UNITY SMC JV,MUMBAI vs. WARD 22(3)(6), MUMBAI, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH MUMBAI BEFORE SHRI CHALLA NAGENDRA PRASAD, VICE PRESIDENT & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No. 4048/Mum/2026 (Assessment Year: 2014-15) Unity SMC Joint ITO Ward 22(3)(6) Venture Piramal Chambers, Vs. 1252, Pushpanjali Mumbai -400 013 Apartment, Old Prabhadevi Road, Mumbai-400 025 PAN/GIR No. AABFU9813C (Applicant) (Respondent) Assessee by Shri Apurv Gandhi, Ld. AR Revenue by Shri Bal Krishna Yadav, Ld. DR Date of Hearing 22.07.2026 Date of Pronouncement 24.07.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: This appeal by the assessee is directed against the order dated 15.01.2026 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as "the CIT(A)"], under section 250 read with section 254 of the Income-tax Act, 1961 [hereinafter referred to as "the Act"], for the Assessment Year 2014-15. The impugned

2 ITA No. 4048/Mum/2026 Unity SMC Joint Venture order has been passed in the second round of appellate proceedings pursuant to the order dated 21.02.2025 passed by the Co-ordinate Bench in ITA No. 225/Mum/2024. The original assessment in the case of the assessee was completed by the ACIT, Circle-21(3), Mumbai [hereinafter referred to as “Assessing Officer”], under section 143(3) of the Act vide order dated 30.11.2016.

Ground No. 1: On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in dismissing the appeal of the appellant for non-prosecution without adjudicating the issues on merits, which is contrary to the provisions of section 250 of the Act and violative of the principles of natural justice. Ground No. 2: On the facts and circumstances of the case and in law, Ld. CIT(A) erred in upholding the decision of Ld. AO which has resulted in disallowance of construction expenses paid of Rs. 10,62,34,619/- made u/s 40(a)(ia) of the Act and added back in the total income of the appellant. The appellant prays that such disallowance of such expenditure of Rs. 10,62,34,619/- made u/s 40(a)(ia) of the Act may kindly be deleted as no such expenditure is disallowable as per the provisions of the Income Tax Act ('1961'). Ground No. 3: On the facts and circumstances of the case and in law, Ld. CIT(A) erred in upholding the decision of Ld. AO wherein it has made disallowance of Rs. 10,62,34,619/- and added back to the income of the Act only on the basis of nonfulfillment of procedural requirement ignoring the submission made by M/s Unity Infraprojects Limited regarding inclusion of contract charges in the total income and payment of tax due on total income.

3 ITA No. 4048/Mum/2026 Unity SMC Joint Venture Ground No. 4: On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not admitting and considering the additional evidence in the form of Form 26A, in violation of Rule 46A and the principles of natural justice. The appellant was prevented by sufficient cause from producing the same before the Assessing Officer, and therefore, the Ld. CIT(A) ought to have admitted and considered it on merits. Ground No. 5: On the facts and circumstances of the case and in law, Ld. CIT(A) erred in upholding the business income determined erroneously by Ld. AO in its assessment order, amounting to Rs. 1,04,06,646/- while the actual business income as per ITR filed of A.Y. 2014-15 amounts to Rs. 32,58,079/- only. The appellant prays that this arithmetical error may kindly be rectified. Ground No. 6: On the facts and circumstances of the case and in law, Ld. CIT(A) erred in upholding the income from other sources determined erroneously by Ld. AO in its assessment order, amounting to Rs. 6,01,718/- while the actual income from other sources as per ITR filed of A.Y. 2014-15 amounts to Rs. 4,15,048/- only. The appellant prays that this arithmetical error may kindly be rectified. Ground No. 7: On the facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the demand erroneously raised by the Ld. AO without perusing the facts and submission made by the appellant during the course of first appellate proceedings. The appellant prays that such erroneous demand raised may kindly be altered or deleted as per the factual evidence of the case. Facts of the case

4 ITA No. 4048/Mum/2026 Unity SMC Joint Venture Project Ltd. and M/s SMC Infrastructure Ltd., engaged in the business of civil contracts. For the year under consideration, the assessee filed its return of income declaring total income of Rs. 36,73,130/-, comprising business income of Rs. 32,58,079/- and income from other sources of Rs. 4,15,048/-. The case was selected for scrutiny and statutory notices were issued. The assessee had shown receipts of approximately Rs. 11.45 crores, including other income of Rs. 4.15 lakhs, against which expenses of approximately Rs. 11.08 crores were claimed, a substantial part thereof comprising construction/sub-contract charges of Rs. 10,62,34,619/- payable to M/s Unity Infra Projects Ltd. 4. During the course of assessment proceedings, the Assessing Officer noticed that the assessee had given the entire portion of the project on sub-contract to M/s Unity Infra Projects Ltd. and that no tax had been deducted or paid at source on the sub- contract charges of Rs. 10,62,34,619/-. A notice under section 142(1) dated 17.10.2016 was issued requiring the assessee to explain why the said expenditure should not be disallowed under section 40(a)(ia) of the Act. Further opportunities were provided through e-mails dated 01.11.2016 and 12.11.2016. The assessee, however, could not furnish Form No. 26A before completion of the assessment. The Assessing Officer, therefore, disallowed the amount of Rs. 10,62,34,619/- under section 40(a)(ia) of the Act and completed the assessment under section 143(3) vide order dated 30.11.2016, determining the total income at Rs. 11,72,42,983/-.

5 ITA No. 4048/Mum/2026 Unity SMC Joint Venture 5. Aggrieved, the assessee preferred an appeal before the CIT(A). During the first round of appellate proceedings, the assessee sought admission of additional evidence under Rule 46A of the Income-tax Rules, 1962, principally comprising Form No. 26A, to substantiate its claim that the payee had taken into account the impugned contract receipts while computing its taxable income and had discharged the tax liability thereon. The Assessing Officer, in the remand proceedings, objected to admission of the additional evidence. The CIT(A), vide order dated 05.01.2024, declined to admit the additional evidence on the ground that the assessee had been afforded sufficient opportunity during the assessment proceedings and upheld the disallowance of Rs. 10,62,34,619/- made under section 40(a)(ia). 6. The assessee carried the matter in appeal before the Tribunal in ITA No. 225/Mum/2024. The Co-ordinate Bench, vide order dated 21.02.2025, considered the controversy relating to admission of Form No. 26A. The Tribunal observed that no rigid or inflexible time frame could be prescribed for obtaining the requisite certification from a Chartered Accountant and further noticed that Form No. 26A placed on record supported the assessee's contention regarding fulfilment of the conditions prescribed under the proviso to section 40(a)(ia). The Co-ordinate Bench, therefore, set aside the order of the CIT(A) and restored the matter to him with a specific direction to admit the additional evidence and adjudicate the issue afresh in accordance with law, after affording reasonable opportunity of hearing to the Assessing

6 ITA No. 4048/Mum/2026 Unity SMC Joint Venture Officer as well as the assessee. The relevant conclusion of the Co- ordinate Bench reads as under: "In light of the foregoing discussion and in the interest of substantial justice, we deem it appropriate to set aside the impugned order of the learned CIT(A) and remand the matter back to him for reconsideration. The learned CIT(A) is directed to admit the additional evidence and adjudicate the issue afresh, strictly in accordance with law, after affording a reasonable opportunity of hearing to both the Assessing Officer and the assessee. We order accordingly." 7. The appeal was accordingly allowed for statistical purposes. 8. Pursuant to the aforesaid order, the proceedings were again taken up by the CIT(A). The impugned order records that notices were issued to the assessee on 13.10.2025, 11.12.2025 and 24.12.2025, but no reply was filed by the assessee. The CIT(A) observed that, during the proceedings before him pursuant to the restoration by the Tribunal, no additional evidence was furnished which could be examined and considered. In the absence of any submissions or evidence from the assessee, the CIT(A) relied upon the findings of the Assessing Officer and upheld the disallowance under section 40(a)(ia). The appeal was consequently dismissed vide order dated 15.01.2026 passed under section 250 read with section 254 of the Act. 9. The assessee is now in appeal before us against the said order. 10. Before us, the learned Authorised Representative (AR) submitted that the assessee had made payment of Rs. 10,62,34,619/- to M/s Unity Infraprojects Limited ("UIL"), being

7 ITA No. 4048/Mum/2026 Unity SMC Joint Venture the sub-contractor, without deduction of tax at source. During the assessment proceedings, although the Assessing Officer had called upon the assessee to explain why the expenditure should not be disallowed under section 40(a)(ia), the assessee was not in possession of Form No. 26A and was in the process of obtaining the same. The assessment was completed on 30.11.2016, whereas the Chartered Accountant issued Form No. 26A on 09.12.2016, shortly thereafter. 11. The learned AR explained that the delay in obtaining Form No. 26A was attributable to circumstances beyond the control of the assessee. It was submitted that UIL was undergoing Corporate Debt Restructuring (CDR) on account of severe financial difficulties. In support thereof, the assessee sought to place on record the Letter of Approval dated 26.12.2014 relating to the restructuring under the CDR mechanism. It was further submitted that UIL subsequently approached the NCLT for initiation of proceedings under the Insolvency and Bankruptcy Code and the relevant application dated 05.06.2017 was also sought to be placed on record. According to the learned AR, owing to the financial difficulties faced by UIL, the requisite coordination between the Chartered Accountant and UIL for verification of its records was delayed and, consequently, Form No. 26A could be issued only on 09.12.2016. 12. The learned AR further submitted that the assessee had acted diligently and that the inability to furnish Form No. 26A before the Assessing Officer was not due to any deliberate or

8 ITA No. 4048/Mum/2026 Unity SMC Joint Venture negligent conduct. It was pointed out that after receipt of Form No. 26A on 09.12.2016, the assessee filed its appeal before the CIT(A) on 29.12.2016, and subsequently sought admission of Form No. 26A as additional evidence under Rule 46A. 13. The learned AR further submitted that, after the matter was entrusted to the present Authorised Representatives, certain discrepancies were noticed in the earlier Form No. 26A. Upon verification of the relevant records, including the return of income and books of account of the payee as well as those of the assessee, a fresh Form No. 26A dated 04.11.2024 was obtained rectifying the discrepancies contained in the earlier certificate. It was submitted that the fresh certificate verifies that the contract charges paid by the assessee to the payee had been taken into account in computing the taxable income of the payee. 14. The learned AR accordingly filed an application dated 16.07.2026 under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, seeking admission of additional evidence, including the documents explaining the circumstances responsible for the delay in procuring Form No. 26A and the fresh Form No. 26A dated 04.11.2024. It was contended that these documents go to the root of the controversy and are necessary for determining the applicability of the disallowance under section 40(a)(ia). The learned AR, therefore, prayed that the additional evidence be admitted and the matter be decided on merits after due verification thereof.

9 ITA No. 4048/Mum/2026 Unity SMC Joint Venture 15. The learned Departmental Representative (DR) raised no objection to the admission of the additional evidence and restoration of the matter to the file of the Assessing Officer for necessary verification and fresh adjudication in accordance with law. 16. We have considered the submissions of the learned AR and perused the material placed on record. We have also carefully gone through the assessment order, the orders passed by the CIT(A), the earlier order dated 21.02.2025 passed by the Co- ordinate Bench in ITA No. 225/Mum/2024 and the additional evidence now sought to be produced before us. 17. The short controversy before us relates to the disallowance of Rs. 10,62,34,619/- under section 40(a)(ia) on account of non- deduction of tax at source from the sub-contract charges paid to M/s Unity Infraprojects Limited. It is not in dispute that the assessee did not deduct tax at source from the said payment. The case of the assessee, however, is that the payee had taken the corresponding contract receipts into account in computing its income and discharged the tax liability thereon, and that the requisite conditions contemplated under the relevant proviso to section 40(a)(ia) are fulfilled. The evidentiary basis of this claim is Form No. 26A. 18. We find that this issue had already travelled to the Tribunal in the first round. The Co-ordinate Bench, while disposing of ITA No. 225/Mum/2024 vide order dated 21.02.2025, specifically directed the CIT(A) to admit the additional evidence and

10 ITA No. 4048/Mum/2026 Unity SMC Joint Venture adjudicate the issue afresh in accordance with law. However, in the consequential proceedings, since the assessee did not respond to the notices issued by the CIT(A), the matter came to be decided on the basis of the existing record and the disallowance made by the Assessing Officer was again sustained. The CIT(A) specifically recorded that, in the absence of submissions or evidence during the consequential proceedings, he was left with no alternative but to rely upon the findings of the Assessing Officer. 19. Before us, the assessee has not only sought to rely upon the Form No. 26A obtained earlier but has also placed reliance upon a fresh Form No. 26A dated 04.11.2024, stated to have been issued after rectification of discrepancies in the earlier certificate and after verification of the relevant records of the payer and the payee. The assessee has also sought to produce documents concerning the financial difficulties and CDR proceedings of the payee to explain the circumstances resulting in the delay in obtaining the requisite certificate. 20. In our considered view, the fresh Form No. 26A and the documents accompanying the application under Rule 29 have a direct bearing on the issue under consideration and go to the root of the disallowance. The claim of the assessee, however, necessarily requires factual verification with reference to the books of account, return of income and tax payment particulars of the payee and the correctness and validity of the fresh Form

11 ITA No. 4048/Mum/2026 Unity SMC Joint Venture No. 26A. These aspects have admittedly not been examined by the Assessing Officer. 21. Considering the totality of the facts and circumstances and in the interest of substantial justice, we admit the additional evidence produced by the assessee. However, since the additional evidence requires examination and factual verification at the level of the Assessing Officer, we deem it appropriate to set aside the impugned order of the CIT(A) and restore the issue to the file of the Assessing Officer for fresh adjudication. 22. The Assessing Officer shall examine the fresh Form No. 26A dated 04.11.2024 and all other supporting evidence produced by the assessee, verify the claim of the assessee with reference to the records of the payee, including whether the corresponding receipts have been taken into account by the payee in computing its income and whether the applicable tax thereon has been duly discharged, and thereafter decide the allowability of the expenditure of Rs. 10,62,34,619/- under section 40(a)(ia) afresh in accordance with law. Needless to state, the Assessing Officer shall afford reasonable opportunity of being heard to the assessee and shall also permit the assessee to furnish such further evidence as may be relevant for adjudication of the issue. We make it clear that we have not expressed any opinion on the merits of the claim and all contentions are left open. 23. Insofar as the grounds relating to the alleged errors in computation of business income and income from other sources are concerned, since the assessment itself is being restored to the

12 ITA No. 4048/Mum/2026 Unity SMC Joint Venture Assessing Officer for the limited purpose stated hereinabove, the Assessing Officer shall also verify the assessee's contention that the business income and income from other sources have been incorrectly adopted in the assessment order and rectify any arithmetical or computational error, if found, in accordance with law.

Order pronounced in the open court on 24.07.2026.

Sd/- Sd/- (CHALLA NAGENDRA PRASAD) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 24/07/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. संबंधधत आयकर आयुक्त / The CIT(A) आयकर आयुक्त(अपील) / Concerned CIT 4. धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai