ASIF FIDAHUSEIN BATLIWALA,MUMBAI vs. INCOME TAX OFFICER WARD 17(1)(1), MUMBAI

We have heard the rival submissions and perused the material available on record. The assessee filed the return of income declaring a total income of Rs. 4,99,510/-. Subsequently, the Ld. AO received information that the assessee had undertaken a financial transaction involving cash purchases amounting to Rs. 58,50,641/- from M/s Pragati Glass Pvt. Ltd. during the Financial Year 2016- 17, relevant to Assessment Year 2017-18. Based on the said information, the Ld. AO reopened the assessment by issuing a notice under section 148 of the Act. The assessee, however, did not file any return of income in response to the notice issued under section 148 of the Act. Despite the issuance of statutory notices, the assessee failed to comply with the same. Consequently, the Ld. AO completed the reassessment by making an addition of Rs. 58,50,641/- under section 69C r.w.s. 115BBE of the Act on account of the alleged unexplained purchases. The Ld. AO further made an addition of Rs. 38,32,052/- under section 69A read with section 115BBE of the Act in respect of unexplained cash deposits in the assessee's bank account. Aggrieved by the reassessment order, the assessee preferred an appeal before the Ld. CIT(A). However, even during the appellate proceedings, the assessee failed to prosecute the appeal diligently. Although notices under section 250 of the Act were duly issued by the Ld. CIT(A), the assessee either sought adjournments or remained non-compliant. In these circumstances, the Ld. CIT(A) proceeded to dispose of the appeal ex parte, without adjudicating the issues on merits, and dismissed the assessee's appeal. Being aggrieved by the said order, the assessee is now in appeal before us.

The Ld. AR argued and specifically agitated the legal grounds related to the assumption of jurisdiction of the Ld. AO for assessment u/s. 147 r.w.s. 144 r.w.s. 144B of the Act, whether the Ld. AO had failed to invoke the provision of section 153C of the Act as the assessee's case is arising out from the third-party search operations.

The Ld. DR contended that the assessee before the Ld. AO and before the Ld. CIT(A) in both the stage remain non-compliant. So, the Ld. AR stated that the assessee had never raised the legal issue before any of the revenue authorities. Further, he pointed out that the assessee had not filed any return u/s. 148 before the Ld. AO. He stands in favour of the orders of revenue authorities.

In our considered view, we find that the assessee's case was reopened u/s. 148 of the Act. A search was duly conducted in the third-party premises, and in relation to the search, the Ld. AO has reopened the assessee's case. During the reassessment, the Ld. AO added back the purchase made from M/s Pragati Glass Pvt. Ltd amount to Rs. 58,50,641/-, and unexplained cash deposit amount to Rs. 38,32,052/-. Finally, the appeal order was passed ex-parte without considering the assessee's plea both in legal grounds and on merit also. So, we find that the reasonable opportunity for the assessee for submission of the evidence is duly denied. In the interest of substantial justice, and having regard to the principle of natural justice, we are of the considered view that the assessee deserves one more effective opportunity to substantiate its claim before the first appellate authority. Accordingly, we set aside the impugned order of the Ld. CIT(A) and restore the matter to his file for de novo adjudication in accordance with law, after affording the assessee a reasonable and effective opportunity of being heard, and after considering all evidences and submissions that may be placed on record. The assessee shall extend full cooperation and shall not seek unnecessary adjournments. We clarify that we have not expressed any opinion on the merits of the additions, and all issues are left open for fresh adjudication by the Ld. CIT(A). Accordingly, the appeal is allowed for statistical purposes.

In the result, the appeal of the assessee bearing ITA No.2179/Mum/2026 is allowed for statistical purposes. Order pronounced in the open court on 30th day of July 2026. Sd/- Sd/- (BIJAYANANDA PRUSETH) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 30/07/2026 Soumili Das, PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI