What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in treating the assessment as ex parte and setting aside the entire assessment. The restoration was limited to the specific amount of unsecured loans that remained disputed.

The assessee's assessment was set aside by the CIT(A) entirely, treating it as an ex parte assessment. The assessee argued that the assessment was under section 143(3) and not ex parte, with most unsecured loans accepted by the AO.

What were the issues?

Whether the CIT(A) was justified in setting aside the entire assessment order based on a misconception of the assessment proceedings, and if the restoration should be limited to the disputed issues.

Which sections of the Income-tax Act were involved?

Section 143(3), Section 144, Section 250

Vijaykumar Baldev Bajaj vs Comm.of Income Tax.Circle 28(3) | ITAT Mumbai 2026

Income Tax Appellate Tribunal, ‘F’ BENCH

For Appellant: Shri Fenil Bhatt

For Respondent: Shri Bal Krishna Yadav

Hearing: 21/08/2026Pronounced: 31/08/2026

आदेश / O R D E R PER AMIT SHUKLA (J.M):

The aforesaid appeal has been preferred by the assessee against the order dated 21.08.2025 passed by the learned Commissioner of Income Tax (Appeals) under section 250 of the Income-tax Act, 1961 (“the Act”), whereby the entire assessment framed vide order dated 03.05.2022 under

2 ITA No.6959/Mum/2025 Vijaykumar Baldev Bajaj section 143(3) of the Act has been set aside to the file of the Assessing Officer for making a fresh assessment after affording adequate opportunity of hearing to the assessee and considering the submissions and documentary evidence furnished by him. The learned CIT(A), having thus restored the entire assessment for de novo adjudication, did not consider it necessary to adjudicate the grounds raised by the assessee on merits. The grievance of the assessee before us is essentially against the sweeping nature of the aforesaid direction, inasmuch as the controversy arising from the assessment order was confined only to unsecured loans aggregating to ₹5,57,45,050 and, therefore, according to the assessee, there was neither any occasion nor any justification for reopening the entire assessment.

The relevant facts, in brief, are that an assessment order was originally passed on 29.09.2021, which was challenged by the assessee before the Hon’ble Bombay High Court. The Hon’ble High Court set aside the said assessment order and granted a period of twelve weeks for passing a fresh assessment order. It was further directed that a personal hearing should be afforded to the assessee and the date thereof should be communicated at least seven days in advance. Pursuant to the aforesaid directions, proceedings were resumed and a notice dated 29.03.2022 under section 142(1) was issued by the National Faceless Assessment

3 ITA No.6959/Mum/2025 Vijaykumar Baldev Bajaj Centre, calling upon the assessee to furnish details in respect of unsecured loans amounting to ₹46.66 crore. Another notice under section 142(1), seeking further particulars, was issued on 30.03.2022. In response, the assessee, vide submission dated 12.04.2022, furnished the details sought in a tabular form, setting out, inter alia, the names and addresses of the lenders, their Permanent Account Numbers, particulars of the transactions and the rates of interest charged, along with the supporting documentary evidence.

The assessment record was thereafter transferred from the National Faceless Assessment Centre to the jurisdictional Assessing Officer on 15.04.2022, with the approval of the Central Board of Direct Taxes. The Assessing Officer issued a further notice dated 27.04.2022 under section 142(1), calling for details relating to unsecured loans obtained from five entities aggregating to ₹13,10,35,000. This was followed almost immediately by another notice dated 28.04.2022, whereby details relating to the entire unsecured loans of ₹46.66 crore were again sought. The assessee furnished replies dated 29.04.2022 and 01.05.2022, accompanied by substantial documentary material. These replies and the particulars furnished therein have also been referred to and reproduced in the assessment order. The Assessing Officer thereafter passed the assessment order dated 03.05.2022, which was digitally signed on 06.05.2022. A reading of the

4 ITA No.6959/Mum/2025 Vijaykumar Baldev Bajaj assessment order indicates that the Assessing Officer accepted the explanation and supporting evidence furnished by the assessee in respect of the substantial portion of the unsecured loans. The adverse inference was restricted to unsecured loans aggregating to ₹5,57,45,050, in respect of which the Assessing Officer held that complete supporting particulars had not been furnished and that the assessee had failed to discharge the onus cast upon him.

Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). During the appellate proceedings, the assessee placed on record the material earlier furnished before the Assessing Officer as well as certain additional evidence which, according to the assessee, could not be produced during the assessment proceedings owing to the paucity of time available. The learned CIT(A), however, proceeded on the premise that the assessment had been framed under section 144 of the Act as an ex parte best judgment assessment because, despite several opportunities, the assessee had failed to furnish replies and written submissions. On that understanding, the learned CIT(A) set aside the assessment in its entirety and restored the matter to the Assessing Officer for making a fresh assessment, without adjudicating the individual grounds raised by the assessee on merits.

5 ITA No.6959/Mum/2025 Vijaykumar Baldev Bajaj 5. Before us, the learned counsel for the assessee submitted that the very foundation on which the learned CIT(A) proceeded is factually erroneous. The assessment order was admittedly passed under section 143(3) of the Act and not under section 144. It was further submitted that the assessment order itself records the replies filed and the considerable documentary material furnished by the assessee; hence, it could not have been regarded as an ex parte assessment arising from an absolute failure on the part of the assessee to participate in the proceedings. The learned counsel pointed out that the Assessing Officer had accepted the identity and creditworthiness of the lenders and the genuineness of the transactions in respect of the unsecured loans, except to the extent of ₹5,57,45,050. Thus, the surviving dispute was confined to a clearly identifiable amount and the learned CIT(A) was not justified in unsettling the entire assessment, including those matters which had already been accepted by the Assessing Officer and were not the subject matter of any adverse finding. It was accordingly prayed that the direction of the learned CIT(A) be suitably modified and the fresh examination by the Assessing Officer be confined only to the unsecured loans aggregating to ₹5,57,45,050. The learned counsel further submitted that, upon such limited restoration, the additional ground raised by the assessee vide application dated 17.02.2026 may be treated as academic and dismissed as infructuous. The

6 ITA No.6959/Mum/2025 Vijaykumar Baldev Bajaj learned DR fairly accepted that the observations of the learned CIT(A), treating the assessment as an ex parte assessment under section 144, are not borne out from the record and that the directions may appropriately be modified and confined to the disputed amount.

We have heard the rival submissions and carefully perused the assessment order, the order of the learned CIT(A) and the material placed on record. At the outset, we find that the learned CIT(A) has proceeded on a fundamental misconception of fact in observing that the assessment was framed under section 144 of the Act as an ex parte best judgment assessment owing to the failure of the assessee to avail the opportunities provided. The assessment order unequivocally shows that it was passed under section 143(3) of the Act. It also records the replies and documentary evidence filed by the assessee during the assessment proceedings. Indeed, the Assessing Officer himself noted that the assessee had substantially complied with the requirements in respect of the majority of the lenders and restricted the adverse inference only to those unsecured loans aggregating to ₹5,57,45,050 for which, according to him, the requisite onus remained undischarged. Therefore, neither the statutory provision under which the assessment was framed nor the actual course of the assessment proceedings supports the premise adopted by the learned CIT(A). The direction for a

7 ITA No.6959/Mum/2025 Vijaykumar Baldev Bajaj wholesale de novo assessment, founded upon such an erroneous premise, cannot be sustained in its existing form.

Once the assessment order itself accepts the assessee’s explanation and evidence in relation to the balance unsecured loans and confines the adverse conclusion to a specific sum of ₹5,57,45,050, the scope of the matter requiring further examination must necessarily remain coextensive with that surviving dispute. There is no justification for reopening or unsettling matters which had already been examined and accepted by the Assessing Officer and in respect of which no adverse conclusion was drawn. An appellate direction setting aside an assessment cannot be so expansive as to place the assessee in a position more disadvantageous than that arising from the assessment order, particularly when the perceived necessity for such a direction proceeds from an erroneous understanding that the assessment was an ex parte order under section 144. The restoration must bear a rational nexus with the issue requiring reconsideration and cannot become an occasion for embarking upon an unrestricted review of the entire assessment, including matters which had attained finality at the assessment stage.

Accordingly, the order of the learned CIT(A) is modified and the matter is restored to the file of the Assessing Officer only for the limited purpose of examining the unsecured loans

8 ITA No.6959/Mum/2025 Vijaykumar Baldev Bajaj aggregating to ₹5,57,45,050. The Assessing Officer shall examine the evidence already furnished by the assessee as well as such further evidence as may be produced in support of the identity and creditworthiness of the concerned lenders and the genuineness of the relevant transactions, and shall decide the issue afresh in accordance with law by passing a reasoned order after affording adequate and effective opportunity of hearing to the assessee. The assessee shall extend due cooperation and furnish the requisite particulars and supporting evidence within the time granted by the Assessing Officer. We further make it explicit that the findings already recorded by the Assessing Officer in respect of the balance unsecured loans, which were accepted in the assessment order and were not subjected to any adverse inference, shall neither be reopened nor disturbed in the proceedings conducted pursuant to this order. Our direction for limited restoration should not be understood as expressing any opinion on the merits of the disputed unsecured loans, and the Assessing Officer shall determine the issue independently on the basis of the material available on record and the explanation furnished by the assessee.

In view of the aforesaid directions and the submission made by the learned counsel, the additional ground raised by the assessee vide application dated 17.02.2026 does not

9 ITA No.6959/Mum/2025 Vijaykumar Baldev Bajaj survive for separate adjudication and is rendered academic. The same is, accordingly, dismissed as infructuous.

10.

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

Order pronounced on 31st August, 2026.

Sd/- Sd/- (ARUN KHODPIA) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 31/08/2026 KARUNA, sr.ps Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy//

BY ORDER,

(Asstt. Registrar) ITAT, Mumbai

VIJAYKUMAR BALDEV BAJAJ,MUMBAI vs. COMM.OF INCOME TAX.CIRCLE 28(3), MUMBAI

What did the Tribunal hold?

What were the facts?

What were the issues?

Which sections of the Income-tax Act were involved?

Recent GST High Court judgments