ACIT, CIRCLE-1, KALYAN, KALYAN vs. SATISH GOPICHAND HARCHWANI, ULHASNAGAR

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ITA 5336/MUM/2026Status: DisposedITAT Mumbai01 September 2026AY 2015-163 pages
AI SummaryRemanded

What did the Tribunal hold?

The CIT(A) quashed the assessment for lack of a remand report and proof of requisite approval for converting the scrutiny. The Tribunal remanded the case back to the CIT(A) to allow the Revenue to submit the approval and to adjudicate the merits of the addition.

What were the facts?

The Assessing Officer (AO) made an addition of Rs. 3,20,87,518/- to the assessee's income, treating it as income from other sources due to alleged accommodation entries. The assessee challenged the addition and the conversion of the case from limited to complete scrutiny.

What were the issues?

The primary issue was the validity of converting the assessment from limited to complete scrutiny without proper approval. The secondary issue was the merits of the addition made by the AO.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLE NARENDER KUMAR CHOUDHRY & HON’BLE PRABHASH SHANKAR

For Appellant: Shri Rajesh Sakhardande
Pronounced: 01.09.2026

आदेश / ORDER

PER: NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER:

This appeal has been preferred by the Revenue against the order dated 24.02.2026, impugned herein, passed by the National Faceless Appeal Centre/Ld. Commissioner of Income Tax (Appeals) (in short, “Ld. Commissioner”) u/s 250 of the Income Tax Act, 1961 (in short, “the Act”), for the A.Y. 2015-16.

ITA No. 5336/MUM/2026 Satish Gopichand Harchwani 2. Brief facts relevant for adjudication of the instant appeal are that the AO, vide assessment order dated 28.12.2017 passed u/s 143(3) of the Act, made an addition of Rs.3,20,87,518/-, being 0.05% of Rs.64,17,50,36,275/-, treating the same as income from other sources on account of alleged accommodation entries.

3.

Before the Ld. Commissioner, the Assessee challenged the addition on merits as well as the validity of conversion of the case from limited scrutiny to complete scrutiny, alleging violation of CBDT Instruction No. 5/2016. The Ld. Commissioner called for a remand report and clarification regarding the requisite approval for such conversion. However, despite reminders, no remand report was furnished by the AO.

4.

Consequently, the Ld. Commissioner drew an adverse inference and quashed the assessment on the ground that the conversion from limited scrutiny to complete scrutiny was not shown to have been made with the requisite approval. The merits of the addition were not adjudicated.

5.

Though the matter had earlier been adjourned at the request of the Assessee, today the Assessee neither appeared nor filed any adjournment application. We are, therefore, constrained to proceed ex-parte qua the Assessee.

6.

The Ld. DR submitted that an opportunity may be afforded to the Revenue/AO to place on record the relevant approval/sanction for conversion of the case from limited scrutiny to complete scrutiny and to have the matter adjudicated on merits.

7.

We have heard the Ld. DR and perused the material available on record. Since the Ld. Commissioner quashed the assessment principally for want of the remand report and proof of requisite approval, without adjudicating the addition on merits, we deem it

ITA No. 5336/MUM/2026 Satish Gopichand Harchwani appropriate to remand the case to the file of the Ld. Commissioner for decision afresh.

8.

The Revenue/AO shall be afforded an opportunity to place on record the relevant approval/sanction, if any, for conversion of the case from limited scrutiny to complete scrutiny. Thereafter, the Ld. Commissioner shall adjudicate the validity of such conversion, as well as the merits of the addition in accordance with law, suffice to say, by affording a reasonable opportunity of being heard to both the parties and passing a speaking order.

9.

Considering that the present order is being passed ex-parte qua the Assessee, liberty is granted to the Assessee to seek recall of this order on substantiating a plausible reason for non-prosecution.

10.

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

Order pronounced in the open court on 01.09.2026.

Sd/- Sd/- PRABHASH SHANKAR NARENDER KUMAR CHOUDHRY ACCOUNTANT MEMBER JUDICIAL MEMBER (Tarun Kushwaha) Sr. Private Secretary

Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench

//True Copy// By Order

Dy/Asstt. Registrar, ITAT, Mumbai.

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