down in clause (b) of section 249(4) of the Act, it is pertinent to note that there is no material on record that the assessee earned any income in India. The assessee’s consistent plea is that he is employed in Nigeria, earns income and pays tax there. Therefore, we are of the considered view that the requirement of paying the advance tax does not arise in the present case. Further, the addition made by the AO was also on account of the transaction of immovable property. Since the assessee did not furnish the necessary information about the source of investment in immovable property, the AO made the addition under section 69 of the Act.
11. During the hearing, the learned AR placed reliance on the decision of the Tribunal in Vishnusharan Chandravanshi vs. ITO, reported in [2024] 161 com 803 (Raipur – Trib.), wherein it was observed as follows: –
“13. At this stage, I may herein observe that the statutory requirement contemplated in Clause (b) of sub-section (4) of Section 249 of the Act would stand triggered only where any obligation was cast upon the assessee to pay “advance tax”. As stated by the Ld. AR, and rightly so, in absence of any taxable income for the year under consideration [as was stated by him in the “SOF” filed before the CIT(Appeals)] no obligation was cast upon him to compute and pay any advance tax u/ss. 208 & 209 of the Act. Considering the fact that as no obligation was cast upon the assessee to compute/deposit any amount towards “advance tax’ for the subject year, I am unable to concur with the view taken by the CIT(Appeals) who had dismissed the appeal as not maintainable for the reason of non-compliance of the mandatory condition contemplated in Clause (b) of sub-section (4) of Section 249 of the Act. Although, at the first blush, I was of the view that the amount assessed by the A.O vide his order u/s. 144 of the Act dated 23.11.2019 of Rs.10 lacs would saddle the assessee with an obligation to pay “advance tax”, but stood corrected on a careful perusal of Section 208 and Section 209(1)(a) of the Act, which contemplates determination of the said tax liability at the behest of the assessee.”
12. In the absence of earning any taxable income in India during the year under consideration, we concur with the observations of the Tribunal in the decision cited supra that no obligation can be cast on the assessee to compute or deposit any advance tax. Accordingly, we are of the considered view that in the facts and circumstances of the present case, the learned CIT(A) erred in invoking the provisions of section 249(4) of the Act for dismissing the appeal filed by the assessee in limine.
13. As noted in the foregoing paragraphs, the assessee did not comply with any of the notices issued during the assessment proceedings. Accordingly, the assessment was completed on the best judgment basis under section 147read with section 144of the Act, on the basis of the material available on record. In his application seeking condonation of delay, the assessee has explained the circumstances for not responding to various statutory notices issued by the AO.
14. Therefore, in the facts and circumstances as noted above, we are of the considered view that, in the interest of justice and fair play, the assessee be granted one more opportunity to represent its case on merits and produce all the documents in support of its claim. Since in the present appeal, the assessee did not appear before the AO and the learned CIT(A) also dismissed the appeal on technical aspect without adjudicating the same on merits, we deem it fit and proper to restore the matter to the file of the jurisdictional AO for de novo adjudication on merit after considering all the details/submissions as may be filed by the assessee and after providing due opportunity of hearing to the assessee. The assessee is directed to cooperate in the assessment proceedings and furnish all the details as may be sought by the AO for complete adjudication. Accordingly, the impugned order is set aside, and the Grounds No.3 to 7 raised by the assessee are allowed for statistical purposes.
15. Grounds No.1 and 2 were not pressed during the hearing. Accordingly, these grounds are dismissed as not pressed.
16. In the result, the appeal by the assessee, being ITA No. 4093/Mum/2025, is partly allowed for statistical purposes.
ITA No. 628/Mum/2026
17. In this appeal, the assessee has raised the following grounds: –
“The appellant prefers an appeal against the order w/s.250 dated 06/11/2025 passed by Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi on the following amongst other grounds, each of which are without prejudice to any other:-
1. The Ld. CIT(A) erred in upholding the penalty order dated 19/06/2025 levying of penalty of Rs. 16,11,459/- u/s 271(1)(c) without appreciating that the L.d. A.O. has not recorded any satisfaction as to whether the appellant is guilty of concealing the particulars of his income or furnishing inaccurate particulars of such income. The appellant, therefore, prays that in the absence of a recording of satisfaction with respect to the particular limb violated by the appellant in the penalty order, the same is bad in law and should be quashed.
2. The 1.d. CI(A) erred in law and on facts in upholding the penalty levied u/s 271(1)(c) of the Income-tax Act, 1961 without appreciating that the appellant had neither concealed any particulars of his income nor furnished any inaccurate particulars of his income.
3. The learned CIT(A) failed to appreciate that the condition prescribed under section 249(4)(b) regarding payment of advance tax is applicable only to appeals against assessment orders and does not apply to appeals against penalty orders, which are independent and distinct proceedings. Hence, rejecting the appeal of the assessee on the technical ground of non-payment of advance tax is unjustified, and the same may be deleted.
4. The learned CIT(A) erred in law in linking the admissibility of penalty appeal with the assessed income, ignoring the settled legal position that penalty proceedings are separate and independent from assessment proceedings.
5. The penalty levied is arbitrary, excessive, unsustainable in law and liable to be deleted in full.
6. The appellant craves leave to add, alter, amend or withdraw any of the above grounds at or before the time of hearing”.
18. As we have restored the matter to the file of the jurisdictional AO in quantum proceedings, the penalty levied under section 271(1)(c) of the Act, which is consequential to the quantum proceedings, cannot survive independently. Therefore, the impugned order passed in ITA No.628/Mum/2026 is set aside, and the penalty proceedings are also restored to the file of the jurisdictional AO for de novo consideration after providing due opportunity of hearing to the assessee. Accordingly, the grounds raised in this appeal are allowed for statistical purposes.
19. In the result, the appeal by the assessee, being ITA No.628/Mum/2026, is allowed for statistical purposes.
Order pronounced in the open Court on 08/04/2026
aniltikotekar4sme.com 