SURBHI INVESTMENTS AND TRADING COMPANY PRIVATE LIMITED,MUMBAI vs. ASSISTANT / DEPUTY COMMISSIONER OF INCOME TAX - 2(3)(1), MUMBAI, MUMBAI

The Registry pointed out that the date of the assessment order mentioned in the impugned appellate order did not correspond with the impugned assessment order passed by the Ld. AO under section 143(3) of the Act. The assessment order was erroneously stated to be dated 19.12.2019. Accordingly, a defect notice was issued. In response, the assessee clarified that the date had been inadvertently mentioned as 19.12.2019 instead of the correct date, i.e., 14.12.2019. Since the defect has been duly rectified, the appeal is admitted and taken up for adjudication on merits.

The brief facts of the case are that the assessee filed the return by declaring total loss Rs. 41,71,46,177/-. The assessee’s case was selected for scrutiny under CASS. The Ld. AO received the information that from DDIT Inv. Unit 6, Kolkata that assessee is the beneficiary of accommodation entries from shell company by way of long term capital gain amount to Rs. 59,83,936/-. In the impugned assessment order, the Ld. AO considered the loss of Rs.3,05,409/- on sale of share of Birla Pacific Medspa Ltd. as bogus and disallowed the same u/s 68 of the Act. Also, the AO added sale proceeds of Rs.59,83,937 of Birla Pacific Medspa Ltd. u/s 68 of the Act which comes total amount to Rs.62,89,346/-. The Ld. AO calculated the commission paid for availing the accommodation entry at the rate of 5% on total transactions which works out to be Rs. 3,14,467/- which was added back u/s. 69C. Accordingly, the Ld. AO added back total amount to Rs. 62,89,346/- u/s.68 and Rs. 3,14,467/- u/s 69C with the total income of the assesse. The aggrieved assessee filed an appeal before the Ld. CIT(A) but the Ld. CIT(A) had granted sufficient opportunities for the hearing in different dates. But the assessee had failed to comply the notices issued by the Ld. CIT(A). Considering this, the Ld. CIT(A) passed an ex-parte order without considering the merit of the case. Being aggrieved, the assessee filed an appeal before us.

The Ld. DR argued and contended that, although the Ld. CIT(A) had granted sufficient opportunities of being heard, the assessee failed to comply with the same. The assessee was unable to provide any reasonable justification for its non-appearance before the Ld. CIT(A). Accordingly, he relied upon and supported the orders of the revenue authorities.

We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the appeal before the Ld. CIT(A) was disposed of ex parte. The assessee had only complied in a single date by filing the adjournment letter before the Ld. CIT(A) & the merit of the case was remained unexplained before the appellate authority. Consequently, the assessee was deprived of a proper and effective opportunity to participate in the appellate proceeding. The principles of natural justice warrant that a litigant should not be denied adjudication on merits when reasonable cause is demonstrated. The matter is restored to the file of the Ld. CIT(A) with a direction to adjudicate the appeal afresh on merits by passing a speaking order after providing reasonable opportunity of being heard to the assessee. It is clarified that we have not expressed any opinion on the merits of the case. The assessee is directed to cooperate in the appellate proceedings, and the Ld.

In the result, the appeal of the assessee bearing ITA No.2699/Mum/2026 is allowed for statistical purposes. Order pronounced in the open court on 10th day of August 2026.