HINDUSTAN STEEL,ARANTHANGI vs. ITO, WARD 2, PUDUKOTTAI, PUDUKOTTAI

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ITA 3392/CHNY/2025Status: DisposedITAT Chennai07 May 2026AY 2017-185 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) ought to have condoned the delay in filing the appeal before it, as the affidavit explaining the delay was uncontroverted. Therefore, the CIT(A) should admit the appeal for adjudication on merits.

What were the facts?

The assessee, a partnership firm, did not file a regular return of income for AY 2017-18. The AO made a best judgment assessment, treating cash deposits as turnover and estimating income, while also adding demonetization period deposits as unexplained money.

What were the issues?

Whether the CIT(A) erred in not condoning the delay in filing the appeal before him, and whether the assessment order was bad in law due to procedural lapses and incorrect application of provisions.

Which sections of the Income-tax Act were involved?

Section 139,Section 142(1),Section 144,Section 69,Section 44AD,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHENNAI BENCHES “C” :: CHENNAI

Before: SHRI ABY T VARKEY & SHRI INTURI RAMA RAO

For Appellant: Shri K. Balasubramanian – Advocate
Hearing: 21/04/2026Pronounced: 07/05/2026

आयकर अपीलीय अिधकरण ”सी” �ायपीठ चे�ई म�। IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCHES “C” :: CHENNAI BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.3392/CHNY/2025 �नधा�रण वष� / Assessment Year: 2017-18 Hindustan Steels, Vs Income Tax Officer, 99, Taluk Office Road, Ward-2, Pudukottai. Aranthangi – 614616. PAN: AAGFH6302L Appellant/ Revenue Respondent / Assessee Assessee by Shri K. Balasubramanian – Advocate Revenue by Mrs. Anitha – Addl.CIT(DR) Date of hearing 21/04/2026 Date of pronouncement 07/05/2026 आदेश/ ORDER PER INTURI RAMA RAO, AM : This appeal filed by the Assessee directed against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], dated 11.03.2025 passed under section 250 of the Income Tax Act, 1961 for the 2017-18.

2.

The Assessee raised the following grounds of appeal :

“11 Learned CIT (A) failed to see that ROI having been filed during the pendency of the assessment proceedings which had culminated in the order of assessment passed u/s 144 of the Act, dated 28.12.2019, as a valid "return of income" though involving a delay. 1.2 There being non issue of statutory notice u/s 143(2) the assessment is bad in law. 2. As against facts recorded in para 10 of ast.order by learned AO himself, Learned CIT (A) NFAC Delhi erred in confirming the addition of Rs. 19,86,000 under section 69 of the I.T.Act and failed to note that section 69 itself is not applicable to the facts of appellant's case. 3. Lerned AO having noticed that this is a tax audit casse and recorded that appellant produced books of accouts, cash book, VAT return and ledger and these not having been rejected by him, erred in estimating the NP at 1.6% of the admitted TO. 4. Learned AO having adopted the TO as admitted by appellant at Rs.3,06,25,637 as per VAT return, which incudes TO of Rs.19,86,000 during demonitization period and on the entire TO he having estimated NP at 1.6% under Sec.44AD, he cannot again make an addition of Rs.19,86,000 which is a double addition as has been held by Chennai Tribunal. 5.1 There being no prohibition for dealing with SBNs upto 31-12-2026 vide Sec.5 of the Specified Bank Notes (Cessation of Liabilities) Act, 2016, authorities below erred in adding Rs. 19,86,000 as appellant's income. 5.2 Without prejudice, Learned AO himself having recorded in the SCN that value of old notes was at Rs,8,60,000 only, authorities below erred in adding Rs.19,86,000 u/s 69 of the Act. 6. In the absence of compliance of proviso under Sec.144A, directions given by JCIT are invalid and hence the assessment is bad in law. For the reasons stated above and those that may be adduced at the time of hearing, including filing of additional grounds, if any, Hon'ble Bench be pleased to set aside the assessment and/or delete the aditions of Rs.19,86,000 and Rs.4,90,010..”

3.

Briefly the facts of the case are that the appellant is a partnership firm duly registered under the provisions of Partnership Act, 1935. The appellant had not filed regular return of income under the provision of section 139 of the Act for the Assessment Year 2017-18. However, based on the information that the appellant made cash deposits of Rs.19,86,000/- in the specified bank notes during the Demonetization Period in the bank account maintained with Laxmi Vilas Bank, the Assessing Officer issued a notice u/s.142(1) of the Act, calling upon the appellant to file the Return of Income. However, the appellant neither complied notice u/s.142(1) of the Act nor the notice u/s.144 of the Act. In the circumstances, the Assessing Officer proceeded with making best judgement assessment order by treating the entire cash deposits in the bank account other than the during the Demonetization Period of Rs.2,24,21,400/- as business turnover of the appellant and estimate the income at the 1.6%. The Assessing Officer also made addition of cash deposits of Rs.19,86,000/- in specified bank notes as unexplained money of during the Demonetization Period as the appellant failed to explain the source of cash deposit.

4.

Being aggrieved by the above assessment order, an appeal was filed before the ld.CIT(A) who vide impugned order confirmed the assessment order.

5.

Being aggrieved, the appellant is in appeal before us in the present appeal. At the outset, we find that there is a delay in filing present appeal by 177 days. The appellant filed an Affidavit seeking the condonation of delay by stating that the delay in filing of appeal occurred on account of the fact that there was delay in finalization of the accounts due to prolonged illness of the Senior Partnership of the firm Mr.Tajuddin who was undergoing treatment for Cancer. The averments made in the affidavit remain uncontroverted by the learned Sr.DR.

6.

In M.Kalappa Sethi Vs. M.V.Laxmi Narain Rao AIR 1973 SC 627, it was held that an uncontroverted affidavit shall be taken as an affidavit on fact. The averments made in the Affidavit seeking the condonation of delay in filing appeal before the ld.CIT(A), remain uncontroverted by the learned ld.CIT(A). In the absence of any material to the contrary, the averments made in the affidavit cannot be brushed aside. Therefore, we are of considered opinion that the ld.CIT(A) ought to have condoned the delay in filing the appeal and admitted the appeal for adjudication on merits. In the circumstances, we direct ld.CIT(A) to admit the appeal for adjudication on merits.

7.

In the result, appeal of the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on 7th May, 2026.

Sd/- Sd/- (ABY T VARKEY) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai; �दनांक / Dated : 7th May, 2026 SGR, Sr.PS आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT Chennai/Madurai/Coimbatore/Salem. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “सी” ब�च, 4. चे�नई / DR, ITAT Chennai. गाड� फ़ाइल / Guard File. 5.

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