HOTEL PREETHI INTERNATIONAL PVT. LTD.,NILGIRIS V. ITO, CORPORATE WARD-2, COIMBATORE

ITA 2554/CHNY/2025

AI Insights

The case involves Hotel Preethi International Pvt. Ltd., which faced ex-parte assessments for the Assessment Years 2017-18 and 2018-19 due to non-response to notices from the AO regarding undisclosed income and unexplained cash credits. The AO made significant additions to the assessee's income, which were upheld by the CIT(A). The assessee appealed to the Income Tax Appellate Tribunal, arguing that they were not given adequate opportunity to present their case. The Tribunal found merit in the assessee's plea for a fair hearing and remanded the case back to the AO for de novo assessments, allowing the assessee to substantiate their claims with evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 777826 (ITAT-CHENNAI)
• Duration Of Justice: 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Appeal Filed On: 16-09-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOUTHAMI MANIVASAGAM
• Assessee Lawyers: S.SRIDHAR ERODE
• Keywords: Set aside; Unexplained cash credit; Principle of natural justice
• Section: 144; 68; 92

Judgement Text

" आयकर अपीलȣय अͬधकरण, ‘बी’ Ûयायपीठ, चेÛनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI Įी मनु क ुमार ͬगǐर, ÛयाǓयक सदèय एवं Įी जगदीश, लेखा सदèय क े सम¢ BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.: 2554 & 2555/CHNY/2025 & SA Nos. 92 & 93/Chny/2025 िनधाᭅरण वषᭅ/Assessment Years: 2018-19 & 2017-18 Hotel Preethi International Pvt. Ltd., 29, Coonoor Road, Udagamandalam H.O, Nilgiris – 643 001. Vs. The Income Tax Officer, Corporate Ward 2, Coimbatore PAN: AADCH 7776C (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri S. Sridhar (Erode), Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Ms. Gouthami Manivasagam, JCIT सुनवाई कᳱ तारीख/Date of Hearing : 26.09.2025 घोषणा कᳱ तारीख/Date of Pronouncement : 10.10.2025 आदेश /O R D E R PER MANU KUMAR GIRI, JM: These appeals filed by the assessee are directed against the orders of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [hereinafter the “Ld.CIT(A)”] both dated 25.08.2025 arising out of the orders dated 26.03.2024 and 07.03.2025 passed by the Assessing Officer, Assessment Unit, Income Tax Department (hereinafter referred to as the \"AO\") passed u/s.147 r.w.s. 144 Printed from counselvise.com - 2 - ITA. Nos:2554 & 2555/Chny/2025 SA Nos.92 & 93/Chny/2025 r.w.s.144B of the Income-tax Act, 1961 (hereinafter \"the Act') for the Assessment Years 2018-19 and 2017-18 (hereinafter the \"AYs\"). 2. Brief facts of the cases are that the assessee is a private limited company. The return of income for the years under consideration have not been filed by the assessee. The Assessing Officer (‘AO’) got information that assessee has made huge cash deposits, cash withdrawals, time deposits and receipt of interest income. The ld. AO issued several notices, however, there was no response from the assessee. Hence, the ld. AO completed the assessments ex-parte for the AY 2017-18 and made total addition of Rs.5,43,21,954/- towards undisclosed interest, unexplained credits u/s. 68 and unexplained cash credits u/s.68 and ld. AO also completed the assessments ex-parte for the for AY 2018-19 by best judgment assessment u/s.147 r.w.s.144 r.w.s 144B of the Act by making disallowance of expenditure of Rs.1,67,97,264/-. Assessee challenged the order of assessments before the ld.CIT(A) who dismissed the appeals by holding that ‘the assessee failed to submit complete details and also failed to submit proof of appeal fees payment which shows that the appeal has not been pursued effectively’. Aggrieved, assessee is in appeal before us. 3. Before us, the ld. Counsel for assessee submitted that the assessee failed to avail adequate opportunity to file evidence and documents before the AO and ld.CIT(A) to substantiate its explanation regarding disallowance/additions which were culminated into high pitch assessments. Even for this FY the assessee had not done any business and the only income earned was interest on short term deposits. The ld. counsel only pleaded for one more opportunity to substantiate its Printed from counselvise.com - 3 - ITA. Nos:2554 & 2555/Chny/2025 SA Nos.92 & 93/Chny/2025 cases before the AO. The ld.Sr. DR insisted for the deposit of 20% of demand raised in appeals however, did not controvert the factum of ex-parte orders by the AO and ld.CIT(A). She further stated that the assessee has not responded to various notices issued by the AO and the Ld.CIT(A) and hence no lenient view is to be taken in both cases and prayed for dismissal of the appeals. 4. We find that as per contentions of the assessee that in this year even company has not done any business. However, we note that the AO has passed the ex-parte assessments in both the years which are huge additions. Therefore, keeping in mind the genuine hardship and peculiar facts of the case and the principle of natural justice, we grant another opportunity of hearing to the assessee before the AO itself. We also find that the ld. CIT(A) has only issued defect notice on 23.05.2025 and 07.08.2025 to the assessee. We also find that when there was defect in the appeal then ld.CIT(A) would have not admitted the appeal as defective. There was no need to decide the appeal on merits. Further, we note that there was no specific notice given for the appeal hearings. Therefore, considering the peculiar facts and circumstances in totality for just and proper decision of the case, fair play and substantial justice, the impugned orders are set aside and both the appeals are restored back to the file of Ld. AO for denovo assessments. The Ld.AO shall proceed for denovo assessments after affording proper opportunity of hearing to the assessee. The assessee is directed to substantiate its case with all evidence and documents, if any, forthwith without any fail, failing which Ld. AO shall be at liberty to proceed with the assessment proceedings on merits as per law. We make it clear that all the legal issues are kept open before the ld.AO. The ld. Counsel also ensured Printed from counselvise.com - 4 - ITA. Nos:2554 & 2555/Chny/2025 SA Nos.92 & 93/Chny/2025 the bench that the assessee will prosecute its cases before the AO diligently. We make it clear that nothing has been said on the merits of the cases. 5. Since we have heard both the appeals and decided as above, the captioned stay petitions become infructuous hence, dismissed. 6. In the result, the appeals filed by the assessee are allowed for statistical purpose and the stay petitions filed by the assessee are dismissed as infructuous. Order pronounced in the open court on 10th October, 2025 at Chennai. Sd/- Sd/- (जगदीश) (मनु क ुमार िगįर) (JAGADISH) (MANU KUMAR GIRI) लेखा सद˟/ACCOUNTANT MEMBER Ɋाियक सद˟/JUDICIAL MEMBER चेÛनई/Chennai, Ǒदनांक/Date: 10.10.2025 RSR आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy to: 1. अपीलाथȸ/Appellant 2. Ĥ×यथȸ/Respondent 3. आयकर आयुÈत /CIT, Coimbatore 4. ͪवभागीय ĤǓतǓनͬध/DR 5. गाड[ फाईल/GF. Printed from counselvise.com "