KASTURI HARDWARE AND PAINTS,CHINCHWAD,PUNE vs. INCOME TAX OFFICER, WARD 9(1), AKURDI,PUNE

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ITA 1512/PUN/2026Status: DisposedITAT Pune31 July 2026AY 2018-20198 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the delay in filing the appeal should be condoned, adopting a justice-oriented approach. The matter was restored to the CIT(A) to decide the appeal on merits after giving the assessee an opportunity of being heard.

What were the facts?

The assessee, a partnership firm, failed to file its income tax return for AY 2018-19. The Assessing Officer made an addition of Rs. 6,11,31,500/- due to high-value cash deposits. The assessee filed an appeal before the CIT(A) with a significant delay.

What were the issues?

Whether the delay in filing the appeal before the CIT(A) was sufficiently explained and should be condoned. Whether the addition made by the AO and the penalty levied were justified.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE,Section 147,Section 144,Section 144B,Section 142(1),Section 148,Section 271AAC(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE

Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA

For Appellant: Shri Nikhil S. Pathak
For Respondent: Shri Rajesh Haladkar, Addl. CIT

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA Nos.1328 & 1512/PUN/2026 Assessment year : 2018-19 Kasturi Hardware and Paints, Income Tax Officer, Kasturi Market GS 9/1/2, Akurdi, Pune Chikali Road, Sambhaji Nagar, Vs. Chinchwad, Pune-411019 PAN: AANFK5325M (Appellant) (Respondent)

Assessee by : Shri Nikhil S. Pathak Department by : Shri Rajesh Haladkar, Addl. CIT Date of hearing : 29-07-2026 Date of pronouncement : 31-07-2026 O R D E R PER BENCH : The above 2 appeals filed by the assessee are directed against the separate orders dated 10.02.2026 and 10.02.20266 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2018-19. Since identical grounds have been raised by the assessee in both the appeals, therefore, these were heard together and are being disposed of by this common order for the sake of convenience. ITA No.1328/PUN/2026, AY 2018-19 2. Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business of trading of hardware paints, plumbing materials, sanitary products and allied goods. As per information with the Department, the assessee has made high value transactions including cash deposits amounting to Rs.6,11,31,500/- in the bank account maintained with TJSB Sahakari bank Ltd., Sambhaji Nagar, Pune Branch during the AY 2018-19 and it has not filed its return of income. The

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Assessing Officer reopened the assessment and issued notice u/s 148 of the Act on 04.04.2022 after obtaining prior approval from the competent authorities. Thereafter, notice u/s 142(1) of the Act along with questionnaire was issued and served upon the assessee. However, due to non-compliance to the statutory notices issued by him, the Assessing Officer completed the assessment u/s 147 r.w.s. 144 r.w.s. 144B of the Act dated 31.12.2023 determining the total income of the assessee at Rs.6,11,31,500/-. Since, the assessee filed the appeal before the Ld. CIT(A)/NFAC with a delay of 670 days, the Ld. CIT(A)/NFAC in the absence of any reasonable cause to explain such delay in filing of the appeal dismissed the appeal of the assessee as non-maintainable.

3.

Aggrieved with such order of the Ld. CIT(A)/NFAC, the assessee is in appeal before the Tribunal by raising following grounds of appeal : “On facts and in law,

1] The learned CIT(A) erred in not condoning the delay of 670 days in filing the appeal and thereby erred in dismissing the appeal filed by the assessee.

2] The learned CIT(A) erred in holding that there was no sufficient cause on the part of the assessee for not filing the appeal within the prescribed time limit and thereby erred in dismissing the appeal filed by the assessee.

3] The learned CIT(A) erred in not appreciating that there was a reasonable cause on the part of the assessee in not filing the appeal within the prescribed time limit and therefore, the delay in filing the appeal ought to have been condoned and the appeal of the assessee should have been decided on merits.

4] The assessee submits that the addition made of Rs.6,11,31,500/- u/s 68 r.w.s. 115BBE is not justified and the same may kindly be deleted.

5] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”

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4.

The Ld. Counsel for the assessee referring to the contents of the condonation petition filed along with affidavit before the Ld. CIT(A) drew the attention of the Bench to the same which read as under : “I, Shri Chetan Bedmutha, S/o Ashoklal Bedmuttha, aged 36 years, residing at Plot No- 86, Sector No- 21, Opposite Police Chowki, Yamunanagar, Nigdi, Pune 411044, do hereby solemnly affirm and state as under:  That I am the nephew of one of the partners of M/s Kasturi Hardware and Paints and was supervising day-to-day administration and compliance related tasks of the firm during the relevant period (AY 2018-19)  I am only 12th passed and not professionally qualified in income-tax compliances or PAN procedures. Whatever work I handled was based on my limited knowledge and understanding.  The original PAN was issued in the name Kasturi Hardware and Electricals. Later, the business name was changed to Kasturi Hardware and Paints, and I was instructed to update the PAN with the changed business name  Due to a bona fide misunderstanding of procedures and lack of proper understanding of the PAN correction process, I mistakenly applied for and obtained a NEW PAN: AANFK5325M in the name of Kasturi Hardware and Paints instead of updating the existing PAN.  That without knowing the consequences, during PAN-Aadhaar KYC updation and bank compliance, I provided the NEW PAN to TJSB Sahakari Bank, causing A/c No. 044120100003466 to be wrongly linked to the NEW PAN.  I hereby state that the said bank account in TJSB Sahakari Bank, having A/c No. 044120100003466 was correctly considered in Audited Books of Accounts of M/s Kasturi Hardware and Paints in Original PAN: AAFFK0198Q from its inception till AY 2019-2020.  The Consultant whose mobile number and email ID was registered on the NEW PAN at the Income-tax E-Filing Portal, had informed me regarding notices from time to time but due to incomplete knowledge and lack of awareness and importance, I failed to provide the said information to the partners of the firm.  As the assessee had duly filed all Tax Audits Reports and Income Tax Returns in time on the original PAN: AAFFK0198Q from last more than 8 years, I was under the impression that notices received from IT Department are for compliance of IT Returns, which we have already complied with within due dates.  Due to this, all statutory notices issued by the Income Tax Department under PAN AANFK5325M including those u/s 148, 142(1), 143(2) and 144B, were left unanswered.

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 That because of my limited understanding and inadvertent neglect, I failed to bring those notices and communications to the knowledge of the partners/assessee, resulting in assessee remaining completely unaware of reassessment proceedings, to an inadvertent delay of around 700 days in filing the appeal.  That the assessee had no knowledge of the existence or use of the NEW PAN or the notices issued there under and was in no position to respond to the Department.  That the resulting delay of over 700 days in filing the appeal has occurred solely due to my bona fide and unintentional mistake, and not due to any fault, negligence or mala fide of the assessee.  I hereby confirm and accept that the said delay occurred solely due to my negligence, and the appellant had absolutely no knowledge or role in the said default.  I take full responsibility for these unintended consequences due to my mistake and limited knowledge and solemnly affirm that the partners remained fully compliant and acted immediately upon knowledge of the proceedings.  There existed a complete communication blackout between the Department and the assessee due to my gross negligence. The assessee was in no position to know about the reassessment or the passing of the order.  I hereby take full responsibility for the consequences arising from this inadvertent action and submit this affidavit in support of condonation of delay.  Whatever stated hereinabove is true and correct to the best of my knowledge and belief. I sign this affidavit on 01/12/2025 at Pune.”

5.

Relying on various decisions he submitted that the Ld. CIT(A) should have condoned the delay in filing of the appeal and should have decided the appeal on merit.

6.

The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A)/NFAC and submitted that the assessee failed to explain any reasonable cause for such delay in filing of the appeal.

7.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed

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on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that due to non-response to the statutory notice issued u/s 148 as well as notice u/s 142(1) of the Act, the Assessing Officer completed the assessment u/s 147 r.w.s. 144 r.w.s. 144B of the Act dated 31.12.2023 determining the total income of the assessee at Rs.6,11,31,500/-. We find the assessee filed the appeal before the Ld. CIT(A) with a delay of 670 days and the Ld. CIT(A)/NFAC was not satisfied with the reasons given by the assessee for such delay and dismissed the appeal as un-admitted. It is the submission of the Ld. Counsel for the assessee that there was bonafide reasons on its part in filing of the appeal with delay as per the reasons given in the affidavit. It is also his submission that given an opportunity the assessee is in a position to substantiate his case by filing the requisite details.

8.

We find the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. reported in 167 ITR 471 (SC) has held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.

9.

We find the Hon’ble Supreme Court in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 LiveLaw (SC) 339 has held as under: “14. There can be no quarrel on the settled principle of law that delay cannot be condoned without sufficient cause, but a major aspect which has to be kept in

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mind is that, if in a particular case, the merits have to be examined, it should not be scuttled merely on the basis of limitation.”

10.

We find the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal vs. ITO vide Special Leave Petition (Civil) Nos.26310-26311/2024 order dated 31.01.2025 has held that a justice oriented and liberal approach ought to be adopted while considering the aspect of condoning the delay involved in filing of the appeal.

11.

In the light of the above decisions of Hon’ble Supreme Court cited (supra) and considering the totality of the facts and circumstances of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(A)/NFAC with a direction to condone the delay in filing of the appeal and decide the issue on merit and as per fact and law after giving due opportunity of being heard to the assessee. The assessee is also hereby directed to make his submissions, if any, on the appointed date without seeking any adjournment under any pretext failing which the Ld. CIT(A)/NFAC is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. ITA No. 1512/PUN/2026, AY 2018-19 12. After hearing both the sides, we find the Assessing Officer in the instant case levied penalty of Rs.47,22,408/- u/s 271AAC(1) of the Act being penalty @ 10% of the tax on addition of Rs.6,11,31,500/- made by him in the order passed u/s 147 r.w.s. 144 r.w.s. 144B of the Act. We find the Ld. CIT(A)/NFAC dismissed the appeal of the assessee on account of delay of 500 days in filing of the appeal. In the preceding paragraphs while deciding the quantum appeal filed by the assessee, we have restored the issue to the file of the Ld. CIT(A)/NFAC with

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certain directions. Since, the quantum appeal has been set aside to the file of the Ld. CIT(A)/NFAC, therefore, this penalty appeal is also restored to the file of the Ld. CIT(A)/NFAC with a direction to condone the delay in filing of the appeal and decide the appeal after the quantum appeal is decided. Needless to say, the Ld. CIT(A)/NFAC shall give due opportunity of being heard to the assessee and decide the same as per facts and law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purpose.

13.

In the result, both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the open Court on 31st July, 2026.

Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 31st July, 2026 Ravi Kumar RK Digitally signed by Ravi Kumar Date: 2026.07.31 16:49:27 +05'30' आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: अपील र्थी / The Appellant; 1. 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘A’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune

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S.No. Details Date Initials Designation 1 Draft dictated on 30.07.2026 Sr. PS/PS 2 Draft placed before author 31.07.2026 Sr. PS/PS Draft proposed & placed before 3 JM/AM the Second Member Draft discussed/approved by 4 AM/AM Second Member Approved Draft comes to the 5 Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to 9 the Office Superintendent Date on which file goes to the 10 A.R. 11 Date of Dispatch of order

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