RAJA & CO.,ERODE V. ITO, WARD-2(1), ERODE

ITA 1537/CHNY/2025

AI Insights

The case involves Raja & Co, a civil contracting firm, which did not file its income tax return for the assessment year 2015-16. The Income Tax Department, based on TDS returns, noted significant income from contracts and other sources. Consequently, the department reopened the case under sections 147 and 148 of the Income Tax Act and issued notices, which the assessee failed to respond to. An ex-parte order was passed by the Assessing Officer, adding 8% of gross contract receipts as income. The assessee's appeal to the CIT(A) was dismissed due to non-participation. The Tribunal, considering the assessee's circumstances including being an NPA and undergoing SARFAESI proceedings, decided to provide another opportunity for the assessee to present its case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772721 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2022-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P.K. SENTHIL KUMAR; ADDL
• Assessee Lawyers: S. SRIDHAR; ERODE
• Keywords: Set aside; Reasonable cause; TDS

Judgement Text

"आयकर अपीलीय अधिकरण,‘डी’ न्यायपीठ,चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI श्री जॉजज जॉजज क े, उपाध्यक्ष एवं श्री एस.आर.रघुनाथा, लेखा सदस्य क े समक्ष BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.:1537/Chny/2025 धििाारण वर्ा / Assessment Year: 2022-23 Raja & Co, 43/A, Kankapuram, Kannimar Valasu Erode - 638 112. vs. The Income Tax Officer, Ward-2(1) Erode. [PAN: AALFR-5159-C] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/Appellant by : Shri. S. Sridhar, Advocate (Erode) प्रत्यर्थी की ओर से/Respondent by : Mr. P.K.Senthil Kumar, Addl CIT. सुिवाई की तारीख/Date of Hearing : 15.07.2025 घोर्णा की तारीख/Date of Pronouncement : 26.08.2025 आआआआ /O R D E R PER S. R. RAGHUNATHA, AM : This appeal of the assessee is filed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2022-23, vide order dated 05.11.2024. 2. At the outset, we find that there is a delay of 117 days in appeal filed by the assessee, for which the assessee has filed affidavit stating the reasons for delay, wherein, it is submitted that the assessee was unaware of the receipt of the order Printed from counselvise.com :-2-: ITA. No:1537/Chny/2025 of the ld.CIT(A) dated 05.11.2024 since the partners of the assessee firm could not face the public because of the losses and of the SARFAESI proceedings against their assets. After considering the Affidavit filed by the assessee and also hearing both the parties, we find that there is a reasonable cause for the assessee in not filing appeal on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeal and admit the appeal filed by the assessee for adjudication. 3. Brief facts of the case are that the assessee is a firm as a civil contractor, had not filed its return of income for the A.Y.2015-16. As per the information available with the department, the assessee had TDS return for A.Y.2015-16, having income from other sources of Rs.40,358/- and contract receipt of Rs.3,59,25,386/-. Since the assessee had not filed its return of income, the sources of these deposits were not found verifiable. The notice u/s.148 of the Act dated 30.03.2021 was issued and the case has been re-opened u/s.147 of the Act. Since the assessee did not participate in the assessment proceedings by not responding to the statutory notices, the AO made an addition of 8% of gross contract receipts of Rs.3,59,25,386/- as income from business, based on the material evidence available on records by passing an order u/s.147 r.w.s.144 of the Act dated 30.03.2022. 4. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A), NFAC. Printed from counselvise.com :-3-: ITA. No:1537/Chny/2025 5. At the outset, we observed that ld.CIT(A) has provided four opportunities for the assessee to appear for hearings as detailed in paragraph 3.1 of the ld.CIT(A) order to support the appeal of the assessee. However, the assessee chose to be silent and did not respond to any of the notices and hence, the ld.CIT(A), NFAC dismissed the assessee’s appeal as deficient by confirming the order of the AO by passing an order dated 18.12.2023. The ld.AR submitted that the assessee had become an NPA and also faced proceedings under the SARFAESI Act, which proves that the assessee firm had suffered huge loss. Due to that the assessee had not concentrated on of the business activities and hence could not respond to the notices issued by the authorities. In view of the above, the ld.AR prayed for one more opportunity before the AO, since the exparte order has been passed by the AO u/s.144 of the Act. Further, ld.AR assured the bench that the ld.AR will represent on behalf of the assessee before the AO to complete the assessment proceedings effectively. 6. Per contra, the ld.DR submitted that both the Assessing Officer and the ld.CIT(A) provided sufficient opportunity to appear before them. However, the assessee has been negligent in responding to the statutory notices and hence, prayed for confirming the order of the ld.CIT(A). 7. We have heard the rival parties and perused the material available on record and gone through the orders of the lower authorities. We note that the AO has passed an ex-parte order by considering the information available with the department and the same has been dismissed by the ld.CIT(A) - NFAC due to non-participation of the assessee before the first appellate authority. Printed from counselvise.com :-4-: ITA. No:1537/Chny/2025 8. In view of the above and to meet the ends of justice we set aside the order of ld.CIT(A) and remit the matter back to the file of AO and direct the AO to denovo frame the assessment order in accordance to law, after providing reasonable opportunity to the assessee. Needless to say, the assessee to be diligent and file written submissions and relevant documents if advised so. 9. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the court on 26th August, 2025 at Chennai. Sd/- Sd/- (जॉजा जॉजा क े) (GEORGE GEORGE K) उपाध्यक्ष /VICE PRESIDENT (एस. आर. रघुिार्था) (S.R.RAGHUNATHA) लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनांक/Dated, the 26th August, 2025 jk आदेश की प्रदिदलदप अग्रेदिि/Copy to: 1. अपीलाथी/Appellant 2. प्रत्यथी/Respondent 3.आयकर आयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. दवभागीय प्रदिदनदि/DR 5. गाडज फाईल/GF Printed from counselvise.com "