R1589 UYYAKONDAN TIRUMALAI PRIMARY AGRICULTURAL COOPERATIVE SOCIETY LIMITED,TRICHY vs. INCOME TAX OFFICER, WARD 2(1), TRICHY, TRICHY

The assessee has raised the following grounds of appeal:

Despite service of the notice issued u/s.148 of the Act, the assessee neither furnished its return of income nor participated in the reassessment proceedings. The assessment records further reveal that the assessee also failed to comply with the statutory notices issued during the course of reassessment proceedings calling upon it to explain the nature and source of the cash deposits reflected in its bank accounts. In the absence of any response or supporting evidences from the assessee, the AO examined the information available on record and noticed that the assessee had deposited aggregate cash amounting to Rs.3,17,57,800/- in its bank accounts during the relevant previous year.

Since the assessee failed to discharge the onus cast upon it by explaining the source and nature of the aforesaid cash deposits or by producing any books of account or documentary evidence in support of its claim, the AO proceeded to complete the assessment ex parte u/s.144 r.w.s 147 of the Act. Treating the entire cash deposits of Rs.3,17,57,800/- as unexplained money within the meaning of section 69A of the Act and liable to be taxed in accordance with the provisions of section 115BBE of the Act, the AO passed the assessment order dated 15.02.2024 u/s.147 r.w.s 144 of the Act determining the total income of the assessee at Rs.3,17,57,800/-.

Aggrieved by the assessment order, the assessee carried the matter in appeal before the Ld.CIT(A). However, the Ld.CIT(A), vide the impugned appellate order dated 11.02.2026, dismissed the appeal ex parte for want of proper representation and confirmed the assessment. Aggrieved by the said order of the Ld.CIT(A), the assessee is in further appeal before this Tribunal.

The Ld.AR, appearing on behalf of the assessee, at the outset assailed the very assumption of jurisdiction by the AO and raised a preliminary legal

Without prejudice to the aforesaid jurisdictional challenge, the Ld.AR addressed the issue on merits. It was submitted that the impugned assessment had been completed ex parte without granting the assessee an effective and meaningful opportunity of being heard. The AO, according to the Ld.AR, proceeded to frame the assessment solely on the basis of the material available on record without considering the explanations and documentary evidence which the assessee was in a position to furnish. It was contended that the additions made in the assessment order were not based upon a proper appreciation of facts and evidence and that the assessee had been deprived of a reasonable opportunity to substantiate its case before the AO.

The Ld. AR further submitted that the assessee is in possession of all the relevant books of account, supporting documents and other evidences necessary to explain the issues forming the subject matter of the reassessment. It was, therefore, pleaded that, in the interest of substantial justice and in consonance with the principles of natural justice, one effective opportunity may be granted to the assessee to place the requisite materials before the AO.

Per contra, the Ld.DR, appearing on behalf of the Revenue, strongly supported the orders passed by the AO as well as the Ld.CIT(A). The Ld.DR submitted that the authorities below had afforded adequate and sufficient opportunities to the assessee at every stage of the proceedings. However, despite such opportunities, the assessee remained indifferent and non- responsive and failed to diligently prosecute its case by furnishing the requisite details and explanations within the stipulated time. It was, therefore, contended that the assessee cannot now seek to assail the impugned orders on the ground of lack of opportunity when the failure to participate in the proceedings was attributable solely to its own conduct. The Ld.DR accordingly submitted that the assessment order and the impugned appellate order do not suffer from any legal or factual infirmity warranting interference by this Tribunal and prayed that the appeal filed by the assessee be dismissed.

We have heard the rival submissions and carefully considered the material available on record. It is an undisputed fact that the assessment has been completed ex parte u/s.144 r.w.s 147 of the Act on account of the failure of the assessee to respond to the statutory notices issued by the AO. It is equally evident from the record that the first appellate authority also dismissed the appeal ex parte for want of proper representation. Consequently, the additions made by the AO have not been tested either on the basis of the explanations which the assessee now claims to possess or upon examination of the books of account and supporting evidences which, according to the assessee, are available for substantiating its case.

Having bestowed our thoughtful consideration to the rival submissions, we are of the considered opinion that the present case warrants restoration to the file of the AO in the interest of substantial justice. It is a settled principle that while procedural defaults on the part of an assessee cannot be lightly ignored, the ultimate objective of assessment proceedings is to determine the correct taxable income in accordance with law. At the same time, it cannot be overlooked that the assessee remained non-compliant before both the AO as well as the Ld.CIT(A), thereby contributing substantially to the present situation. Therefore, while the conduct of the assessee cannot be appreciated, the ends of justice would nevertheless be better served if one final opportunity is afforded to it to place all relevant materials before the AO for proper adjudication.

Accordingly, without expressing any opinion on the merits of the additions made in the assessment order or on the preliminary legal challenge regarding the validity of the reassessment proceedings, we deem it appropriate to set aside the impugned orders and restore the entire matter to the file of the AO for adjudication afresh in accordance with law. The AO shall afford the assessee a reasonable and effective opportunity of being heard, permit it to file its return of

We consciously refrain from adjudicating the jurisdictional challenge raised by the assessee with regard to the alleged non-compliance of the provisions of section 148A(b) of the Act. Since the matter is being restored to the file of the AO for fresh adjudication at the request of the assessee itself, we keep all legal as well as factual contentions of both the parties expressly open. It shall be open to the assessee to raise all jurisdictional objections, including the challenge to the validity of the proceedings under sections 148A and 148 of the Act, and equally open to the AO to examine and adjudicate the same in accordance with law after considering the material available on record and the submissions that may be advanced by the assessee. Nothing contained in this order shall be construed as an expression of opinion on the merits of such legal objections.

However, while granting the aforesaid indulgence, we cannot lose sight of the fact that the assessee failed to respond to the statutory notices issued during the reassessment proceedings and thereafter also failed to effectively prosecute the appeal before the Ld.CIT(A), resulting in avoidable litigation and unnecessary consumption of judicial time. The restoration of the matter is, therefore, considered appropriate only on terms. Accordingly, the assessee is directed to pay costs of Rs.10,000/- (Rupees Ten Thousand only) to the Tamil Nadu State Legal Services Authority, Hon'ble High Court of Madras within a period of one month from the date of receipt of this order and produce proof of such payment before the AO at the commencement of the remand proceedings. Subject to compliance with the aforesaid condition, the AO shall proceed to decide the matter afresh uninfluenced by any observations contained either in the assessment order, the order of the Ld.CIT(A), or in the present order. In the event of failure on the part of the assessee to comply with the above direction

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