HOTEL PREETHI INTERNATIONAL PVT. LTD.,NILGIRIS vs. ITO, CORPORATE WARD-2,, COIMBATORE
What did the Tribunal hold?
The Tribunal decided to set aside the impugned orders and restore both appeals to the file of the Ld. AO for denovo assessments. The Tribunal noted that the AO had passed ex-parte assessments with huge additions in both years. Considering the genuine hardship, peculiar facts, and the principle of natural justice, a further opportunity of hearing was granted to the assessee before the AO. The Tribunal observed that the CIT(A) had issued defect notices but had not admitted the appeals as defective and proceeded to decide them on merits without specific notice for appeal hearings. Therefore, for a just and proper decision, fair play, and substantial justice, the matter was remitted. The Ld. AO is directed to proceed with denovo assessments after affording a proper opportunity of hearing. The assessee is directed to substantiate its case with all evidence and documents forthwith. All legal issues are kept open before the Ld. AO. The Tribunal made it clear that nothing was said on the merits of the cases. The stay petitions were dismissed as infructuous.
What were the facts?
The assessee, Hotel Preethi International Pvt. Ltd., is appealing against orders of the CIT(A) for Assessment Years (AYs) 2018-19 and 2017-18. The Assessing Officer (AO) initiated reassessment proceedings under Section 147 read with Sections 144 and 144B of the Income-tax Act, 1961, as the assessee had not filed returns. The AO received information regarding significant cash deposits, withdrawals, time deposits, and interest income. Despite several notices, the assessee did not respond. Consequently, the AO completed ex-parte assessments, making additions of Rs. 5,43,21,954/- for AY 2017-18 (undisclosed interest, unexplained credits under Section 68) and disallowing Rs. 1,67,97,264/- for AY 2018-19 via best judgment assessment. The CIT(A) dismissed the assessee's appeals, citing failure to submit complete details and proof of appeal fee payment.
What were the issues?
1. Whether the Tribunal should grant the assessee another opportunity to present its case before the AO, considering the ex-parte nature of the assessments and the alleged failure to provide adequate opportunities for submitting evidence and documents. (Mixed question of law and fact, concerning principles of natural justice and procedural fairness). Assessee's contention: The assessee argued that it did not receive adequate opportunities to file evidence and documents before the AO and CIT(A) to substantiate its explanations, leading to high-pitched assessments. The assessee stated that it had not conducted any business in the relevant year, with the only income being interest on short-term deposits, and pleaded for one more opportunity to present its case. Revenue's contention: The Revenue, through the Ld. Sr. DR, insisted on the deposit of 20% of the demand raised in the appeals. The Revenue did not controvert the fact that the orders were ex-parte. It was further stated that the assessee had not responded to various notices from the AO and CIT(A), and therefore, no lenient view should be taken. The Revenue prayed for the dismissal of the appeals.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI JAGADISH
O R D E R PER MANU KUMAR GIRI, JM: These appeals filed by the assessee are directed against the orders of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [hereinafter the “Ld.CIT(A)”] both dated 25.08.2025 arising out of the orders dated 26.03.2024 and 07.03.2025 passed by the Assessing Officer, Assessment Unit, Income Tax Department (hereinafter referred to as the "AO") passed u/s.147 r.w.s. 144 & 2555/Chny/2025 SA Nos.92 & 93/Chny/2025 r.w.s.144B of the Income-tax Act, 1961 (hereinafter "the Act') for the Assessment Years 2018-19 and 2017-18 (hereinafter the "AYs").
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.
Order pronounced in the open court on 10th October, 2025 at Chennai.
More judgments on Section 147
- ACIT Central Bilaspur, Bilaspur vs Arun Kumar Agrawal, SaktiITSSA 26/RPR/2025[2018-19]Status: Disposed21 Oct 2026AY 2018-19
- Vinod Agrawal, Kawardha vs Assisstant Commissioner of Income Tax…ITA 666/RPR/2026[2019-20]Status: Heard21 Oct 2026AY 2019-20
- Sar Business Tradelink Private Limited… vs Income Tax Officer, Ward - 1(2), RaipurITA 599/RPR/2026[2014-15]Status: Heard21 Oct 2026AY 2014-15
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- Neo Incorporation, Rajkot vs DCIT Circle- 1(2), RajkotITA 471/RJT/2026[2012-2013]Status: Disposed21 Oct 2026AY 2012-2013
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