RAJSHREE CREATIONS,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 27(3), NAVI MUMBAI, NAVI MUMBAI

PDF · subscribers
ITA 2540/MUM/2026Status: DisposedITAT Mumbai09 July 2026AY 2018-193 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) passed an ex-parte order without deciding the issues on merits. The Tribunal restored the matter to the CIT(A) for fresh adjudication after providing the assessee a reasonable opportunity of being heard and deciding the issues in a speaking order.

What were the facts?

The assessee's appeal before the CIT(A) was dismissed ex-parte due to non-prosecution. The assessee contended that they were not given a proper opportunity to be heard and that a deficiency letter mentioned by the CIT(A) was not received. The CIT(A) had sustained additions of Rs. 72,50,350 on account of interest paid as unexplained income.

What were the issues?

Whether the CIT(A) erred in passing an ex-parte order without providing a proper opportunity of hearing to the assessee and whether the interest expenses were allowable.

Which sections of the Income-tax Act were involved?

Section 250,Section 144,Section 263

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI

Before: Shri Amit Shukla (JM) & Shri Arun Khodpia (JM)

For Appellant: Shri Mayur R. Makadia
For Respondent: Shri Azhar Kabir
Hearing: 06.07.2026Pronounced: 09.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “D”, MUMBAI

Before Shri Amit Shukla (JM) & Shri Arun Khodpia (JM)

ITA No. 2540/Mum/2026 (A.Y. 2018-19)

Rajshree Creations Vs. ACIT, Circle-27(3) Room No. 423, 4th Floor 102, Karma Sandhesh 2 Off. Hingwala Lane Tower No. 6, Vashi Railway Behind Popular Hotel Station Commercial Complex Ghatkopar East Navi Mumbai-400703. Mumbai-400 077. PAN : ABAFS7819J (Appellant) (Respondent)

Assessee by Shri Mayur R. Makadia Respondent by Shri Azhar Kabir Date of Hearing 06.07.2026 Date of Pronouncement 09.07.2026

ORDER Per Arun Khodpia, AM:

This appeal is preferred by the assessee, directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘Ld. CIT(A)’] dated 18.12.2025, for the assessment year 2018-19, arises from the order under section 144 r.w.s. 263 of the Income Tax Act, 1961 [in short ‘Act’] dated 28.02.2024 passed by the assessment unit of Income-tax Department.

2.

The grounds of appeal raised by the assessee are as under: - 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in passing an ex parte order u/s 250 without giving a proper opportunity of being heard and dismissing the appeal. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in stating that the appellant was issued a deficiency letter, however, no such letter was issued to the appellant nor was the same uploaded on the portal. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in sustaining the additions of Rs. 72,50,350 on account of interest paid as unexplained income.

2 ITA No. 2540/Mum/2026 Rajshree Creations 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating that the appellant is not following project completion method as mentioned by the Assessing Officer. This is because the appellant has voluntarily offered a notional gross profit of Rs. 3.43 crores and paid tax on the same even though no sales have been recognized during the year under consideration based on progress of the project. In view of the same, the CIT(A) further erred in not appreciating that the said interest expenses were incurred in connection with the project and were therefore allowable. 5. On the facts and circumstances of the case and in law and without prejudice to the above, the Ld. CIT(A) erred in not appreciating the fact that the appellant has also earned an income of Rs. 1,48,79,145 from temporary deployment of funds in FD Mutual funds and such interest expenses otherwise should have been allowed against the interest income earned by the appellant. 6. The appellant reserves the right to add, amend, alter and/or withdraw any of the above grounds at the time of hearing.

3.

At the outset, it is noticed that the impugned order passed by CIT(A) was an ex- parte order, wherein the appeal of the assessee was dismissed in limine on account of non- prosecution by the assessee. Ld. CIT(A) observed that the assessee was provided with sufficient opportunity by fixing the date of hearing calling for the evidence in support of grounds raised, but, even after adequate and sufficient opportunity provided, the assessee did not respond. Ld. CIT(A) accordingly confirmed the findings of the Assessing Officer (in short Ld. AO) in absence of any submissions by the assessee.

4.

Ld. Counsel of the assessee submits, that only one opportunity to rebut was provided by the CIT(A), which the assessee due to some unavoidable reasons was unable to respond. Therefore, one more chance to represent its case may be provided to the assessee, so that the assessee would be able to place its submissions and contention in just and fair manner.

5.

Per contra, Ld. DR vehemently supported the orders of the revenue authorities.

6.

We have considered the rival submissions and perused the material available on record. Admittedly, in the present case the impugned order was passed on ex-parte basis, wherein there was no findings recorded by the CIT(A) on merits, he simply accepted the findings of the AO and confirmed the same, without any submissions by the assessee. In view of such facts and circumstances of the present case, we deem it appropriate to restore

3 ITA No. 2540/Mum/2026 Rajshree Creations this matter back to CIT(A) for fresh adjudication after hearing the assessee and by deciding the issues under a speaking order.

7.

Needless to say, the assessee shall be afforded reasonable opportunity of being heard during the set aside proceedings. The assessee is also directed to remain compliant with the notices in the appellate proceedings, failing which the appellate authority is at liberty to decide the case in accordance with mandate of law.

8.

In the result, appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on 09.07.2026.

Sd/- Sd/- (AMIT SHUKLA) (ARUN KHODPIA) Judicial Member Accountant Member

Mumbai : Dated 09.07.2026

Copy of the order forwarded to : 1. The appellant 2. The respondent 3. CIT-concerned 4. DR, ITAT, Mumbai 5. Guard file By order

(Dy/Asstt. Registrar) ITAT, Mumbai.

More judgments on Section 263

All 13,616 judgments and leading authorities on Section 263 →

Recent GST High Court judgments

Search GST case law →