ECO CHEM LABORATORES PVT. LTD.,TUTICORIN vs. ACIT, CIRCLE-1,, TIRUNELVELI

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ITA 2065/CHNY/2026Status: DisposedITAT Chennai29 June 2026AY 2020-217 pages
AI SummaryRemanded

What did the Tribunal hold?

The tribunal held that the CIT(A) is obligated to dispose of appeals on merits, even if ex parte, and cannot dismiss them for non-prosecution. The matter was remanded to the CIT(A) for de novo consideration.

What were the facts?

The assessee's appeal before the CIT(A) was dismissed ex parte for non-prosecution without adjudicating on merits. The Assessing Officer had made additions based on estimated profit and unexplained money after the assessee failed to file a return or comply with notices.

What were the issues?

Whether the CIT(A) erred in dismissing the appeal ex parte without considering the merits, and whether the additions made by the AO were arbitrary and without basis.

Which sections of the Income-tax Act were involved?

Section 139,Section 148,Section 142(1),Section 147,Section 144,Section 144B,Section 69A,Section 115BBE,Section 250,Section 234B,Section 234F

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHENNAI

Before: SHRI INTURI RAMA RAO & SHRI S.S.VISWANETHRA RAVI

Pronounced: 29.06.2026

आयकर अपील�य अ�धकरण, चे�नई पीठ�, चे�नई INCOME TAX APPELLATE TRIBUNAL, CHENNAI BENCHES, CHENNAI BENCH: A BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA No.2065/CHNY/2026 िनधा�रण वष�/Assessment Year: 2020-21) ECO CHEM LABORATORES PVT. ACIT, CIRCLE-1, LTD. - D.NO. OLD 5A/310, NEW TIRUNELVELI-627011, TAMIL D.NO.5/193, CALDWELL COLONY, NADU Vs. 3RD STREET,, TUTICORIN-628008, TAMIL NADU अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of Assessee: AABCE5123C

अपीलाथ� �ारा/Appellant represented by: Ms.Nikitha, Advocate ��थ� �ारा/Respondent represented by: Mr.S.Manoj Prakash, JCIT सुनवाई की तारीख / Date of conclusion of hearing: 16.06.2026 घोषणा की तारीख / Date of pronouncement: 29.06.2026 आदेश / ORDER PER INTURI RAMA RAO, ACCOUNTANT MEMBER: This appeal filed by the Assessee directed against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], dated 19.02.2026 passed u/s.250 of the Income Tax Act, 1961 for the Assessment Year 2020-21.

2.

The Assessee raised the following grounds of appeal :

“1.1 The CIT(A) erred in dismissing the appeal ex parte, without appreciating the facts of the case and provisions of the Act. He ought to have provided the appellant adequate and effective opportunity to be heard.

1.2 The CIT(A) failed to appreciate that dismissal of appeal on technical grounds deprives the appellant of its statutory right of appeal. He erred in not adjudicating the grounds raised before him on merits, thereby causing grave prejudice to the appellant.

1.3 The CIT(A) failed to appreciate that even in a best judgment assessment, the estimation must be fair, reasonable, and based on material on record.

2.

MERITS:

2.1 The CIT(A) erred in confirming the arbitrary addition of Rs.25,68,170/- , being 8% of turnover without any basis or proper verification. He failed to appreciate that the AO has wrongly considered turnover figures, resulting in duplication of receipts by treating export turnover separately from GST turnover.

2.2 The CIT(A) erred in ignoring that for an exporter, export turnover is inherently part of total turnover reported under GST, and separate addition results in inflated income.

2.3 The CIT(A) erred in confirming the addition of Rs. 1,72, 17,751/- u/s. 69A without appreciating that the same represents legitimate business transactions.

2.4 The CIT(A) failed to appreciate that foreign outward remittances and purchase of foreign currency are integral to the appellant's business operations and cannot be treated as unexplained money.

2.5 The CIT(A) failed to appreciate that the additions made are based on incorrect facts and leads to a erroneous enhancement of income.

3.

The CIT(A) erred in upholding interest u/s.234B and fee u/s.234F as the same are arbitrary and excessive.”

3.

Briefly, the facts of the case are that the appellant is a Company engaged under the provisions of Companies Act. No regular return of income under the provisions of section 139 of the Income Tax Act, 1961 was filed for the Assessment Year 2020-21. However, based on the information that the appellant had reported sales turnover of Rs.2,16,71,903/- and purchased a foreign current year to the tune of Rs.82,74,084/- made exports to the tune of Rs.1,04,30,225/-. The Assessing Officer formed an opinion that income got escaped assessment from tax, accordingly, a notice u/s.148 of the Act was issued on 28.03.2024. The appellant neither complied with the notice u/s.148 of the Act, nor the notice u/s.142(1) of the Income Tax Act, 1961. In the circumstances, the e-Assessment Unit of the Department (hereinafter called ‘AO’) had proceeded with framing best judgment vide order date 11.03.2025 passed u/s.147 r.w.s 144 read with section 144B of the Act at a total income of Rs.1,97,85,920/-. While doing so, the Assessing Officer estimated profit @8% on the total sales and exports of Rs.3,21,02,128/- and also made addition on account of purchase or foreign currency of Rs.82,74,084/- and foreign remittances of Rs.89,43,667/- aggregating to Rs.1,72,17,751/- as unexplained money of the appellant and also taxed the income at the prescribed under section 115BBE of the Income Tax Act.

4.

Being aggrieved by the above assessment order, the appellant preferred an appeal before ld.CIT(A), who vide impugned order had dismissed the appeal in limine for non-prosecution without entering into the merits.

5.

Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal.

6.

We have heard rival submissions and perused the material available on record. We find that the ld.CIT(A) dismissed the appeal of the appellant for non- prosecution without entering into the merits of the addition. The CIT(A) without dealing with the contentions of the appellant merely dismissed the appeal in limine for non-prosecution. As contemplated u/s. 250(6) of the Act the CIT(A) is required to frame points of determination followed by a detailed discussion thereupon before passing the order. It is the settled position of law that the CIT(A), even while disposing of the appeal ex-parte, he is duty bound to dispose of the appeal on merits. Reliance in this regard can be placed on the decision of the Hon'ble Bombay High Court in the case of PCIT vs. Premkumar Arjundas Luthra 279 CTR 614. The Hon’ble Bombay High Court has held in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF) (Bombay)/[2017] 297 CTR 614 (Bombay) as under : Quote, “8.From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act.

Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn.

Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.” Unquote.

7.

Therefore, in the light of the above legal position, we are of the considered view that the matter requires to be remanded to the file of the CIT(A) with the direction to dispose of the appeal de novo on merits after affording reasonable opportunity of hearing to the assessee. All the contentions raised by the appellant are left open for consideration before the ld.CIT(Appeals).

8.

In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open Court on 29th June, 2026.

Sd/- Sd/- (SS VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai; िदनांक / Dated : 29th June, 2026 SGR, Sr.PS आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT Chennai/Madurai/Coimbatore/Salem. 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “ए” ब�च, चे�नई / DR, ITAT Chennai. गाड� फ़ाइल / Guard File. 5. GANGADHARA Digitally signed by GANGADHARA RAO SALEELA RAO SALEELA Date: 2026.07.01 17:40:05 +05'30'

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