M/S.THIRU KUMAARH HARDWARES,CHENNAI V. ITO, NCW-19(6), CHENNAI

ITA 589/CHNY/2025

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The case involves M/s. Thiru Kumaarh Hardwares, a partnership firm engaged in the hardware business, which faced scrutiny from the Income Tax Department due to unexplained cash deposits in its bank accounts. The Assessing Officer issued notices under section 142(1) of the Income Tax Act, 1961, but the assessee failed to provide satisfactory explanations, leading to an exparte assessment order under section 144. The assessee appealed to the CIT(A), which also confirmed the assessment due to non-compliance. The Tribunal noted the assessee's internal disputes and cessation of business as reasons for non-representation and allowed the appeal, remanding the case for fresh assessment subject to a cost.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312877 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M.P. GURUPRASAD
• Assessee Lawyers: VISHWA PADMANABHAN
• Keywords: Condonation of delay; Unexplained investment
• Section: 144; 142(1)

Judgement Text

"आयकर अपीलीय अिधकरण, ’डी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी जगदीश, लेखा सद˟ क े समƗ । Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri Jagadish, Accountant Member आयकर अपील सं./I.T.A. No.589/Chny/2025 िनधाŊरण वषŊ/Assessment Year: 2017-18 M/s. Thiru Kumaarh Hardwares, 1A, Anjugambal Street, 100 Feet Road, Thanthai Periyar Nagar, Tatamani, Chennai 600 013. [PAN:AAEFT8378E] Vs. The Income Tax Officer, Non Corporate Ward 19(6), Chennai. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri Vishwa Padmanabhan, CA ŮȑथŎ की ओर से/Respondent by : Shri M.P. Guru Prasad, Addl. CIT सुनवाई की तारीख/ Date of hearing : 24.04.2025 घोषणा की तारीख /Date of Pronouncement : 30.04.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order dated 31.10.2023 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2017-18. 2. We find that this appeal is filed with a delay of 424 days. The assessee filed an affidavit along with petition for condonation of delay stating the reasons. Upon hearing both the parties and on examination I.T.A. No.589/Chny/25 2 of the said petition, we find the reasons stated by the assessee are bonafide, which really prevented in filing the appeal in time. Thus, the delay is condoned and admitted the appeal for adjudication. 3. The assessee raised 3 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the assessment order exparte of the assessee. 4. At the outset, we note that the assessee is a partnership firm deriving income from business of hardwares. The Assessing Officer found cash deposits in assessee’s bank account. Under scrutiny, notice under section 142(1) of the Income Tax Act, 1961 [“Act” in short] was issued and also issued notice to the bank seeking explanation. The Assessing Officer issued show-cause notice to the assessee seeking details of credits in bank account as per the details supplied by the banks and there was no explanation to that effect by the assessee. Since there is no explanation from the assessee, the Assessing Officer added the entire credits to the income of the assessee and passed order under section 144 of the Act. As not satisfied with the order of the Assessing Officer, the assessee preferred an appeal before the ld. CIT(A)/NFAC, Delhi. Para 3 of the impugned order clearly shows that I.T.A. No.589/Chny/25 3 there is no response from the assessee in compliance to the notices issued by the ld. CIT(A). Having no explanation in support of the ground raised by the assessee, the ld. CIT(A) confirmed the order of the Assessing Officer exparte of the assessee. 5. Before us, the ld. AR Shri Vishwa Padmanabhan, CA submits that the assessee is ready to file all relevant details in support of the contention involved in the addition made by the Assessing Officer. He submits that the assessee could not represent before both the authorities below for the only reason that there is serious and prolonged disputes between the partners and the business of the assessee was completely shut down since past few years. Due to cessation of business and ongoing disputes between the partners, the firm’s financial and administrative affairs were severely affected. The ld. AR submits that now the assessee’s one of the partners Shri Sudallaimani is ready to prosecute the case before the Assessing Officer and prayed to afford an opportunity to the assessee. 6. The ld. DR Shri M.P. Guru Prasad, Addl. CIT objected the same and submits that if at all this Tribunal intends to afford one more opportunity to the assessee, that should be by way of cost as the I.T.A. No.589/Chny/25 4 assessee totally failed to prosecute its case before the Assessing Officer and the ld. CIT(A) inspite of ample opportunities afforded to the assessee. 7. Having considered the submissions of the ld. AR and ld. DR , we note that the Assessing Officer added entire credits in the bank accounts of the assessee without there being any benefit to the expenditure. We find that there is no assistance from the assessee before the Assessing Officer and the ld. CIT(A) and the addition involved therein is under section 69A of the Act on account of unexplained investments. As there is no assistance from the assessee, taking into account the undertaking given by the ld. AR that the assessee is ready to file every evidence and in the interest of justice, we remand the matter to the file of the Assessing Officer subject to the condition of payment of ₹.5,000/- in favour of the State Legal Aid Authority, Hon’ble Madras High Court within 30 days from the date of receipt of this order and the Assessing Officer shall satisfy the payment of cost and decide the issue afresh after considering the written submissions/ documentary evidences as may be filed by the assessee to substantiate its claim. Thus, the grounds raised by the assessee are allowed for statistical purposes. I.T.A. No.589/Chny/25 5 8. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 30th April, 2025 at Chennai. Sd/- Sd/- (JAGADISH) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 30.04.2025 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. "