What did the Tribunal hold?

The Tribunal set aside the CIT(A)'s order and restored the matter for fresh adjudication. This was done to provide the assessee with an opportunity to present their case effectively, as they were proceeded ex parte.

The assessee's appeal against the CIT(A)'s order was dismissed ex parte. The assessee argued that the CIT(A) erred in confirming the disallowance of business loss and relied on an incorrect precedent.

What were the issues?

Whether the assessee was denied a proper opportunity to present their case before the CIT(A) and whether the disallowance of business loss was justified.

Naiknavare Developers and Sunhar… vs ACIT | ITAT Mumbai 2026

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: SHRI SANDEEP GOSAIN

PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER:

This appeal is filed by the Assessee against the order of Ld. CIT(A)/Ld. NFAC vide dated 31-Oct-2025 for the Assessment Year 2017- 18. The Assessee has raised the following grounds of appeal:

The learned CIT(A) erred in law and on facts in confirming the disallowance of business loss amounting to Rs 53,22,449/-without appreciating the fact that the appellant has rightly debited the indirect expenses to P & L account and capitalized direct expenses to WIP.

ITA 9321/MUM/2025 NAIKNAVARE DEVELOPERS AND SUNHAR INFRACOM LLP 2. The learned I-T authorities erred in law and on facts in relying on the decision of Bombay HC in case of ALD Automotive (P) Ltd V DCIT 254 Taxman 233 for the proposition that expenses incurred prior to setting up of business are not allowable as business loss irrespective of the fact that the business has actually commenced and this fact has been accepted by the learned AO.

Appellant craves leave to add, alter, clarify, explain, modify, delete any of the grounds of appeal, and to seek any just and fair relief.

From the records, I noticed that the assessee was proceeded ex parte before the Ld. CIT(A) and, consequently, the Ld. CIT(A), after considering the material available on record, dismissed the appeal.

Be that as it may, without going into the merits of the issues raised by the assessee and considering the fact that the assessee could not effectively represent his case before the Ld. CIT(A), I am of the view that, in the interest of justice, one more opportunity should be given to the assessee to represent his case before the Ld. CIT(A). Accordingly, considering the overall facts and circumstances of the present case, I deem it proper to set aside the order passed by the Ld. CIT(A) and restore the matter to the file of the Ld. CIT(A) for deciding the same afresh after providing adequate and sufficient opportunity of being heard, subject to a cost of Rs. 2,000/- imposed upon the assessee, which shall be deposited in the Prime Minister Relief Fund. A copy of the receipt shall be placed on record before the Ld. CIT(A) within 30 days from the date of receipt of this order. The assessee shall not seek any adjournment on frivolous grounds and shall remain cooperative during the course of the proceedings.

Before parting, I wish to make it clear that my decision to restore the matter to the file of the Ld. CIT(A) shall in no way be construed as reflecting

ITA 9321/MUM/2025 NAIKNAVARE DEVELOPERS AND SUNHAR INFRACOM LLP upon or expressing any opinion on the merits of the dispute, which shall be adjudicated independently by the Ld. CIT(A) in accordance with law.

Needless to mention, the Ld. CIT(A) shall provide an adequate opportunity of being heard to the assessee. The assessee shall not seek any adjournment on frivolous grounds and shall remain cooperative during the course of the proceedings.

In the result, the appeal filed by the assessee stands allowed for statistical purposes.

Order pronounced in the open court on 31.07.2026.

Sd/- SANDEEP GOSAIN JUDICIAL MEMBER Mumbai Dated: 31.07.2026 RY-SrPS

ITA 9321/MUM/2025 NAIKNAVARE DEVELOPERS AND SUNHAR INFRACOM LLP

Copy to: NAIKNAVARE DEVELOPERS AND SUNHAR INFRACOM LLP , MAHALAXMI BUILDING NO. 3, 175, 1 ALCHANDRA ROAD, HINDU COLONY DADAR EAST, MUMBAI-400014, MAHARASHTRA

ACIT, CIRCLE 20(2), 217, 2ND FLOOR, PIRAMAL CHAMBER 2 LALBAUG PAREL, MUMBAI-400012, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

NAIKNAVARE DEVELOPERS AND SUNHAR INFRACOM LLP,MUMBAI vs. ACIT, CIRCLE 20(2), MUMBAI

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