SALEM TEXTILES LTD.,SALEM vs. DCIT, CIRCLE-1(1), SALEM

Brief facts of the case are that the assessee is a public limited company and did not file its return of income for AY 2020-21. Based on the information available with the department, the AO found that the assessee has made cash deposits to the tune of Rs.1,40,94,000/- into its bank account maintained with The Karur Vysya Bank Ltd and

Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A) on 14.03.2025.

At the outset, we observed that ld.CIT(A) has has provided four opportunities to the assessee to appear for hearings as detailed in paragraph 4.1 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 appeal filed by the assessee by confirming the order of the AO by passing an order dated 21.01.2026. Aggrieved by the order of the ld.CIT(A), the assessee preferred an appeal before us.

The ld.AR submitted that the assessee company has no employees and no business operation carried out due to the company was not in operation and closed from 02.03.2016 and hence the assessee could not participate in the assessment as well as appellate 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

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).

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 confirmed by the ld.CIT(A), NFAC due to non-participation of the assessee. Since, the assessee has failed to participate before the AO as well as the first appellate authority, we levy the cost of Rs.25,000/- to be paid to State Legal Aid Authority, Hon’ble High Court of Madras within 30 days from the date of receipt of this order and the assessee shall satisfy the payment of cost before the authorities.

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 with 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.

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