MANGESH SAWANT,MUMBAI vs. DCIT CIRCLE 42(1)(1), MUMBAI

Briefly stated, the assessee, an individual engaged in the business of builder and developer, had filed his return of income declaring total income of ₹16,29,200. The case was selected for scrutiny; however, there was no effective compliance with the statutory notices issued during the course of assessment proceedings and, consequently, the assessment was completed ex parte under section 144 of the Act. In the said assessment, the Assessing Officer made addition of ₹13,05,70,402 on account of unsecured loans treated as unexplained cash credits; addition of ₹87,73,000 on account of unexplained cash deposits in bank accounts; disallowance of ₹61,373 under section 14A read with Rule 8D; addition of ₹5,98,67,052 by applying interest at 12% on interest-free advances; and disallowance of interest expenditure of ₹29,85,044 for want of supporting evidence. Accordingly, the total income was assessed at ₹20,38,86,070.

The procedural history thereafter assumes considerable significance for adjudication of the present appeal. Against the very same order dated 14.02.2024, the assessee preferred ITA No.2742/Mum/2024 before the Tribunal. The Registry, vide defect memo dated 21.05.2024, pointed out two defects, namely, that there was a shortfall of ₹9,500 in payment of the appeal fee, the assessee having paid ₹500, and that the appeal was delayed by 31 days. The defects remained

Thereafter, the assessee preferred MA No.97/Mum/2025 seeking recall of the aforesaid order. One of the principal contentions raised in the Miscellaneous Application was that payment of appeal fee of ₹500 was itself in accordance with section 253(6)(d), since the first appellate authority had not adjudicated the quantum additions on merits. The Tribunal examined the said contention, the statutory provision and the judicial authorities relied upon by the assessee. It also took note of the other defect in the earlier appeal, namely, the delay of 31 days and the fact that, despite such defect having specifically been intimated through the Registry’s defect memo dated 21.05.2024, no application seeking condonation thereof had been filed. After considering the entire matter, the Tribunal vide detailed order dated 30.07.2025 dismissed the Miscellaneous Application.

However, one significant observation in the aforesaid order has a direct bearing upon the present proceedings. In para 4.4 of the order passed in the Miscellaneous Application,

It is in the aforesaid backdrop that the assessee has now filed the present appeal after depositing the entire prescribed appeal fee of ₹10,000. The appeal, reckoned from the ordinary period of limitation against the impugned order dated 14.02.2024, is delayed by 582 days. In the petition seeking condonation, duly supported by an affidavit, it has been explained that during the intervening period the assessee had been pursuing the earlier proceedings before the Tribunal; thereafter discussions were undertaken and professional guidance was sought regarding the further course of action; and some further time was consumed in taking such advice and in completing the procedural requirements for institution of the present appeal. It has also been stated that there was no mala fide intention behind the

Before us, the learned counsel submitted that the numerical delay of 582 days cannot be viewed dehors the intervening proceedings before the Tribunal. A substantial part of the said period was consumed, firstly, in prosecution of the earlier appeal in ITA No.2742/Mum/2024, which culminated in the order dated 27.09.2024, and thereafter in prosecution of MA No.97/Mum/2025, which ultimately came to be disposed of on 30.07.2025. It was submitted that the assessee was thus pursuing the appellate remedy arising from the very same impugned order during a substantial part of the period now computed as delay. It was further emphasised that the Tribunal itself had expressly granted liberty to file a fresh appeal and, even while dismissing the Miscellaneous Application, reiterated in para 4.4 that such liberty was intended to ensure that the assessee was not left remediless. The learned counsel accordingly submitted that the delay may be condoned and the appeal admitted. The learned DR, on the other hand, opposed the prayer for condonation, principally referring to the delays and defaults occurring at different stages of the proceedings.

We have heard the rival submissions and carefully considered the entire chronology of events. There is no

The distinction assumes importance in the peculiar facts before us. A substantial part of the overall period of 582 days was consumed while proceedings arising from the very same impugned order were actually pending before this Tribunal. The assessee had initially instituted ITA No.2742/Mum/2024 and the same remained before the Tribunal until its disposal on 27.09.2024. Thereafter, the assessee invoked the miscellaneous jurisdiction of the Tribunal by filing MA No.97/Mum/2025 seeking recall of the said order, which remained pending until it was finally disposed of on 30.07.2025. Thus, this is not a case where, throughout the period of 582 days, the assessee remained completely inactive or allowed the appellate remedy to lie dormant. For a

It is true that, after the first appeal was rejected on 27.09.2024, the assessee could perhaps have immediately acted upon the liberty granted therein and filed another appeal instead of invoking the miscellaneous jurisdiction. Likewise, some further time was consumed even after disposal of the Miscellaneous Application on 30.07.2025. The course adopted by the assessee may, therefore, not have been procedurally flawless or marked by the expedition ordinarily expected of a diligent litigant. But that by itself cannot be determinative. The material consideration is whether the conduct, viewed as a whole, reflects abandonment of the remedy or a deliberate and mala fide attempt to prolong the proceedings. We find no such circumstance here. On the contrary, the assessee continued to pursue, albeit somewhat imperfectly, one remedy or another arising from the same impugned order.

There is another aspect which, in our opinion, carries substantial weight. While rejecting the earlier appeal, the coordinate Bench consciously refrained from foreclosing the assessee’s appellate remedy and expressly granted liberty to file another appeal after payment of the requisite fee. More

We are conscious that the liberty to institute a fresh appeal cannot be construed as dispensing altogether with the law of limitation. The assessee must still establish sufficient cause for the delay. However, the existence and reiteration of such liberty form an integral part of the factual setting in which the explanation for delay has to be appreciated. The assessee has now acted upon that liberty, deposited the entire prescribed appeal fee of ₹10,000 and instituted the present appeal. When this circumstance is read with the fact that a substantial part of the overall delay was consumed in bona fide prosecution of the earlier appeal and the subsequent Miscellaneous Application before this very Tribunal, the numerical figure of 582 days assumes a materially different complexion.

We have also considered the explanation in the affidavit regarding the period thereafter, namely, that professional guidance was sought concerning the further course of action and that some time was consumed in such consultations and attendant professional engagements. Viewed in isolation, professional preoccupation may not always furnish a sufficient explanation for a prolonged delay. However, the explanation for condonation cannot be dissected into isolated segments divorced from the overall sequence of events. Here, there was no prolonged abandonment of the appellate remedy followed by its sudden resurrection. The assessee had first pursued an appeal, thereafter a Miscellaneous Application, and has now instituted the fresh appeal which the Tribunal itself had expressly permitted. There is also nothing on record to indicate that the delay was engineered to obtain any collateral advantage or that the assessee stood to benefit by postponing adjudication of the substantial additions made against him.

Thus, while we do not approve of the want of procedural diligence displayed by the assessee at different stages, it would equally be incorrect to characterise the entire period of 582 days as unexplained delay attributable to sheer inaction. A substantial portion thereof was consumed in prosecution of proceedings before the Tribunal itself. More importantly, the

Accordingly, considering the affidavit filed by the assessee; the substantial period consumed in pursuing the earlier appeal and Miscellaneous Application before the Tribunal; the continuous, though procedurally imperfect, pursuit of the appellate remedy; the absence of any discernible mala fide or collateral advantage arising from the delay; the subsequent payment of the entire requisite appeal fee; and, above all, the express liberty granted in the original Tribunal order and reiterated in para 4.4 of the order passed in the Miscellaneous Application, we are satisfied that sufficient cause has been made out in the peculiar facts of the present case. We, therefore, condone the delay of 582 days and admit the appeal for adjudication.

Once the appeal is so admitted, we find that the first appellate authority has not examined any of the additions on

The explanation furnished before the NFAC for the delay in filing the first appeal also needs to be appreciated in the backdrop that the assessee’s challenge to substantial additions has never received adjudication on merits. While the earlier non-compliance of the assessee cannot be altogether ignored, the object of appellate proceedings is ultimately to determine the tax liability in accordance with law after giving the litigant a fair and effective opportunity to place its case. Considering the peculiar sequence of proceedings which has subsequently unfolded, and particularly the fact that the Tribunal itself has preserved the appellate remedy on two occasions, we are of the view that one effective opportunity should be afforded to the assessee to

Consequently, the impugned order dated 14.02.2024 is set aside and the appeal is restored to the file of the learned CIT(A)/NFAC with a direction to admit the same and adjudicate all the grounds raised by the assessee on merits and in accordance with law, after affording reasonable and effective opportunity of hearing to both sides. The assessee shall be at liberty to furnish the documentary evidence and explanations in support of its grounds, which shall be examined in accordance with law.

At the same time, having regard to the history of non- compliance appearing from the record, the indulgence granted by us necessarily carries a corresponding obligation upon the assessee. The assessee shall extend full cooperation in the proceedings before the first appellate authority, furnish the requisite evidence and explanations within the time allowed, and shall not seek adjournments except for genuine and unavoidable reasons. The learned CIT(A)/NFAC shall thereafter decide the appeal independently on the basis of the material placed before it and in accordance with law. We make it clear that we have not expressed any opinion whatsoever on the merits of any of the additions or

Before parting, we may clarify that the condonation granted in the present case rests upon its peculiar and somewhat unusual procedural history, particularly the fact that a substantial part of the gross delay of 582 days was consumed in pursuing proceedings before the Tribunal and that the coordinate Bench had expressly preserved the remedy of a fresh appeal and subsequently reiterated that such liberty was intended to ensure that the assessee was not left remediless. Our conclusion should, therefore, not be understood as diluting the obligation of a litigant to adhere to statutory timelines or as laying down that professional preoccupation, by itself, constitutes sufficient cause for condonation of delay.