SHAKTI ENTERPRISES,MUMBAI vs. INCOME TAX OFFICER, WARD 41(2)(5), MUMBAI

आदेश / ORDER PER: MAKARAND VASANT MAHADEOKAR, AM

This appeal by the assessee is directed against the order dated 24.01.2024 passed by the National Faceless Appeal Centre/Commissioner of Income Tax (Appeals)[hereinafter referred to as "the CIT(A)"] under section 250 of the Income-tax

2 ITA No. 3193/Mum/2026 Shakti Enterprises Act, 1961[hereinafter referred to as "the Act"], for the assessment year 2014-15, arising from the assessment order dated 06.12.2016 passed under section 143(3) of the Act. 2. Condonation of Delay 2.1. It is observed that there is a delay of 727 days in filing the present appeal. The assessee has filed a petition seeking condonation of the delay, duly supported by an affidavit of Shri Shamji Velji Patel, partner of the assessee-firm. 2.2. The learned AR submitted that the impugned order was passed on 24.01.2024 and the appeal ought to have been filed within the prescribed period of 60 days, namely, on or before 24.03.2024. The present appeal was, however, filed on 21.03.2026, resulting in a delay of 727 days. 2.3. Referring to the condonation petition and the supporting affidavit, the learned AR submitted that, when the appeal before the learned CIT(A) was filed in Form No. 35 on 09.01.2017, the assessee-firm consisted of six partners. For receiving notices, communications and orders concerning the appeal, the e-mail address of one of the then partners, who was looking after the day-to-day tax compliances of the firm, was furnished in Form No. 35. 2.4. The learned AR further submitted that, subsequent to the filing of the first appeal, disputes arose among the partners and the firm was reconstituted under a deed dated 26.10.2017.

3 ITA No. 3193/Mum/2026 Shakti Enterprises Five of the then partners, including the partner whose e-mail address was recorded in Form No. 35, retired from the firm and a new partner was inducted. However, due to an inadvertent omission, neither the PAN-based profile and e-mail address of the assessee-firm nor the e-mail address recorded in the pending first appellate proceedings was updated. The e-mail address of the retired partner, therefore, continued to remain recorded for the purpose of the appeal. 2.5. It was submitted that the notices issued during the first appellate proceedings, including the notices dated 06.01.2021, 18.09.2023, 06.10.2023 and 28.11.2023, as well as the final show-cause notice dated 18.12.2023, continued to be communicated to the e-mail address of the retired partner and did not come to the knowledge of the continuing partners. On one occasion, the chartered accountant of the assessee noticed a hearing notice while accessing the portal for some other compliance and sought an adjournment. However, detailed submissions could not thereafter be filed because the relevant assessment records remained in the custody of the chartered accountant engaged by the erstwhile group of partners. 2.6. The learned AR submitted that the learned CIT(A) thereafter passed the impugned order dated 24.01.2024 in the absence of any effective representation by the assessee. The impugned order also continued to be communicated to the e-mail address of the retired partner and, therefore, did not come to the knowledge of the continuing partners.

4 ITA No. 3193/Mum/2026 Shakti Enterprises 2.7. According to the condonation petition and affidavit, the continuing partners first became aware of the impugned order upon receipt of a recovery letter dated 29.11.2025 issued by the Income Tax Officer, Ward 41(2)(5), Mumbai, concerning the outstanding demand for the assessment year 2014-15. Immediately thereafter, the matter was forwarded to the tax consultant for taking necessary action. 2.8. The learned AR submitted that the original assessment proceedings and the first appeal had been handled by the consultant engaged by the erstwhile group of partners. The continuing partners did not possess the relevant assessment and appellate records, including the assessment order and Form No. 35, and the same could not be downloaded from the e-filing portal in the changed circumstances. The continuing partners, therefore, made repeated follow-ups with the erstwhile partners and their chartered accountant. The relevant records were eventually obtained on or around 01.03.2026. Thereafter, with the assistance of the tax consultant, the present appeal was prepared and filed on 21.03.2026. 2.9. The learned AR contended that the delay was neither intentional nor deliberate and that the assessee did not derive any advantage from the delayed filing. The delay arose from the reconstitution of the firm, the failure to update the registered e- mail address, the consequent communication gap and the difficulty encountered in obtaining the records from the erstwhile partners and their consultant. It was accordingly submitted that

5 ITA No. 3193/Mum/2026 Shakti Enterprises the delay arose from circumstances beyond the reasonable control of the continuing partners and constituted sufficient cause for condonation. 2.10. The learned DR raised no objection to the condonation of the delay. 2.11. We have considered the submissions and perused the condonation petition and the supporting affidavit. The material chronology emerging from the petition is that the partner whose e-mail address was furnished in Form No. 35 retired pursuant to the reconstitution of the firm on 26.10.2017. The e-mail address recorded in the pending appellate proceedings was not updated. Consequently, the notices and the impugned order continued to be communicated to the e-mail address of the retired partner. Although a hearing notice was noticed on the portal on one occasion and an adjournment was sought, the continuing partners were unable to furnish substantive submissions because the assessment records remained with the consultant engaged by the erstwhile partners. 2.12. The same chain of circumstances explains both the non-compliance during the first appellate proceedings and the delay in filing the present appeal. The continuing partners have affirmed that they first acquired knowledge of the impugned order upon receipt of the recovery letter dated 29.11.2025. They thereafter initiated steps to obtain the records from the erstwhile

6 ITA No. 3193/Mum/2026 Shakti Enterprises partners and their consultant. The relevant records were obtained on or around 01.03.2026 and the appeal was filed on 21.03.2026. 2.13. The explanation is supported by the affidavit of a partner of the assessee-firm. Nothing has been placed before us to controvert the material averments made therein. The learned DR has also raised no objection to the condonation of the delay. The chronology does not indicate that the assessee deliberately allowed the period of limitation to expire or that it derived any advantage from the delayed filing. On the contrary, refusal to condone the delay would result in the addition of Rs.86,50,847/- remaining unexamined on merits at the first appellate stage. 2.14. The expression “sufficient cause” is required to be applied in a manner that advances substantial justice, provided the explanation is bona fide and does not disclose deliberate inaction or culpable negligence. In the present case, the delay arose primarily from the reconstitution of the assessee-firm, the continued registration of the e-mail address of a retired partner and the consequent failure of communication. Upon acquiring knowledge of the impugned order and obtaining the requisite records, the assessee took steps to institute the appeal. 2.15. Considering the totality of the circumstances, the supporting affidavit, the connection between the non-compliance before the learned CIT(A) and the subsequent delay before the Tribunal, and the absence of any objection from the Revenue, we are satisfied that the assessee was prevented by sufficient cause

7 ITA No. 3193/Mum/2026 Shakti Enterprises from filing the appeal within the prescribed period. Accordingly, the delay of 727 days is condoned and the appeal is admitted for adjudication.

8 ITA No. 3193/Mum/2026 Shakti Enterprises before the Tribunal. The learned AR requested that one more opportunity be granted to the assessee and that the entire matter be restored to the file of the learned CIT(A) for fresh adjudication. The learned DR raised no objection to the restoration of the matter to the file of the learned CIT(A). 5. We have considered the rival submissions and perused the orders of the authorities below. The learned CIT(A) dismissed the appeal on the ground that the assessee had not furnished any substantive reply or supporting evidence despite the opportunities granted. The impugned order, however, does not examine the assessee’s challenge to the application of section 43CA or adjudicate the grounds concerning the addition of Rs.86,50,847/- on merits. 6. Section 250(6) requires the order of the learned CIT(A) to state the points for determination, the decision thereon and the reasons for the decision. The Hon’ble jurisdictional Bombay High Court in Commissioner of Income Tax v. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bombay) has held that “the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.” 7. In the present case, the first appeal has not received an effective adjudication on merits. Further, the reasons which prevented the assessee from effectively participating in the first appellate proceedings are the same reasons which have been

9 ITA No. 3193/Mum/2026 Shakti Enterprises accepted by us while condoning the delay in filing the present appeal. The learned DR has also raised no objection to restoration. 8. In these circumstances, we consider it appropriate, in the interest of substantial justice, to grant one more opportunity to the assessee to present its case before the learned CIT(A). Accordingly, the impugned order dated 24.01.2024 is set aside and the entire appeal is restored to the file of the learned CIT(A) for fresh adjudication on merits in accordance with law. 9. The learned CIT(A) shall afford a reasonable and effective opportunity of hearing to the assessee and shall examine the grounds, submissions and supporting evidence that may be placed on record. The learned CIT(A) shall thereafter pass a reasoned and speaking order in accordance with law. The assessee is directed to update its address, e-mail address and other communication particulars on the relevant portals and records, furnish its submissions and supporting evidence within the time allowed, and cooperate in the appellate proceedings without seeking unnecessary adjournments. 10. We clarify that we have not expressed any opinion on the merits of the addition of Rs.86,50,847/- made under section 43CA of the Act. All factual and legal contentions of both sides are left open for consideration by the learned CIT(A). 11. Ground Nos. 1 and 2 are allowed to the extent indicated above. Ground No. 3, concerning the addition under section

10 ITA No. 3193/Mum/2026 Shakti Enterprises 43CA, is restored to the file of the learned CIT(A) and is allowed for statistical purposes. Ground No. 4 is general in nature and does not require separate adjudication.

Order pronounced in the open court on 01.09.2026.

Sd/- Sd/- (AMIT SHUKLA) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 01.09.2026 ANKIT, PS

आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. संबंधधत आयकर आयुक्त / The CIT(A) 4. आयकर आयुक्त(अपील) / Concerned CIT धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई/ DR, ITAT, Mumbai 5. 6. गार्ड फाईल / Guard file.

आदेशानुसार/BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai