Ex Parte Assessment Set Aside; Appeal Restored Despite Advance Tax Issue

The assessee, an NRI employed in Nigeria, did not file his return of income for AY 2015-16 on the grounds that he had no taxable income in India. Based on information regarding the purchase of immovable property worth Rs 53.71 lakh, the Assessing Officer initiated reassessment proceedings. Due to non-response from the assessee, the AO completed the assessment ex parte under Section 147 r.w.s. 144 and treated the property investment as unexplained under Section 69.

On appeal, the CIT(A) dismissed the case in limine by invoking Section 249(4), citing non-payment of advance tax. The assessee contended that he had no taxable income in India and therefore no liability to pay advance tax. He also explained that, being a non-resident, he could not respond to notices due to practical constraints. Additionally, a penalty under Section 271(1)(c) was levied and upheld by the CIT(A), leading to a separate appeal.

Issue Before Court: Whether the appeal can be dismissed under Section 249(4) for non-payment of advance tax when the assessee claims no taxable income in India, and whether the penalty under Section 271(1)(c) can survive when the quantum assessment is set aside.

Tribunal Decided: The Tribunal held that the condition under Section 249(4)(b) applies only where the assessee is liable to pay advance tax. In the present case, there was no material on record to establish that the assessee earned taxable income in India. Accordingly, no obligation to compute or pay advance tax arose, and the CIT(A) erred in dismissing the appeal on this technical ground. Considering that the assessment was completed ex parte and the assessee did not get an effective opportunity to present his case, the Tribunal restored the matter to the file of the Assessing Officer for fresh adjudication on merits after providing adequate opportunity to the assessee. With respect to the penalty proceedings, the Tribunal held that since the quantum addition itself was set aside, the penalty under Section 271(1)(c), being consequential in nature, could not survive independently. Therefore, the penalty matter was also restored to the AO for fresh consideration. The appeals were thus allowed for statistical purposes.

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