AKSHAYA MERCHANTS FINANCE,BANGALORE vs. INCOME TAX OFFICER WARD 4(3)(2), BANGALORE

ITA No. 492/Bang/2026 is against the quantum order whereas ITA No. 493/Bang/2026 relates to the penalty order u/s. 271AAC(1) of the Act. Both these appeals are heard together for the sake of convenience since both the assessees are one and the same and also the facts are similar. The facts

The brief facts of the case are that the assessee is a firm and not filed their return of income. The AO based on the information that the assessee had made the cash deposits as well as cash withdrawals had proposed to reopen the assessment u/s. 147 of the Act. Subsequently, notice u/s. 148 was issued after following the procedures prescribed u/s. 148A of the Act. The assessee had not responded to the 148 notice and thereafter notice u/s. 142(1) as well as the show cause notices were issued. The assessee had not responded to any of the notices and therefore the AO had sent a notice u/s. 133(6) of the Act to the bankers. The banker also furnished the information and thereafter the AO had issued a notice seeking the details of the said deposits. The assessee had not responded to any of the notices and therefore the cash deposits made during the year was treated as unexplained money u/s. 69A of the Act. Similarly, the AO had also imposed penalty u/s. 271AAC(1) of the Act.

As against the said orders, the assessee filed appeals before the Ld.CIT(A) with a delay of 872 and 693 days. In the application to condone the said delay, the assessee had submitted that the two partners who are looking after the day-to-day operations of the business had suddenly absconded and therefore the remaining partners were not able to follow up the assessment proceedings. In fact, the communication from the department was sent to the registered office address but the said notices were not attended by the other partners who are all not conversant with the income tax matters. The assessee further submitted that they came to know about the assessment order only on 14/08/2025 and thereafter steps were taken for filing an appeal through the professional. Since the managing partners were not available to look after the business, it took lot of time for the remaining partners to find out the records in order to file an appeal before the Ld.CIT(A). This entire facts would establishes that the assessee is not at fault and therefore the delay has to be condoned. The Ld.CIT(A) had

As against the said orders, the appeals are filed before this Tribunal.

At the time of hearing, the Ld.AR submitted that the assessee firm incurred heavy loss after the managing partners absconded and therefore there is no coordination between the other partners and therefore the assessee was not able to respond to the notices issued by the Ld.CIT(A). The Ld.AR further submitted that the assessee had sought for an adjournment in view of the above said facts but unfortunately, the Ld.CIT(A) without communicating anything about the adjournment application had decided the appeal ex-parte and therefore prayed an another opportunity.

The Ld.DR submitted that the notices were duly served on the assessee and therefore the non-appearance by the assessee invites the ex- parte order and therefore prayed to dismiss the appeals.

We have heard the arguments of both sides and perused the materials available on record.

In both the appeals, the assessee had challenged the ex-parte order of the Ld.CIT(A). The reason for the non-appearance before the Ld.CIT(A) was that the managing partners had unilaterally and abruptly closed the business operations and absconded because of the losses without informing the other partners and therefore the other partners were put on dark and therefore the appeals could not be represented before the Ld.CIT(A). The very same reason was given by the assessee for the delay in filing the appeals which was accepted by the Ld.CIT(A) and the delays were condoned. Therefore, the said facts are not in dispute. In such circumstances only, the assessee firm sought for an adjournment but the Ld.CIT(A) without

Considering the said facts, we are inclined to set aside the ex-parte orders of the Ld.CIT(A) on the condition that the assessee should pay a sum of Rs. 11,000/- each towards the cost for showing the indulgence. The said cost amounts should be paid into the account of Prime Minister’s National Relief Fund and the receipt should be produced before the Ld.CIT(A), otherwise the benefit granted under this order would go automatically.

In the result, both the appeals filed by the assessee are allowed for statistical purposes.