DAL MARKETING SOLUTIONS LTD.,MADURAI vs. ITO, CORP. WARD-1(3), CHENNAI

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ITA 2753/CHNY/2026Status: DisposedITAT Chennai04 August 2026AY 2016-176 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal before the CIT(A) due to the Managing Director's imprisonment. The case was remitted back to the CIT(A) to decide the appeal on merits along with the quantum appeal.

What were the facts?

The assessee company did not file its return of income for AY 2016-17. The Assessing Officer (AO) completed the assessment ex-parte and initiated penalty proceedings under Section 271(1)(c). The assessee's appeal before the CIT(A) was dismissed in limine due to a significant delay.

What were the issues?

Whether the delay in filing the appeal before the CIT(A) was justifiable and if the appeal should be admitted on merits.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 147,Section 144,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI GEORGE GEORGE K & MS. PADMAVATHY.S

आदेश / O R D E R

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 27.03.2026 for Assessment Year (AY) 2016-17. The appeal of the assessee is emanating from the penalty order u/s. 271(1)(c) of the Act passed by the A.O.

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2.

The assessee is a company and did not file the return of income for AY 2016-17. The A.O received information that the assessee company is having contract receipts to the tune of Rs. 25,95,96,957/- and commission receipts of Rs.10,265/-. Since the assessee did not file the return of income, the A.O reopened the assessment by issue of notice u/s. 148 of the Act. The assessee neither filed the return in response to the notice nor filed any further details. The A.O therefore completed the assessment u/s. 147 r.w.s 144 of the Act assessing the total income at Rs.2,07,78,021/-. Subsequently, the A.O initiated penalty proceeding u/s.271(1)(c) of the Act vide notice dated 26.03.2022 for concealment of income. Since the assessee did not respond to the notices, the A.O levied a penalty of Rs. 68,69,836/- u/s. 271(1)(c) of the Act. Aggrieved, the assessee filed further appeal before the CIT(A). There was a delay of 971 days in filing the appeal before the CIT(A) and the assessee filed a petition for condoning the delay, wherein it is stated that: “IN this connection, it is to be noted that the petitioner company had three directors, details of which are as under: a) A.Saravanakumar, Managing Director b) Rammohan Raja Karthika, Director c) Ramasamy Ganesan, Director It is submitted that Shri.A.Saravanakumar, Managing Director was in- charge of all administrative and finance related matters of the petitioner company and was handling all proceedings connected to Income Tax as well. It is most humbly submitted that Shri.A.Saravanakumar, Managing Director of the petitioner company was arrested on 05.03.2022 u/s.19(1) of the Prevention of Money Laundering Act, 2002 for the alleged offence u/s.3 and 4 of the PMLA, 2002 pertaining to ECIR No. ECIR/MDSZO/04/2018 dated 09.07.2018 and was remanded to judicial custody on the same day. It may further be noted that there were no operations in the company since 2016. Moreover, the other directors in the company were not aware about any of the matters relating to income tax and thus could not take any action regarding the same. The case of the prosecution was that Shri. A. Saravanakumar, Managing Director of the petitioner company, who is the person responsible for the affairs of the petitioner company had actively assisted the directors of M/s.

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Disc Assets Lead India Limited in diverting the funds of that company and thus had committed the offence of Money Laundering u/s.3 of the PMLA, 2002 punishable u/s.4 of the PMLA, 2002.

Shri.A. Saravanakumar had filed a petition seeking bail and the Designated Court under the PMLA Act, 2002 vide order dated 29.10.2024 had allowed the petition and ordered Shri.A.Saravanakumar to be released on bail subject to certain conditions and was ultimately released on bail on 30.10.2024. Copy of the memo of arrest dated 05.03.2022 and bail order dated 29.10.2024 is enclosed for the perusal of this respected authority. Owing to the imprisonment of Shri.A.Saravanakumar, Managing Director of the petitioner company for over 2 years and due to lack of access to any data or information related to the petitioner company coupled with various other challenges in seeking legal help, he could not take sufficient action against any notices / orders that were issued during such period.

It is also submitted that the Assessing Officer in connection to the proceedings u/s.147 r.w.s.263 of the petitioner company issued notices on 24.10.2024 and 31.01.2025 (received via post on 07.02.2025 by Shri.A.Saravanakumar) for which no response was filed by Shri.A. Saravanakumar, Managing Director of the petitioner company. Copy of the 142(1) notice dated 31.01.2025 issued in the case of the petitioner company is enclosed for the perusal of this respected authority. Despite being released on bail on 30.10.2024, Shri.A.Saravanakumar was under immense stress and anxiety as a result of his imprisonment over 2 years which had mentally taken a massive toll on his health and personal life due to which Shri.A.Saravanakumar could not file or participate in any Income Tax proceedings of the petitioner company.

It was only after the passing of the assessment order u/s.147 r.w.s.263 dated 29.03.2025 in the case of the petitioner company that Shri.A.Saravanakumar approached his Chartered Accountant Shri. Ramanujam, Madurai in the first week of April, 2025 to discuss about the passing of various orders in the case of the petitioner company and the future course of action to be taken in respect of the same.

Shri. Ramanujam, Chartered Accountant after discussing with Shri.A.Saravanakumar advised Shri.A.Saravanakumar to approach Shri.T.Banusekar, Advocate, Chennai to discuss about the passing of various orders in the case of the petitioner company and the future course of action to be taken in respect of the same. Shri.A.Saravanakumar in the third week of April, 2025 sought an appointment and approached Shri. T.Banusekar, Advocate to seek his advice on the further course of action.

Shri.A.Saravanakumar, Managing Director of the petitioner company had briefed Shri.T.Banusekar, Advocate about the entire history comprising of

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the arrest and charges framed under the PMLA Act, 2002 against him and had also appraised him regarding the passing of various orders in the case of the petitioner company levying huge tax demands. Considering the same, Shri. T.Banusekar, Advocate sought for all details pertaining to passing of various orders in the case of petitioner company and had also sought for details regarding the arrest of Shri. A. Saravanakumar. Shri.A.Saravanakumar collated and furnished all the necessary details asked for in the third week of May, 2025. After going through the details furnished by Shri. A. Saravanakumar, Shri. T.Banusekar, Advocate advised that appeals can be filed against all the orders passed levying tax demands with a petition to condone the delay in filing the said appeals. Shri.A.Saravanakumar then requested the office of Shri. T.Banusekar, Advocate to draft the appeals against such orders. The appeal was then drafted, sent for the approval of Shri.A. Saravanakumar and was finally filed on 06.06.2025 with a delay of 961 days. There was hence a delay in filing the appeal. It is most humbly submitted before this respected authority that the delay was purely due to genuine reasons beyond the control of the petitioner company. There was no intention to delay the filing of the appeal and no benefit is sought to be derived by delaying the filing of appeal. For these reasons, it is most humbly prayed that this respected authority may be pleased to condone the delay of 961 days in filing the appeal and admit the appeal filed on 06.06.2025.”

3.

However, the CIT(A) dismissed the appeal in limine without condoning the delay. The assessee is in appeal before the Tribunal against the order of the CIT(A).

4.

We have heard the parties, and perused the material available on record. The Ld. Authorized Representative (AR) of the assessee submitted that the assessee submitted a detailed reasons for not filing the appeal before the CIT(A) on time which has not been considered. The Ld. AR accordingly prayed that one more opportunity may be given. From the perusal of the

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above reasons for condonation as filed before the CIT(A), we notice that the assessee could not file the appeal on time since the Managing Director incharge of the affairs of the assessee was in jail. The Ld. AR during the course of hearing brought to our attention that the quantum appeal against the order of the A.O passed u/s.147 r.w.s.144 is pending before the CIT(A). Considering the facts and circumstances peculiar to assessee's case and in the interest of natural justice, we are inclined to give one more opportunity to the assessee. Accordingly, we condone the delay in filing the appeal before the CIT(A) and remit the appeal back to the CIT(A) with a direction to consider the appeal against the penalty order u/s. 271(1)(c) of the Act along with the appeal against the quantum additions made by the AO. The CIT(A) is further directed to call for necessary details and decide the issue in accordance with law. The assessee is required to submit the necessary details as may be called for and cooperate with appellate proceedings. It is ordered accordingly.

5.

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

Order pronounced on 04th day of August, 2026 at Chennai.

Sd/ Sd/ (जॉज� जॉज� के) (पदमावती यस) (Padmavathy.S) (George George K) उपा�� / Vice President लेखा लेखा सद�य लेखा लेखा सद�य सद�य /Accountant Member सद�य चे�नई/Chennai, �दनांक/Dated: 04th August, 2026. EDN, Sr. P.S EJTADA Digitally signed by EJTADA DURGA DURGA NARESH Date: 2026.08.07 NARESH 17:59:59 +05'30'

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

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