S.M. EXPLOSIVES,SALEM vs. ITO, WARD-1, SALEM

Brief facts of the case are that the assessee is a firm, engaged in explosive business and did not file its return of income for AY 2020-21. As per the information available with the department, the AO found that the assessee has made cash deposits to the tune of Rs.1,05,38,125/- in bank account maintained with Karur Vyasa Bank and amounting to Rs.5,22,94,246/- as total sales reported under GSTR-1 during the assessment year. The case was re- opened u/s.147 of the Act, accordingly, a notice u/s.148 of the Act, dated 28.02.2024 was issued to the assessee. In response, the assessee has filed its return of income for A.Y.2020-21 on 11.07.2024, declaring a total income of Rs.45,140/-. Further, the AO issued statutory notices to the assessee and by calling for details. In response, the assessee furnished the reply along with supporting documents for consideration. On perusal of the documents submitted by the assessee, the AO completed the assessment by passing an order u/s.147 r.w.s 144B of the Act dated 24.03.2025 by making an addition of Rs.5,25,000/- as unexplained money u/s.69A of the Act and by arriving total income of Rs.5,70,140/-.

Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A) on 02.05.2025.

At the outset, we observed that ld.CIT(A) has provided six opportunities for the assessee to appear for hearings as detailed in paragraph 5 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) passed an order dated 03.11.2025 by confirming the order of the AO. Aggrieved by the impugned order of the Ld.CIT(A), the assessee is in appeal before us.

The ld.AR submitted that Mr. M. Appachi who was the main partner and proprietor of the firm, was demised on 05.06.2025. After demise of the main partner, his son and wife continued the business by taking over all assets and liabilities and they had lot of difficulties in repaying outstanding loans. The present partner of the firm had not checked the income tax portal and his email ID during the relevant period and hence the assessee was not aware of the notices issued and impugned order passed by the ld.CIT(A) and hence, the assessee could not participate in the appeal proceedings. In view of the above, the ld.AR prayed that the Tribunal may be pleased to set aside the order of ld.CIT(A) and remit the issues to the file of AO as the assessment order passed without having the complete details of the source. Further, ld.AR assured the bench that the ld.AR will represent on behalf of the assessee before the authorities complete the proceedings effectively.

Per contra, the ld.DR submitted that both the AO 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).

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 order by considering the details and information available with the department and documents submitted by the assessee and on appeal

In view of the above and to meet the ends of justice, we set aside the order of the ld.CIT(A) and remit the matter back to the file to ld.CIT(A) to adjudicate the matter afresh on merits in accordance with law, after providing reasonable opportunity to the assessee and also obtain the remand report from AO, in case any of the additional evidence provided during the proceedings. Needless to say, assessee to be diligent and file written submissions and relevant documents if advised so.

In the result, appeal filed by the assessee is allowed for statistical purposes.