The tribunal found that the assessee provided a valid explanation for the delay due to partner disputes and fund withdrawal issues.

The Bangalore bench of Income Tax Appellate Tribunal ( ITAT )  ruled that an appeal before the Commissioner of Income Tax(Appeals)[CIT(A)] cannot be dismissed solely on technical grounds for non-payment of advance tax  without a valid reason. Banyan Tree Diagnositc and Research Centre, the appellant-assessee, filed its return of income up to assessment year (AY) 2016-17. The AIMS database revealed that the firm deposited Rs. 23,29,530 in its Vijaya Bank account during the demonetisation period but failed to file its return for AY 2017-18 within the time allowed under Section 139(1) of the Income tax Act, 1961.  Despite receiving notices under Sections 142(1) and 144 of the Act, the assessee did not respond. The Assessing Officer(AO), during scrutiny, found Rs. 96,61,125 deposited during FY 2016-17, with Rs. 23,29,530 deposited during demonetisation. As no explanation was provided, the AO concluded the assessment under Section 144 of the Act, treating Rs. 5,86,527 as business income and Rs. 23,29,530 as unexplained money under Section 69A of the Income tax law. Get a Copy of Income Tax Rules, Click here The AO completed the assessment on a total income of Rs. 29,16,057 under section 144 on 14/11/2019. Aggrieved by the assessment, the assessee appealed before the CIT(A). The CIT(A) dismissed the assessee’s appeal for not meeting the conditions of section 249(4)(b) of the Act, as the assessee didn’t file the return or pay the required advance tax. The assessee then appealed to the Tribunal. The assessee counsel submitted that it is a partnership firm with two equal partners, Smt. C. Gayatri Devi and Mr. Abdul Azeez Amanulla. The firm entered into MoUs to run the Radiology Department and Central Lab at Dr. B.R. Ambedkar Medical College & Hospital. After taking a Rs. 60,00,000 loan for machinery, Mr. Abdul Azeez Amanulla stopped cooperating, blocking funds and refusing to sign cheques, which led to a police complaint by Smt. C. Gayatri Devi. Due to these issues, the firm could not file its AY 2017-18 return or pay taxes. The CIT(A) granted only five days to address the deficiency notice, which was insufficient to respond. The tribunal after hearing both sides, noted that Income tax Section 249(4)(b) required the payment of advance tax for an appeal to be admitted. However, the assessee provided a valid reason for not paying the tax due to issues with the partner and fund withdrawal problems. Get a Copy of Income Tax Rules, Click here Additionally, the bench noted that the assessee had since paid the taxes and found a valid reason for the delay. The two-member bench comprising Keshav Dubey(Judicial Member) and Chandra Poojari (Accountant member) set aside the CIT(A)’s decision, restored the appeal for reconsideration, and allowed it, concluding that dismissing the appeal solely on technical grounds without a valid reason was inappropriate.