HAJRATRADING COMPANY,CHENNAI vs. DCIT, NON CORPORATE CIRCLE-8(1), CHENNAI

PDF · subscribers
ITA 1376/CHNY/2026Status: DisposedITAT Chennai22 September 2026AY 2015-166 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted the additional evidence filed by the assessee under Rule 29 of the ITAT Rules, 1963. The Tribunal found that the additional evidence, including the Tax Audit Report, financial statements, and various supporting documents, had a direct bearing on the determination of the trading results. The reasoning was that the assessee's explanation for not producing these documents earlier, citing the incapacitation and subsequent death of its Chartered Accountant, was accepted in the interest of justice and equity. Consequently, the Tribunal restored the issue to the file of the Assessing Officer for fresh examination of the admitted evidence and for deciding the issue afresh, after providing the assessee with an adequate opportunity of being heard. The assessee was directed to cooperate and not seek unnecessary adjournments. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, M/s. Hajra Trading Company, is a firm that did not file its return of income for Assessment Year 2015-16. The Assessing Officer (AO) reopened the assessment under Section 147 based on information about export transactions and duty drawback received. The assessee eventually filed a return declaring a low income. The AO, noting the failure to file within the prescribed time and obtain a tax audit under Section 44AB despite turnover exceeding Rs. 1 crore, estimated the income at 10% of turnover and added the duty drawback. The Commissioner (Appeals) partly allowed the appeal, reducing the estimated profit to 6% of turnover but confirming the addition of duty drawback. The assessee appealed to the Tribunal.

What were the issues?

1. Whether the Tribunal should admit additional evidence, specifically financial statements, tax audit reports, ledgers, invoices, and other supporting documents for AY 2015-16, as per Rule 29 of the ITAT Rules, 1963, considering the assessee's explanation for their non-production before lower authorities? Assessee's Contention: The assessee argued that its Chartered Accountant, who handled its accounts, became incapacitated due to ill health and subsequently passed away, preventing the timely filing of the return and production of records. The assessee claimed that the additional evidence, including reconstructed records, is crucial for determining trading results and should be admitted in the interest of justice, leading to a remand to the AO. Revenue's Contention: The Revenue relied on the order of the First Appellate Authority.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 142(1),Section 44AB,Section 144B,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI INTURI RAMA RAO

Hearing: 21.09.2026Pronounced: 22.09.2026

आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 16.01.2026, passed u/s.250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2015-16.

- 2 - ITA No.1376/CHNY/2026 Hajra Trading Company 2. Brief facts of the case are as follows: The assessee is a firm. For the assessment year 2015-16, the assessee had not filed its return of income. Based on the information that the assessee had effected export transactions of Rs.2,92,91,066/- and received duty drawback of Rs.13,14,604/-, the assessment was reopened u/s.147 of the Act and notice u/s.148 was issued on 29.03.2021. In response, the assessee filed its return of income on 30.12.2021 declaring total income of Rs.28,600/-. During the course of assessment proceedings, notices u/s.142(1) were issued, in response to which the assessee furnished partial details stating that it was an export-oriented unit and had received duty drawback during the relevant financial year. The AO, however, did not accept the trading results, primarily for the reason that the assessee had failed to file its return within the prescribed time and had not obtained its accounts audited u/s.44AB of the Act, despite the turnover exceeding Rs.1 crore. Accordingly, the AO completed the assessment u/s.147 r.w.s.144B of the Act on 22.03.2022, determining the total income at Rs.42,44,418/- by estimating the income at 10% of the turnover, amounting to Rs.29,29,814/-, and further adding duty drawback of Rs.13,14,604/-.

- 3 - ITA No.1376/CHNY/2026 Hajra Trading Company 3. Aggrieved by the reassessment order passed u/s.147 r.w.s.144B of the Act, the assessee preferred an appeal before the First Appellate Authority (FAA). The FAA held that the AO was justified in estimating the income, considering the assessee’s failure to comply with the statutory audit requirements, non-filing of VAT returns and absence of return of income for the preceding year, rendering the trading results unreliable. However, the FAA partly allowed the appeal by estimating the gross profit at 6% of the declared turnover and confirming the addition towards duty drawback of Rs.13,14,604/-.

4.

Aggrieved by the order of the FAA, the assessee has preferred the present appeal before the Tribunal. Before us, the assessee has filed a petition under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, seeking admission of additional evidence, contending that the relevant documents could not be produced before the lower authorities for reasons beyond its control. The Ld.AR submitted that the Chartered Accountant who had been handling the assessee-firm’s accounts and tax matters during the relevant period was unable to attend to the same due to deteriorating health and subsequently discontinued his professional practice without informing the assessee. Despite

- 4 - ITA No.1376/CHNY/2026 Hajra Trading Company efforts to retrieve the records, the assessee subsequently came to know from his family members that the Chartered Accountant had passed away. The assessee has also filed an affidavit in support of the above circumstances.

5.

It was further submitted that, consequently, the assessee could neither file its return within the prescribed time nor produce the books of account and supporting records during the assessment proceedings. Thereafter, the assessee engaged different professionals and, upon considerable efforts, reconstructed the records from available sources. The books of account, purchase and sales ledgers, export invoices, bills of lading, customs documents, VAT returns, financial statements and tax audit report for AY 2015-16 have accordingly been compiled and furnished as additional evidence. The Ld.AR submitted that these documents have a direct bearing on the determination of the trading results and, therefore, prayed that the additional evidence be admitted in the interest of justice and the issue be restored to the file of the AO for fresh consideration.

6.

The Ld.DR strongly relied on the order of the FAA.

- 5 - ITA No.1376/CHNY/2026 Hajra Trading Company 7. We have heard the rival submissions and perused the material on record. The assessee has filed a petition under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, seeking admission of additional evidence comprising Tax Audit Report in Form 3CB & 3CD for AY 2015-16, ITR acknowledgement, financial statements and tax audit reports for AYs 2016-17 & 2017-18, purchase and sales ledgers, export invoices, purchase bills, bills of lading, customs documents, sales abstract and VAT returns. The assessee has explained that the tax consultant handling its accounts and tax matters had discontinued his professional practice due to deteriorating health and subsequently passed away, resulting in the relevant records not being available during the proceedings before the lower authorities. On perusal of the additional evidence, we find that the same has a direct bearing on the determination of the trading results. In the interest of justice and equity, we admit the additional evidence and take the same on record. Since the additional evidences are taken on record, we deem it appropriate to restore the issue to the file of the AO for fresh examination of the evidences and for deciding the issue afresh in accordance with law after providing adequate opportunity of being heard to the assessee. The assessee is

- 6 - ITA No.1376/CHNY/2026 Hajra Trading Company directed to cooperate with the Revenue and shall not seek unnecessary adjournment. It is ordered accordingly.

8.

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

Order pronounced in the open court on 22nd September, 2026 at Chennai.

Sd/- Sd/- (इंटूर� रामा राव) (जॉज� जॉज� के) (GEORGE GEORGE K) (INTURI RAMA RAO) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�नई/Chennai, �दनांक/Dated, the 22nd September, 2026 RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Chennai 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.09.25 11:38:34 +05'30'

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →