MANTHAN HASMUKH MODI,MUMBAI vs. ITO-27 (2)(2), MUMBAI

The Registry has informed that the appeal has been filed with a delay of 852 days. The assessee filed a petition seeking condonation of delay along with an affidavit duly sworn by the assessee himself on 27.01.2026. In the condonation petition, the assessee explained that the delay occurred primarily due to a change of Chartered Accountant handling the assessee’s income-tax matters from one consultant to another. It was submitted that, mainly due to lack of proper communication between the assessee and the concerned consultants, the appeal before the Tribunal could not be filed within the prescribed period. The Ld. DR opposed the submissions of the assessee and contended that no sufficient cause had been demonstrated for condoning the substantial delay in filing the appeal before the Tribunal. We have considered the rival submissions and the explanation furnished by the assessee. We find that the assessee has explained that the delay occurred due to a communication gap between the assessee and its consultant. Considering the totality of the facts and circumstances, we are of the considered view that, while the delay deserves to be condoned in the interest of substantial justice, it is appropriate to impose a cost upon the assessee so as to emphasize the importance of due compliance with the statutory appellate proceedings. During the course of hearing, the Ld. AR fairly agreed to the imposition of a cost of Rs.5,000/-.

The assessee filed a paper book comprising pages 1 to 51, which has been placed on record. The Ld. AR contended that the assessment order was passed ex parte. The Ld. AO made an addition of Rs.19,29,774/- by invoking the provisions of section 2(22)(e) of the Act in respect of payment received by the assessee, being a Director of M/s. Arhamm Diamond Jewellery Pvt. Ltd. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A) and filed additional evidence in support of his claim. The Ld. CIT(A) called for a remand report from the Ld. AO. During the remand proceedings, the assessee furnished detailed clarification before the Ld. AO vide letter dated 15.01.2020, a copy of which is annexed at APB pages 6 to 9.

The assessee has specifically agitated before us that, despite calling for a remand report, the Ld. CIT(A) proceeded to pass the impugned appellate order and confirmed the addition without considering the remand report. The Ld. AR invited our attention to para 4.2 of the impugned appellate order, wherein the Ld. CIT(A) recorded that the remand report had not been received and proceeded to decide the appeal on merits. The relevant para no. 4.2 is reproduced below:

The Ld. DR relied upon the orders of the revenue authorities and supported the findings recorded therein.

We have heard the rival submissions and considered the material available on record. The assessee filed the return of income declaring total income of Rs.4,26,130/-. Subsequently, the assessee’s case was reopened 3 under section 147 of the Act. During the reassessment proceedings, the Ld. AO observed that M/s. Arhamm Diamond Jewellery Pvt. Ltd., in which the assessee was a Director holding 10% voting power, had advanced an amount of Rs.20,38,558/- to the assessee. By invoking the provisions of section 2(22)(e) of the Act, the Ld. AO treated an amount of Rs.19,29,774/- as deemed dividend and added the same to the total income of the assessee. The impugned assessment order was passed ex parte under section 144 of the Act. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A) and furnished additional evidence. In relation thereto, the Ld. CIT(A) called for a remand report from the Ld. AO. During the remand proceedings, the assessee, vide letter dated 15.01.2020, furnished the relevant documents and explanations before the Ld. AO. The assessee claimed that the payments received from the company were towards labour charges. In support thereof, Form No. 26AS reflecting deduction of tax at source by the company has been placed at APB pages 18 to 21. According to the assessee, the payments were in the nature of labour charges arising in the course of business and were not advances received by the assessee for his personal or non-business purposes.

In the result, the appeal of the assessee bearing ITA No 898/Mum/2026 is allowed for statistical purpose. Order pronounced in the open court on 03rd day of September 2026 Sd/- Sd/- (OM PRAKASH KANT) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 03/09/2026 SAUMYA Sr.PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI