HOTEL PREETHI INTERNATIONAL PVT. LTD.,NILGIRIS vs. ITO, CORPORATE WARD-2,, COIMBATORE

Brief facts of the cases are that the assessee is a private limited company. The return of income for the years under consideration have not been filed by the assessee. The Assessing Officer (‘AO’) got information that assessee has made huge cash deposits, cash withdrawals, time deposits and receipt of interest income. The ld. AO issued several notices, however, there was no response from the assessee. Hence, the ld. AO completed the assessments ex-parte for the AY 2017-18 and made total addition of Rs.5,43,21,954/- towards undisclosed interest, unexplained credits u/s. 68 and unexplained cash credits u/s.68 and ld. AO also completed the assessments ex-parte for the for AY 2018-19 by best judgment assessment u/s.147 r.w.s.144 r.w.s 144B of the Act by making disallowance of expenditure of Rs.1,67,97,264/-. Assessee challenged the order of assessments before the ld.CIT(A) who dismissed the appeals by holding that ‘the assessee failed to submit complete details and also failed to submit proof of appeal fees payment which shows that the appeal has not been pursued effectively’. Aggrieved, assessee is in appeal before us.

Before us, the ld. Counsel for assessee submitted that the assessee failed to avail adequate opportunity to file evidence and documents before the AO and ld.CIT(A) to substantiate its explanation regarding disallowance/additions which were culminated into high pitch assessments. Even for this FY the assessee had not done any business and the only income earned was interest on short term deposits. The ld. counsel only pleaded for one more opportunity to substantiate its & 2555/Chny/2025 SA Nos.92 & 93/Chny/2025 cases before the AO. The ld.Sr. DR insisted for the deposit of 20% of demand raised in appeals however, did not controvert the factum of ex-parte orders by the AO and ld.CIT(A). She further stated that the assessee has not responded to various notices issued by the AO and the Ld.CIT(A) and hence no lenient view is to be taken in both cases and prayed for dismissal of the appeals.

We find that as per contentions of the assessee that in this year even company has not done any business. However, we note that the AO has passed the ex-parte assessments in both the years which are huge additions. Therefore, keeping in mind the genuine hardship and peculiar facts of the case and the principle of natural justice, we grant another opportunity of hearing to the assessee before the AO itself. We also find that the ld. CIT(A) has only issued defect notice on 23.05.2025 and 07.08.2025 to the assessee. We also find that when there was defect in the appeal then ld.CIT(A) would have not admitted the appeal as defective. There was no need to decide the appeal on merits. Further, we note that there was no specific notice given for the appeal hearings. Therefore, considering the peculiar facts and circumstances in totality for just and proper decision of the case, fair play and substantial justice, the impugned orders are set aside and both the appeals are restored back to the file of Ld. AO for denovo assessments. The Ld.AO shall proceed for denovo assessments after affording proper opportunity of hearing to the assessee. The assessee is directed to substantiate its case with all evidence and documents, if any, forthwith without any fail, failing which Ld. AO shall be at liberty to proceed with the assessment proceedings on merits as per law. We make it clear that all the legal issues are kept open before the ld.AO. The ld. Counsel also ensured & 2555/Chny/2025 SA Nos.92 & 93/Chny/2025 the bench that the assessee will prosecute its cases before the AO diligently. We make it clear that nothing has been said on the merits of the cases.

Since we have heard both the appeals and decided as above, the captioned stay petitions become infructuous hence, dismissed.

In the result, the appeals filed by the assessee are allowed for statistical purpose and the stay petitions filed by the assessee are dismissed as infructuous.