AMMAYAPPAN TEXTILES PVT. LTD.,TIRUVALLUR vs. ITO, CORPORATE WARD-1(1), CHENNAI

आदेश / O R D E R आदेश आदेश आदेश

PER S.S. VISWANETHRA RAVI, J.M :

These three appeals filed by assessee are directed against separate orders dated 10.10.2025, 27.10.2025 and 07.10.2025 passed by the NFAC, Delhi and

:-2-: ITA. Nos: 622, 623 & 624/Chny/2026 SP Nos: 37, 38 & 39/Chny/2026

Addl/JCIT(A)-1, Ahmedabad, respectively, for assessment years 2014-15 and 2015-

16.

same identical facts, with the consent of both the parties, we proceed to hear the

appeals together and pass consolidated order for the sake of convenience.

First we take up ITA No: 622/Chny/2026 for assessment year 2014-15:

affidavit for the assessment year explaining the reasons to condone the said delay.

On perusal of the same and upon hearing both the parties, we find the reasons

stated by the assessee are bonafide which prevented the assessee in filing the

appeal in time. Thus, delay of 33 days is condoned.

original assessment on 21.11.2016 u/s. 143(3) of the Income Tax Act, 1961 [‘the Act’

in short]. We find the said order at page no. 70 of the paper book-I. On perusal of

the same, we note that the AO determined the income of the assessee at

Rs.1,37,51,541/- against returned income of Rs.81,82,209/-, inter alia, making

disallowance u/s. 36(1)(va) of the Act, against which the assessee filed an appeal

before the ld.CIT(A), wherein by following the decision of Hon’ble High Court of

Madras in the case of M/s. Industrial Security Intelligence India Pvt Ltd, the ld. CIT(A)

deleted the addition made by the AO, vide its order dated 09.02.2018, which is at

page no.74 of the paper book-I. We find the revenue preferred an appeal before the

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ITAT, which was dismissed for below tax effect vide its order dated 08.10.2018 which

is at page no. 83 of the paper book-I. As matter stood thus, the AO reopened the

original assessment vide issuing notice u/s. 148 of the Act on 07.03.2020 which is at

page no. 87 of the paper book -I. We note that the AO issued said notice on his

belief that the income as escaped for assessment within the meaning of 147 of the

Act and asked the assessee to file return of income in the prescribed form. In

response to the said notice, assessee filed return of income declaring the same

income as was declared in the original return of income. In pursuance of the same,

the AO issued notice u/s. 142(1) of the Act seeking details vide annexure which is at

page no. 90 of the paper book. On perusal of the annexure at page no. 90, we note

that the AO observed as; It is seen that you have claimed a sum of Rs.78,00,000/- as

land development cost under the head maintenance expenses. It is seen from the

records that the existing developed factor land but incurred for developing land which

was part of investment. You are hereby requested to furnish the details in support of

your claim in writing on or before 14.10.2020;

came to the possession of AO to reopen the already concluded original assessment,

it was only reopened on examination of existing record before the AO. We find

support in the contention of the ld.AR as is supported on perusal of the show cause

notice issued calling for details vide show cause notice dated 02.11.2016 which is at

page no. 64 of the paper book. On an examination of the same, we find that the AO

issued said show cause notice to the assessee on 02.11.2016 in the original

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assessment proceedings by giving final opportunity to present complete details with

reference to land development cost, share capital increase along with the ROC filing

fees, disallowance of bad debts claim and disallowance of stevedoring charges which

clearly shows that the assessee was requested to file required details in support of its

claim on account of land development cost. We find a reply dated 08.11.2016 in

response to the said show cause notice at page no. 65 of the paper book, wherein

the assessee given the information in detail on all other aspects sought by the AO,

particularly we find sl.no. 5 at page no. 69 of the paper book, where the assessee

furnished details with reference to land development cost with bills, copy of invoices

from respective parties and stated that the said payments were paid by cheque,

supporting ledgers of respective parties, which clearly shows that the assessee

disclosed all the relevant details during the original assessment proceedings bringing

all primary facts necessary for assessment which is not disputed by the ld. DR, Shri.

Saujanya Ranjan, JCIT. A plain reading of first proviso to section 147 of the Act, it is

noted that where assessment under sub-section 3 of section 143 of the Act has been

made in the relevant assessment year, no action shall be taken under this section

after expiry of 4 years from the end of the relevant assessment year unless any

income chargeable to tax has escaped assessment for the AY by reason of failure on

the part of the assessee to disclose fully and truly all material facts necessary for

assessment for that AY. Therefore, we hold that no new tangible information has

reached the AO to reopen already concluded original assessment u/s. 143(3) of the

Act. As discussed above, it was only on examination of the existing record with

reference to land development cost which is evident vide annexure to the notice u/s.

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142(1) of the Act at page no. 90 of the paper book. Thus, the year under

consideration i.e., 2014-15, end of assessment year is 31.03.2015 and the expiry of

four years i.e. 31.03.2019. Since, we held that there was no failure on the part of the

assessee to disclose fully and truly, the notice dated 07.03.2020 u/s. 148 of the Act

issued after the expiry of four years, in our opinion, is hit by first proviso to section

147 of the Act for reopening the original assessment, is barred by limitation and

therefore, the consequential reassessment order dated 24.09.2021 is invalid, is this,

quashed. Thus, grounds raised by the assessee are allowed.

affidavit for the assessment year explaining the reasons to condone the said delay.

On perusal of the same and upon hearing both the parties, we find the reasons

stated by the assessee are bonafide which prevented the assessee in filing the

appeal in time. Thus, delay of 33 days is condoned.

u/s. 263 of the Act and its consequential giving effect order.

36(1)(va) of the Act in pursuance of the direction of the ld.PCIT u/s. 263 of the Act.

The ld.AR raised a contention that the order of 263 passed by the ld.PCIT is not

finalized as it is pending before Hon’ble High Court of Madras and drew our attention

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to the sl.no. 38 & 39 of the paper book-I relating to e-acknowledgment for filing Tax

Case Appeal u/s. 260A of the Act. We note that the assessee challenged the order of

the ld.PCIT passed u/s. 263 of the Act before the ITAT. We find the order of ITAT at

page no. 225 of the paper book -I, wherein it is noted that the coordinate bench of

ITAT benches upheld the direction of the ld.PCIT u/s. 263 of the Act. Further, we find

in order to arrive such conclusion the Tribunal relied on the order of this Tribunal in

the case of M/s. Electrical India vs ADIT, 147 Taxmann.com 470 (2023), which

clarified that the decision of Hon’ble Supreme Court in the case of Checkmate

Services Pvt Ltd, would relate back to the date of consequential amendment brought

in by legislature in respect of the provision of the Act. Accordingly, the ITAT Chennai

Benches upheld the order of the ld.PCIT, accordingly the AO passed present giving

effect order by making disallowance u/s. 36(1)(va) of the Act. We find the ld.CIT(A)

discussed the issue with reference to taking into account the submissions of the

assessee from Para no. 6.1 of the impugned order. On an examination of the same

we find that the ld.CIT(A) primarily relied on the order of the ITAT in holding the

employer’s liability is to be paid out of its income and the employee’s contribution is

deemed to be an income if such contribution received or deducted from the

employees on or before the due date. Be that as it may, since we held the

reassessment order dated 24.09.2021 passed u/s. 147 r.w.s. 144B of the Act is

barred by limitation in the aforementioned paragraphs in ITA No. 622/Chny/2026 for

assessment year 2014-15, the giving effect order dated 24.03.2025 passed by the

AO u/s. 147 r.w.s. 263 of the Act has no legs to stand in the eyes of law, therefore, it

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is invalid and the additions made thereon are deleted. Thus, order of ld.CIT(A) is set

aside and the grounds raised by the assessee are allowed.

remaining grounds becomes academic requiring no adjudication.

affidavit for the assessment year explaining the reasons to condone the said delay.

On perusal of the same and upon hearing both the parties, we find the reasons

stated by the assessee are bonafide which prevented the assessee in filing the

appeal in time. Thus, delay of 33 days is condoned.

passed against scrutiny assessment order without assigning proper reasons and

justification. He vehemently argued that, the Addl/JCIT failed to appreciate that the

rectification order passed on the issues which were not forming part of the

rectification petition filed by the assessee on 14.12.2017 and drew our attention to

the page no. 117 of the paper book -I. Further, he submits that the Addl/JCIT failed to

appreciate that the action of the AO in recomputing the claim of depreciation on

vehicles as well as re-computation of MAT credit which were not at all part of the

rectification petition and the order passed therein in response to rectification petition

and drew our attention to page no. 120 of the paper book – I. He vehemently argued

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that the assessee filed rectification with reference to make correction in the

disallowance made u/s. 36(1)(va) of the Act and the AO by correcting the same proceeded on other two issues which were not at all part of rectification petition which

is not permissible. He prayed to set aside the order of the Addl/JCIT in respect of confirming the order to an extent of new issues on depreciation as well restriction of

MAT credit.

find rectification application filed u/s. 154 of the Act dated 11.12.2017 is at page no.

117 of the paper book -I and on perusal of the same, we note that the assessee

sought rectification in respect of disallowance under the head employees contribution

of PF/ESI. In response to which, the AO passed rectification order dated 11.08.2020

which is at page no. 120 of the paper book -I, wherein he restricted disallowance of

employees contribution to PF to an extent of Rs.36,18,694/- as against Rs.2,74,90,101/- which is evident from tabular form reproduced therein. Further, the

payments relating to ESI, the AO restricted said disallowance to an extent of

Rs.9,76,460/- as against Rs.36,13,293/-. We find further, the ld.AR submits that the

said payments which were referred to Para no.4 of the rectification order are paid

within 5 days of grace period and the disallowance restricted in the rectification order

is not justified. We find e-mail clarification dated 07.08.2020 at page no. 145 of the

paper book -I, wherein it was explained by the assessee that the PF Act due date is 15th of the next month (+) grace period of 5 days. Therefore, according to the ld.AR

:-9-: ITA. Nos: 622, 623 & 624/Chny/2026 SP Nos: 37, 38 & 39/Chny/2026 the grace period is always 20th of the other month for remittance of the employees contribution under the PF Act. We find the audited financials dated 28.08.2015 are placed from page no. 9 to 58 of the paper book -I. We find the details of employees contribution to EPF and ESI are placed at page no. 56 & 57 of the paper book -I and on an examination of the details at page no. 56 & 57 of the paper book -I, we find all payments were made after 20th of other month. Therefore, the arguments of the ld.AR that the PF remittance were made within the grace period is not acceptable. According to the ld.AR, as per ESIC Act, the due date is 21st of next month and there is no grace period for FY 2014-15. Therefore, the applicability of grace period of 5 days does not arise at all for AY 2015-16. Thus, we find no infirmity in the order of the Addl/JCIT in confirming the restriction of disallowance made by the AO u/s. 154 of the Act with reference to PF and ESIC. Therefore, the contentions of the assessee in this regard are rejected.

:-10-: ITA. Nos: 622, 623 & 624/Chny/2026 SP Nos: 37, 38 & 39/Chny/2026 it, for making the amendment or refusing to allow the claim. In the present case, the AO did not confine his jurisdiction to the rectification sought, but however travelled beyond the application made by the assessee and made disallowances on new issues which were not at all the part of rectification application. We find the findings of the AO vide para 5 & 6 of the rectification order which clearly shows that, he proceeded to disallow the depreciation on hired vehicles and restriction of MAT credit, but nowhere it was shown that the opportunity of having heard by the assessee was given and therefore, the disallowances made with reference to depreciation and restriction of MAT credit is not justifiable. Thus, the order of the Addl.JCIT is not justified and the contention raised by the assessee in this regard is accepted, additions made thereon are deleted.

Sd/- Sd/ Sd/- Sd/ Sd/ (यस यस यस यस िव�ने� िव�ने� रिव रिव) यस यस यस यस िव�ने� िव�ने� रिव रिव (एस एस एस. . . . आर एस आर आर. . . . रघुनाथा आर रघुनाथा रघुनाथा) रघुनाथा (SS VISWANETHRA RAVI) (S. R. RAGHUNATHA) �याियक �याियक सद�य �याियक �याियक सद�य सद�य / Judicial Member सद�य लेखा सद�य लेखा सद�य /Accountant Member लेखा लेखा सद�य सद�य चे�ई/Chennai, �दनांक/Dated: 05th May, 2026.

:-11-: ITA. Nos: 622, 623 & 624/Chny/2026 SP Nos: 37, 38 & 39/Chny/2026 JPV

आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�/CIT - Chennai/Coimbatore/Madurai/Salem 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF

PRASANNA Digitally signed by PRASANNA VANI JETTY VANI JETTY Date: 2026.05.14 12:03:19 +05'30'