What did the Tribunal hold?

The Tribunal restored the issues to the file of the Assessing Officer, directing the officer to provide all relied-upon materials and grant adequate opportunity to the assessee. The appeal was allowed for statistical purposes.

The assessee could not participate in assessment and appellate proceedings due to severe financial crisis and business closure. The assessee filed an affidavit explaining these circumstances and requested an opportunity to present their case on merits.

What were the issues?

Whether the assessee was prevented by sufficient cause from participating in the assessment and appellate proceedings, and if so, whether the matter should be remanded for fresh adjudication.

Jitendra M. Kitavat, HUF vs ITO | ITAT Mumbai 2026

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI CHALLA NAGENDRA PRASAD & SHRI MAKARAND VASANT MAHADEOKAR

Pronounced: 11/09/2026

PER SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER: This appeal is filed by the assessee against the order of the Ld. CIT(A)-NFAC, Delhi, dated 18.02.2026 for the assessment year 2017-18 in sustaining the addition made by the Assessing Officer.

Ld. Counsel for the assessee, at the outset, submitted that the Ld. CIT(A) passed an order ex-parte. Ld. Counsel submitted that the assessee could not participate in the proceedings before the Assessing Officer as well as the Ld. CIT(A) as the business of the assessee-HUF suffered severe financial losses, resulting in an acute financial crisis and ultimately compelled the assessee to shut down its business operations. The assessee filed the following affidavit deposing and explaining the circumstances under which the assessee could not participate effectively in the assessment proceedings as well as the appellate proceedings, stating as under:

“I Shri Jitendra M. Kitavat, Karta of Jitendra M. Kitavat (HUF), aged about 51 years, residing at 61, Purnima Apartment, 43, B G Marg, Mumbai 400006, do hereby solemnly affirm and state as under: 1. I am the Karta of the Appellant HUF and am fully conversant with the facts and circumstances of the present case. I am competent to swear this affidavit. 2. During the course of the assessment proceedings before the learned Assessing Officer as well as the appellate proceedings before the learned Commissioner of Income-tax (Appeals), proper and effective compliance could not be made by me. 3. The non-compliance before the learned Assessing Officer as well as the learned Commissioner of Income-tax (Appeals) was neither wilful nor intentional. During the relevant period, the business of the Appellant HUF suffered severe financial losses, resulting in an acute financial crisis. The financial condition deteriorated to such an extent that the HUF was ultimately compelled to shut down its business operations.

The closure of the business placed me, as the Karta of the HUF, under immense financial and mental pressure. My entire time and efforts were devoted towards dealing with the financial crisis, settling outstanding liabilities, arranging funds for the family's livelihood and coping with the consequences of the closure of the business. In these exceptional circumstances, I was unable to properly attend to the income-tax proceedings or effectively coordinate with my tax consultant for filing timely replies and necessary documents. 5. I respectfully submit that the failure to comply with the notices issued during the assessment and appellate proceedings was purely on account of the above unavoidable circumstances. There was never any intention to disregard the statutory notices or to delay the proceedings. The non-compliance was bona fide and arose solely because the HUF had ceased its business operations due to the severe financial crisis and I was under extreme financial and mental stress. 6. I sincerely regret the aforesaid non-compliance. I respectfully submit that the assessment as well as the first appellate order came to be passed without the benefit of the relevant explanations and supporting documentary evidence which the Appellant is now ready and willing to place before this Hon'ble Tribunal. I therefore humbly pray that, in the interest of substantial justice, one effective opportunity may kindly be granted to the Appellant so that the matter can be decided on merits rather than on account of the earlier procedural lapse. 7. I state that I have a good case on merits and am now in a position to place all relevant facts, documentary evidence and legal submissions before the Hon'ble Tribunal for proper adjudication. 8. I sincerely regret the earlier non-compliance and undertake to extend full cooperation in all future proceedings before the Hon'ble Tribunal. I assure this Hon'ble Tribunal that there shall be no lapse or default on my part in prosecuting the present appeal. 9. I therefore humbly pray that the earlier non-compliance may kindly be viewed sympathetically and the Appellant may be afforded one effective opportunity in the interest of substantial justice, so that the matter may be decided on merits rather than on account of procedural lapses.

10.

I declare that the contents of this affidavit are true and correct to the best of my knowledge and belief.” 3. Ld. Counsel for the assessee submitted that for the reasons explained in the affidavit, the assessee could not effectively participate in the proceedings either before the Assessing Officer or before the Ld. CIT(A). Therefore, the issues in appeal may be restored to the file of the Assessing Officer.

Ld. Counsel for the assessee submitted that some of the material and statements which the Assessing Officer relied upon to treat the transactions as accommodation entries were never provided to the assessee and the assessee had denied any transaction with one Shri Shripal Vora, as the assessee never entered into any transaction with him. Therefore, Ld. Counsel submitted that a direction may be given to the Assessing Officer to provide all the documents / materials which the Assessing Officer is relying upon to treat the transactions entered into by the assessee as accommodation entries, especially when the assessee disputed that he never entered into any such transactions with them.

Ld. DR has no serious objection in restoring the appeal to the file of the Assessing Officer.

Considering the rival submissions and perusing the reasons explained in the affidavit, we feel it appropriate to restore the issues in appeal to the file of the Assessing Officer with a direction to provide all the materials/ documents, which were relied upon to treat the transactions as accommodation entries and assessed the same in the hands of the assessee. The Assessing Officer shall complete the assessment in accordance with law after providing adequate opportunity to the assessee.

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

Order pronounced in the open court on 11/09/2026

Sd/- Sd/- MAKARAND VASANT MAHADEOKAR CHALLA NAGENDRA PRASAD JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai Dated: 11/09/2026 Prabhat Copy to: JITENDRA M. KITAVAT, HUF 9 RUBY MANSION, FORJETT CROSS STREET GOWALIA, GRANT 1 ROAD, S.O. MUMBAI – 400007 MAHARASHTRA

INCOME TAX OFFICER-23(1)(6) 2 ROOM NO.615, PIRAMAL CHAMBERS LALBAUG, MUMBAI-400012, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

JITENDRA M. KITAVAT, HUF,MUMBAI vs. ITO 23(1)(6), MUMBAI

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