DEEPA SILKS,KARUR vs. ITO, WARD 1 KARUR, KARUR

ITA 3988/CHNY/2025Status: DisposedITAT Chennai08 October 2026AY 2017-187 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assessee's submission that notices issued by the Income Tax Department went to their tax consultants who failed to inform the assessee-firm, and consequently, the assessee could not respond to the show cause notice before the Assessing Officer, remained uncontroverted. The Tribunal was satisfied that the appellant was prevented by sufficient cause from responding to the show cause notice. Therefore, in the interest of justice, the matter was remanded to the Assessing Authority to the stage of issuing a show cause notice, enabling the appellant to respond and for proceedings to be completed accordingly. The penalty amount mentioned in the grounds of appeal (Rs. 1,50,000/-) and the penalty levied by the AO (Rs. 1,26,436/-) were noted, but the specific finding on the penalty sustainment was deferred due to the remand. The issue of whether the penalty under Section 271B was automatic or discretionary, and the applicability of reasonable cause under Section 273B, were implicitly left undecided pending the fresh proceedings.

What were the facts?

The assessee, Deepa Silks, a partnership firm, is in appeal against the order of the Commissioner of Income Tax (Appeals) [NFAC] dated November 7, 2025, for Assessment Year 2017-18. The NFAC had dismissed the assessee's appeal ex-parte. The case originated from the Assessing Officer (AO) issuing a notice under Section 148 on March 30, 2021, due to information about cash deposits in the assessee's bank account, suggesting escaped income. The assessee did not comply with notices under Section 148 and 142(1). Consequently, the AO made a best judgment assessment under Section 147 read with Sections 144 and 144B, determining total income at Rs. 30,34,470/-, treating cash deposits as business turnover and estimating income at 12%. The AO also initiated penalty proceedings under Section 271B for failure to get accounts audited under Section 44AB. The assessee did not respond to the show cause notice for penalty, leading to a penalty of Rs. 1,26,436/- levied on September 20, 2022. The assessee's appeal before the CIT(A) was dismissed for non-prosecution.

What were the issues?

1. Whether the NFAC erred in dismissing the appeal ex-parte and whether the order passed in violation of principles of natural justice is a nullity, as argued by the assessee. The assessee contended that no proper opportunity was given and that the order was passed out of time, invalid, and without jurisdiction. The revenue did not record specific arguments on this point. 2. Whether the NFAC erred in sustaining the penalty under Section 271B of Rs. 1,50,000/- for failure to file the tax audit report under Section 44AB, as argued by the assessee. The assessee argued that Section 44AB was not applicable as no books of accounts were maintained, and that the delay in filing the report was due to reasonable cause, negating the presumption of penalty applicability under Section 271B and Section 273B. The revenue did not record specific arguments on this point.

Which sections of the Income-tax Act were involved?

Section 250,Section 147,Section 144,Section 144B,Section 148,Section 142(1),Section 271B,Section 44AB,Section 274,Section 273B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHENNAI BENCHES,

Before: SHRI INTURI RAMA RAO & SHRI MANU KUMR GIRI

Pronounced: 08.10.2026

PER INTURI RAMA RAO, ACCOUNTANT MEMBER :

This is an appeal filed by the Assessee directed against the order passed by learned Commissioner of Income Tax(Appeal)[NFAC], dated 07.11.2025 passed u/s.250 of the Income Tax Act, 1961 for the Assessment Year 2017-18. 1 DEEPA SILKS [A]

2.

The Assessee raised these following grounds of appeal :

“1. The order of the NFAC, Delhi dated 07.11.2025 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1082359628(1) for the above-mentioned Assessment Year is contrary to law, fact and in circu

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 147

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

Recent GST High Court judgments

Search GST case law →