NAVKAR DIAMONDS PRIVATE LTD,MUMBAI vs. ITO WARD 5(2)(1), MUMBAI, MUMBAI

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ITA 5395/MUM/2026Status: DisposedITAT Mumbai20 August 2026AY 2022-236 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the ex-parte order of the CIT(A) and remanded the matter for fresh adjudication on merits. The assessee was directed to cooperate and furnish necessary documents.

What were the facts?

The assessee's appeal was dismissed by the CIT(A) ex-parte due to non-cooperation. The assessee claimed this was due to unavoidable family and medical exigencies of their Chartered Accountant. High value additions were made by the AO.

What were the issues?

Whether the CIT(A) erred in dismissing the appeal ex-parte without adjudicating on merits, and if the assessee's reasons for non-cooperation were bonafide.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 69C,Section 40(a)(ia),Section 250,Section 271AAC(1),Section 271H,Section 234E,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI

Before: SMT. BEENA PILLAI & SMT. RATNA DASGUPTA

For Appellant: Shri Atik Jain
For Respondent: Shri Arun Kanti Dutta CIT-DR
Hearing: 10/08/2026Pronounced: 20/08/2026

PER RATNA DASGPUTA, AM The captioned appeal by the assessee arises out of order dated 20/02/2026 passed by National Faceless Appeals Centre, Delhi- hereinafter referred to as Ld. CIT(A) – which in turn, has emanated from assessment order under Section 143(3) r.w.s.

Navkar Diamonds Pvt. Ltd. 2 ITA No. 5395/MUM/2026

144B of the Income-tax Act – hereinafter referred to as “the Act” – by the Assessment Unit (hereinafter referred to as AO) on 26/02/2024. 2. The grounds of appeal raised by assessee are as under:- i. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in dismissing the appeal without adjudicating the grounds of appeal on merits. ii. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming the action of Ld. AO in making addition of Rs. 9,26,92,028/- under section 69C of Income Tax Act, 1961 by alleging as unexplained/bogus purchases merely on the basis that the parties have not replied to notice issued u/s 133(6) of the Income Tax Act, 1961. iii. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Ld. AO in ignoring the evidence submitted by the appellant during the course of assessment proceedings. iv. On the facts and circumstances of the case and law, the Ld. CIT(A) failed to consider that addition of 100 percent of purchases merely due to non-filing of reply in response to notice issued u/s 133(6) of the Income Tax Act, 1961 is bad in law and required to be deleted. v. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming the action of Ld. AO in disallowing Rs. 4,44,23,650/- being 30 percent of total purchases for non-payment of TDS deduction on OR before the due date of filing return of income. vi. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming the action of Ld. AO in initiating penalty proceedings u/s 271AAC(1), 271H and 234E of Income Tax Act, 1961.

Navkar Diamonds Pvt. Ltd. 3 ITA No. 5395/MUM/2026

vii. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming the action of Ld AO in charging interest u/s 234B and 234C of Income Tax Act, 1961. viii. Appellant craves leave to add further grounds to amend OR alter the existing grounds of appeal on OR before the date of hearing. 3. Briefly stated, the facts are that the assessee is a private limited company engaged in the business of wholesale trading, import and export of diamonds. It filed its return of income on 7/11/2022, declaring total income of Rs. 7,57,300/-. The case was selected for scrutiny under CASS, and in assessment under section 143(3) of the Act, the Ld. AO made addition of Rs. 9,26,92,028/- u/s 69C of the Act as unexplained bogus purchases and also Rs. 4,44,23,650/- u/s 40(a)(ia) of the Act.

3.1 In appeal, the assessee did not cooperate in proceedings before the Ld. CIT(A). While concluding his order u/s 250 of the Act, the Ld. CIT(A) observed as follows ;-

4.6 It is, thus, evident that the appellant has no evidence to substantiate the grounds taken and it has not even once argued with any supporting, relevant and cogent arguments/averments, constraining me to, dismiss this appeal as no material change has been brought out by the appellant, to what was available before the AO. Therefore, order made decided ex-parte and appeal of the appellant is dismissed.

Navkar Diamonds Pvt. Ltd. 4 ITA No. 5395/MUM/2026

It is against this order that the assessee is in appeal before this Tribunal.

4.

Before us, it has been submitted on behalf of the assessee, vide letter dated 10/08/2026, that its failure to respond to notices issued by the Ld. CIT(A) was on account of “unavoidable family and medical exigency” of the Chartered Accountant who was entrusted with their matter. It was explained that by the time the assessee could approach a different Chartered Accountant for pursuing the appellate proceedings and preparing necessary submissions, the Ld. CIT(A) had already disposed of the appeal ex-parte. In this backdrop, the assessee contends that its inability to co-operate in appellate proceedings before the Ld. CIT(A) was due to bonafide reasons beyond its control, and that it should not be deprived of its right to contest the additions on merit. It was further submitted that the assessee is now in a position to furnish relevant books of account, purchase documents, supporting evidences and other material necessary for adjudication of the grounds raised in appeal. It has, accordingly, been requested that the ex parte order passed by the Ld. CIT(A) be set aside and the matter be restored to the file of Ld. CIT(A) for fresh adjudication on merits. The CIT-DR also expressed no objection to the assessee’s request that the matter be so remanded.

Navkar Diamonds Pvt. Ltd. 5 ITA No. 5395/MUM/2026

5.

We have considered the submissions of the assessee in the light of the material available on record. High value addition, totaling to Rs. 13,78,72,978/-, has been made in this case in the course of assessment proceedings. The assessee has itself filed appeal against the order of the Ld. AO and then failed to participate in appellate proceedings. Given the circumstances brought out, we see no reason to believe that the assessee has intentionally not complied with the notices issued by the Ld. CIT (A).

6.

In view of the above, in the interest of justice, we deem it appropriate to remand the matter to the Ld. CIT(A) for fresh adjudication as per law after affording the assessee reasonable opportunity of being heard. The assessee shall co-operate in the appellate proceedings and furnish all necessary information/documents in support of its claim.

7.

The ground regarding initiation of penalty proceedings u/s 271AAC(1)of the Act is consequential in nature and does not require any adjudication at this stage.

8.

The grounds relating to initiation of proceedings u/s 271H and 234E of the Act do not require adjudication at the stage of initiation.

Navkar Diamonds Pvt. Ltd. 6 ITA No. 5395/MUM/2026

9.

The ground regarding charging of interest u/s 234B and 234C of the Act are also consequential and does not require adjudication at this stage.

10.

All grounds raised by the assessee are hereby disposed of and, in the result, the assessee’s appeal is allowed for statistical purposes.

Order pronounced in the open Court on 20/08/2026

Sd/- Sd/- (BEENA PILLAI) (RATNA DASGPUTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 20/08/2026 Z.U., P.S.

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER,

//True Copy// (Assistant Registrar) ITAT, Mumbai

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