WAXOILS PRIVATE LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, MUMBAI

Brief facts relevant for adjudication of the instant appeal are that the AO, vide assessment order dated 23.01.2025 passed u/s 147 r.w.s. 144 and 144B of the Act, made an addition of Rs.12,91,035/- on account of disallowance relating to commission expenditure treated as non-genuine.

The Assessee challenged the aforesaid addition before the Ld. Commissioner. Despite affording several opportunities, the Assessee failed to comply. The Ld. Commissioner thereafter issued a further notice dated 26.02.2026, fixing the hearing on 05.03.2026, and specifically cautioned the Assessee regarding the consequences of continued non-compliance. However, the Assessee again failed to comply and, consequently, the appeal was decided ex-parte.

Before us, the Ld. Counsel referred to a letter dated 24.02.2026 and submitted that the Assessee had sought an adjournment of 15 days, but the appeal was nevertheless disposed of ex-parte. It was accordingly contended that one further opportunity may be afforded to the Assessee.

The Ld. DR on the contrary supported the impugned order and submitted that sufficient opportunities had already been afforded to the Assessee, which remained un-availed.

At the same time, the issue involved requires adjudication after considering the relevant submissions and documents. Further, the Hon’ble Jurisdictional High Court in CIT (Central), Nagpur v. Prem Kumar Arjun Das Luthra (HUF) [2016] 69 taxmann.com 407 (Bom.) has held that the first appellate authority is required to dispose of the appeal on merits and cannot dismiss the same merely for want of prosecution.

Thus, considering the peculiar facts and circumstances, the case is remanded to the file of the Ld. Commissioner for decision afresh, suffice to say, by affording a reasonable opportunity of being heard to the Assessee and considering the material and submissions placed/to be placed on record.

However, considering the fact that the Assessee could not avail the opportunities granted by the Ld. Commissioner and the appellate proceedings remained unprosecuted, we are of the view that one further opportunity may be granted, subject to reasonable terms.

The Assessee shall cooperate with the proceedings and shall not seek unnecessary adjournment. We further clarify that, in case of any further default, the Assessee shall not be entitled to any leniency.

In the result, the Assessee’s appeal is allowed for statistical purposes.