SRI SASTHA SPINNING MILLS PVT. LTD.,COIMBATORE vs. ITO, CORP. WARD-2,, COIMBATORE

PDF · subscribers
ITA 1152/CHNY/2026Status: DisposedITAT Chennai22 April 2026AY 2009-103 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee failed to respond to notices from lower authorities due to closure of operations. Considering the peculiar circumstances, the Tribunal decided to grant one more opportunity to the assessee to substantiate its claim.

What were the facts?

During a search, the AO noticed payments of Rs.7,61,50,000/- made by the assessee to M/s. Hallko Capital and Management Pvt. Ltd. without proper details. The AO treated this amount as unexplained income. The CIT(A) granted partial relief, assessing Rs.4,11,50,000/- as income from other sources.

What were the issues?

Whether the assessee should be given another opportunity to provide details for unexplained payments, and whether the lower authorities properly followed procedures in the absence of assessee's response.

Which sections of the Income-tax Act were involved?

Section 131,Section 143(3),Section 250,Section 254

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI

Before: SHRI GEORGE GEORGE KAND MS. PADMAVATHY.S

Hearing: 21.04.2026Pronounced: 22.04.2026

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 14.01.2026 for Assessment Year (AY) 2009-10.

2.

The assessee is a private limited company. There was a search in the Sarvana Kumar Group and there was an enquiry u/s. 131 of the Act was conducted in the case of R. Jagadish Kumar, Managing Director of the assessee-company. During the course of enquiry, the A.O noticed that

ITA No.1152/Chny/2026 Sri Sastha spinning Mills Pvt. Ltd. :- 2 -:

payments to the tune of Rs.7,61,50,000/- was made to M/s. Hallko Capital and Management Pvt. Ltd. towards which the assessee could not furnish proper details. The A.O treated the amount as unexplained against which the assessee preferred further appeal before the CIT(A). The CIT(A) gave partial relief to the assessee by holding that the amount to the tune of Rs.4,11,50,000/- has to be assessed as income from other sources. Aggrieved, the assessee as well as the Revenue filed further appeal before the CIT(A). The Tribunal in the first round held that the CIT(A) while giving partial relief has violated Rule 46A of the Income Tax Rules, 1963 and accordingly remitted the appeal back to the A.O. In the second round assessment proceedings, the A.O issued various notices to the assessee calling on details and since the assessee did not respond the A.O completed the assessment u/s. 143(3) r.w.s 254 assessing the income at Rs.7,61,50,000/-. Aggrieved, the assessee filed further appeal before the CIT(A). The CIT(A) also passed an ex-parte order dismissing the appeal since the assessee failed to respond to the notices. The assessee is in appeal before the Tribunal against the order of the CIT(A).

3.

We have heard the parties, and perused the material available on record. The Ld. Authorized Representative (AR) of the assessee submitted that the assessee has closed down its operations in 2022 and therefore the notices issued by the lower authorities were not responded. Accordingly, the Ld. AR prayed for one more opportunity with an undertaking that the assessee would properly represent the case. Considering the facts and circumstances peculiar to assessee's case, we are inclined to give one more opportunity to the assessee to substantiate the claim by producing the required details. Accordingly, we remit the appeal back to the AO with a direction to call for

ITA No.1152/Chny/2026 Sri Sastha spinning Mills Pvt. Ltd. :- 3 -:

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 assessment proceedings. It is ordered accordingly.

4.

Further, we also levy a cost of Rs.10,000/- (Ten thousand only) in the appeal since considerable time and efforts have been spent by the Exchequer and for the reason that the assessee being delinquent before the lower authorities. The same shall be paid by the assessee to Tamil Nadu State Legal Services Authority at Hon’ble High Court of Madras within a period of one month from the date of receipt of this order and produce the receipt before the A.O.

5.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 22nd day of April, 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: 22nd April, 2026. EDN, Sr. P.S 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 Digitally signed by EJTADA DURGA EJTADA DURGA NARESH NARESH Date: 2026.05.05 16:47:01 +05'30'

More judgments on Section 131

All 4,706 judgments and leading authorities on Section 131 →

Recent GST High Court judgments

Search GST case law →