RAM GANGWANI,MUMBAI vs. CIRCLE41(1)(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH; MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA Nos. 603, 569and 570/Mum/2026 (Assessment Year: 2017-18)

Ram Gangwani DCIT, Circle41(1)(1) 72/12, SevaSamiti Co-op Kautilya Bhavan, Bandra Kurla Housing Society, Sion- vs. Complex, G Block, Bandra East, Koliwada, Mumbai, Mumbai, Maharashtra, 400051. Maharashtra, 400037.

PAN: AEMPG3722R (Appellant) (Respondent) For Assessee : Shri S.R. Lodhe Adv. For Revenue : Shri Nakul Agrawal Sr.DR (Virtually appear) Date of Hearing : 17.06.2026 Date of Pronouncement : 09.07.2026 O R D E R PER VIKRAM SINGH YADAV, A.M : These are three appeals filed by the Assessee against the respective orders of the Learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [‘Ld.CIT(A)’], all dated 25.11.2025, pertaining to Assessment Year (AY) 2017-18 wherein the ld CIT(A) has dismissed the appeal of the assessee in quantum proceedings u/s 143(3) and penalty levied u/s 271AAC(1) and u/s 272A(1)(d) has been confirmed.

ITA Nos. 603/Mum/2026 &Ors.; A.Y. 2017-18 Ram Gangwani 02.11.2017. The return was selected for limited scrutiny under CASS for verification of unsecured loans. Thereafter, notices u/s. 143(2) and 142(1) were issued, calling for necessary information and documentation. However, the submissions so filed by the assessee was not found acceptable and the Assessing Officer brought to tax unsecured loan taken by the assessee from Mr. Govardhan Gamnani as unexplained credit u/s. 68 and addition of Rs. 1,01,00,000/- was made u/s. 68 read with section 115BBE of the Act and the assessed income was determined at Rs.1,21,51,570/-.

ITA Nos. 603/Mum/2026 &Ors.; A.Y. 2017-18 Ram Gangwani that there is some outstanding tax demand against the assessee and thereafter, the assessee took the necessary steps and filed the appeal before the ld. CIT(A) on 26.02.2025. It was accordingly submitted that the ld. CIT(A) has failed to take the same into consideration and has dismissed the appeal of the assessee in limine on account of delayed filing. Further, our reference was drawn to the written submissions and the contents thereof reads as under: “16. The appellant stated before the ld.CIT(A) that the assessee has received assessment order only through email-reminder dated 19.1.2025, and demand notice dated 27.1.2026. The appeal was Hereto annexed and filed before the ld.CIT(A) on 25.2.2025. marked as Annexure-A-1 is a copy of demand notice dated 27.1.2026. 17. The assessee-appellant submits that the assessment order is dated 4.12.2019, which is placed on Income tax portal on 5.12.2019. Due to complete lockdown this assessment order was not served on the assessee nor the Id.AO has taken any concrete steps to serve the Order of assessment dated 4.12.2019. The COVID-19 in India officially started on January 30, 2020, the appeal from 5.12.2019 should have been filed on or before 5.1.2020 if it is served but due to Covid-19 effect all the functions have been paralyzed and the order dated 4.12.2019 could not be served to the assessee and only by reminder of email dated 19.1.2025, the assessee received the assessment order and hence, the limitation have been started from 19.1.2025. 18. The first case reported in Kerala and from 30.1.2020, the effect of COVID-19 started in India, immediately impacting the country through rapid economic disruption, intense lockdowns starting March 25, 2020, severe job losses for millions of migrant workers, and an initial health system strain that escalated into a devastating second wave in 2021. During this period none of the human being were working freely and all the Government offices were paralyzed due to this COVID-19 and hence, the Hon'ble Supreme Court suomotu declared condonation in files appeals, suits, writs in any court in India and it was continued till March 2022. Hereto annexed and marked as Annexure-A-2 is a copy of judgment of Hon'ble Supreme Court in Miscellaneous Application No.21 of 2022 dated 10.1.2022 by this order the Hon'ble Supreme Court has extended condonation of delay till 28.2.2022. 19. Therefore, there is no question of delay till 28th February 2022. Even after lifting of lockdown there was delay in normal functioning of the situation. 20. The assessee submits that, the Id. AO order has passed order on 4.12.2019 and posted on Income tax portal on 5th Dec 2019. Till March 2022, there was no physical communication. By placing the order or

ITA Nos. 603/Mum/2026 &Ors.; A.Y. 2017-18 Ram Gangwani notice is not suffice to service of the notice/order. As per the provisions of F. No. Pr. CCIT/NeAC/SOP/2020-21 Government of India Ministry of Finance Central Board of Direct Taxes National e-Assessment Centre New Delhi Dated:19/11/2020 on the Subject SOP for Assessment Unit under the Faceless Assessment Scheme, 2019. In this notification, it has been very specifically stated if the notice is not received by the assessee, it is the duty of the department to serve the notice but in the said notification, there is no mentioned if the assessment order is not serviced on the assessee for technical reason or procedural lacuna as the case of the assessee, the order is dated 4.12.2019 and there was total ban on movement on human being for two years and the assessment order is passed but not served still the action of the department can be appreciated against the assesses. The assessment order is dated 4.12.2019 was not communicated to the assessee and the ld.CIT(A) has taken this datefor limitation which is prejudice to the interest of assessee that unless and until the service of any order has done to the assessee no department to entitle to take action against the assessee. Hereto annexed and marked as Annexure-A-3 is a copy of SOP dated 19.11.2020 21. The assessee submits that, the assessee received email- reminder of assessment order dated 19.1.2025, therefore, the cause of action started from 19.1.2025 and the appeal filed before the Id.CIT(A) on 25.2.2025. Therefore, the appeal filed before the ld.CIT(A) was well within the limitation but the ld.CIT(A) calculated the limitation from 4.12.2019 and rejected the appeal for want of condonation of delay. 22. The issue of limitation period in filing the appeal before the appellate authority and the Principal has been elaborately dealt with by the Hon'ble Supreme Court in the case of S. L. Kapoor vs Jagmohan&Ors on 18 September, 1980 reported in 1981 AIR 136, 1981 SCR (1) 746 wherein it has been held (1) The order dated February 27, 1980 of the Lt. Governor superseding the New Delhi Municipal Committee is vitiated by the failure to observe the principle of audialterampartem. [767D] (2) (i) An administrative body may in a proper case, be bound to give a person who is affected by their decision an opportunity of making representation. It all depends on whether he has some right or interest, or some legitimate expectation, of which it would not be fair to deprive him. [754 C]. Hereto annexed and marked as Annexure-A-4 is a copy of judgment of Hon'ble Supreme Court in the case of S. L. Kapoor vs Jagmohan&Ors on 18 September, 1980 reported in 1981 AIR 136, 1981 SCR (1) 746 23. The assessee-appellant submits that the Hon'ble Bombay High Court in the case of Yogeshwari Petrochemicals Private ... vs The State Of Maharashtra on 5 December, 2025 in WRIT PETITION NO. 11642 OF 2025 order dated 5th December, 2025 observed and held as under: "7. Mr. Deolekar's contentions beg the question. The issue here is whether the limitation is to be construed from the date of the order or from the date of knowledge of the order. This is certainly an

ITA Nos. 603/Mum/2026 &Ors.; A.Y. 2017-18 Ram Gangwani arguable issue, both on the facts and on the law. Before any decision could have been taken on this issue, the principles of natural justice ought to have been followed. 8. The appellate authority cannot presume that the appeal is delayed solely based on the order dates. Here, it was the petitioner's case that the limitation had to be construed from the date of knowledge. Therefore, this plea could not have been summarily rejected as it has been, without even hearing the petitioner or allowing him an opportunity to make good his case. 9. The fact that the Statute may not specifically contemplate a hearing or an opportunity makes no difference. The principles of natural justice are required to be read into "theUnoccupied interstices of statute" so that a fair hearing and fair opportunity are granted to the parties who are likely to be affected by the outcome. That the principles of natural justice must be read into the 'unoccupied interstices' of the statute unless there is a clear mandate to the contrary was the law laid down in the decisions of the Supreme Court in Institute of Chartered Accountants of India Vs. L.K. Ratna& 19-WP-11642-2025 (C).DOCX Otherst and in S. L. Kapoor vs. Jagmohan& Ors2 10. On the above grounds, we allow this petition, quash and set aside the impugned order dated 9 March 2025, and remand the matter to the appellate authority with directions to hear the petitioner and to decide the issue of the appeal being affected by the bar of limitation only thereafter. This exercise must be completed within three months from the date of uploading of this order. 11. However, we clarify that all contentions of all parties are expressly left open. The fact that we have set aside the impugned order does not mean that we have accepted the petitioner's case about service or date of knowledge. We have set aside the impugned order because we believe that such an order, which adversely affects the interest of the petitioner, should not have been made without allowing the petitioner to put forth his case for being heard in the matter"

Hereto annexed and marked as Annexure-A-5 is a copy of judgment of Hon'ble High Court in the case of Yogeshwari Petrochemicals Private ... vs The State Of Maharashtra in WP NO. 11642 OF 2025 order dated 5th December, 2025. 24. The assessee-appellant would like to refer to and rely on the decision of Hon'ble Supreme Court in the case of Collector Land Acquisition, vs Mst. Katiji&Ors on 19 February, 1987Equivalent citations: 1987 AIR 1353, 1987 SCR (2) 387 wherein the Hon'ble Supreme Court observed and held as under:

ITA Nos. 603/Mum/2026 &Ors.; A.Y. 2017-18 Ram Gangwani "3. The legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on de merits. The expression "sufficient cause" employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life- purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the others courts in the hierarchy. Hereto annexed and marked as Annexure-A-6 is a copy of the judgment of Hon'ble Supreme Court in the case of Collector, Land Acquisition Vs. Mst. Katiji: 167 ITR 471. 25. The assessee also would like to refer to and rely on the decision of this Bench in the case of M/s Mizuho Corporate Bank Ltd. V/s ADIT International taxation in ITA No.602/Mum/2013 order dated 26th March 2014 wherein on the issue of condonation of delay the Hon'ble Bench vide para 12 observed and held asunder : "12. We have considered rival contentions and found that issue taken by the assessee is covered in favour of the assessee by the order of the Tribunal in assessee's own case in the immediately preceding year. With regard to the delay in filing appeal, we have considered the rival submissions carefully. The issue is whether the delay in filing of appeal by the assessee was on account of sufficient reasons or not.If the reasons are found to be sufficient and bona fide the delay deserves to be condoned. Before we evaluate the sufficiency of the reasons, it would be of relevance to keep in mind the broad judicial thoughts on the issue. No doubt filing of appeal is a right granted under the statute to the assessee and is not an automatic privilege, therefore, the assessee is expected to be vigilant in adhering to the manner and mode in which the appeals are to be filed in terms of the relevant provisions of the Act. Nevertheless, liberal approach has to be adopted by the appellate authorities where delays have occurred for bona fide reasons on the part of the assessee or revenue in filing appeals. In matters concerning the filing of appeals, in exercise of the statutory right, a refusal to condone delay can result in a meritorious matter being thrown out at the very threshold which would lead to miscarriage of justice. The judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so." Hereto annexed and marked as Annexure-A-7 is a copy of Tribunal order in the case of M/s Mizuho Corporate Bank Ltd. V/s ADIT International taxation in ITA No.602/Mum/2013 order dated 26th March 2014.

ITA Nos. 603/Mum/2026 &Ors.; A.Y. 2017-18 Ram Gangwani 26. In addition to the above, the assessee refers to and rely on the decision of this very Bench in the case of Mr. Rajesh Tulsidas Kalla, in ITA No. ITA No.828/Mum/2025 (Assessment Year: 2010-11) & ITA No.829/Mum/2025 (Assessment Year: 2009-10) order dated 15.4.2026 wherein the Hon'ble Bench has condoned the delay vide para 4 observed and held as under : "4. Having considered the averments made in the affidavit and the explanation tendered, and bearing in mind that procedural delays should not come in the way of substantial justice where sufficient cause is shown, we are satisfied that the assessee was prevented by reasonable cause from filing the appeals within the prescribed time. Accordingly, the delay of 36 days is condoned and the appeals are admitted for adjudication on merits." Hereto annexed and marked as Annexure-A-8 is a copy of Tribunal order in the case of Mr. Rajesh Tulsidas Kalla, in ITA No. ITA No.828/Mum/2025 (Assessment Year: 2010-11) & ITA No.829/Mum/2025.” 5. It was further submitted that at the relevant point in time, the assessee was a proprietor of the firm M/s. Selfmark Fashions and was involved in the trading business of fashionable clothes and for its business purposes, the assessee has taken unsecured loan from Mr. Govardhan Gamnani in the year 2016-17, who was the NRI and family friend and the said loan has subsequently been repaid fully in the year 2019-20. It was submitted that in support of the loan transaction, the assessee has submitted the necessary documentary evidences in terms of the bank statements of the lender and copy of the confirmation letter from the lender confirming the loan transaction. Further, the NRI lender has also confirmed the transaction to the Assessing Officer vide his email dated 26.12.2019. however, inspite of the relevant documentary evidence submitted by the assessee, the Assessing Officer failed to appreciate the same and has gone ahead and has made the addition. It was submitted that the assessee has discharged the necessary onus in terms of identity, creditworthiness and genuineness of the transaction. The loan amount has been taken through normal banking channels duly reflected in the books of account, the lender has confirmed the loan transaction and also filed the independent confirmation directly

ITA Nos. 603/Mum/2026 &Ors.; A.Y. 2017-18 Ram Gangwani before the Assessing Officer which apparently has not been appreciated and considered by the Assessing Officer and even the ld. CIT(A) has failed to record any factual finding on the merits of the case.

ITA Nos. 603/Mum/2026 &Ors.; A.Y. 2017-18 Ram Gangwani 8. We have heard the rival contentions and perused the material available on record. Where the assessee is aggrieved with the order and findings of the Assessing officer, the assessee can file appeal before the ld CIT(A) within thirty days of notice of demand being served on the assessee. Therefore, for filing of appeal, besides the assessment order which carries the findings of the Assessing officer and the basis of arriving at the findings in terms of the additions/disallowances made, notice of demand which quantifies the ultimate tax liability plays an equally important role and have to be read and understood jointly (and not dis-jointly) with the assessment order and more so, the service of notice of demand helps determine the period of limitation for filing such appeal before the ld CIT(A). In the instant case, admittedly and undisputedly, the notice of demand initially carries NIL tax demand and therefore, the question that arises is how to determine the period of limitation for filing appeal before the ld CIT(A). Where the demand notice carries Nil demand, additional question that arises is whether there was an occasion for the assessee to take any further action in terms of filing the appeal before the ld. CIT(A) and even where the appeal had been filed, would the ld CIT(A) have adjudicated the grounds of appeal where the ultimate tax liability has been determined at Nil by the Assessing officer. In any case, in the instant case, the assessee has challenged the non-service of the assessment and demand notice and mere uploading on the IT portal without demonstrative service on the assessee electronically or otherwise cannot be held to be valid service. The ld DR has submitted that due to certain technical/IT glitches, it is possible that no tax demand was reflected in the IT system and the notice of demand; and subsequently, when the said technical glitches were rectified, the assessee was made aware of the outstanding tax demand vide email communication dated 19/01/2025, we find that in such a scenario, the period that the Revenue took to remove the technical glitches cannot be attributed to the assessee and the said

ITA Nos. 603/Mum/2026 &Ors.; A.Y. 2017-18 Ram Gangwani period deserve to be excluded for computing the period of limitation and the limitation period will start from the date where the corrected demand notice was served on the assessee. In the instant case, there is no material on record as to when the corrected demand notice was served on the assessee, however, a communication dated 19/01/2025 has been stated to be issued whereby the assessee was made aware of the tax demand which has not been disputed by the Revenue. In such a scenario, it would be appropriate to consider the said date as the start of the limitation period for the purposes of filing appeal before the ld CIT(A). Where the said date is considered, we find that there is no delay in filing the appeal before the ld CIT(A) and the appeal has been duly filed in time. We therefore find the explanation so submitted by the assessee as reasonable and duly supported by the provisions governing the limitation period which apparently has not been properly considered and appreciated by the ld CIT(A). In light of the same, the findings of the ld CIT(A) are hereby set-aside and the appeal of the assessee is admitted for adjudication.

ITA Nos. 603/Mum/2026 &Ors.; A.Y. 2017-18 Ram Gangwani 11. In the result, all the three appeals filed by the assessee are allowed for statistical purposes.

Order pronounced on 09.07.2026

Sd/- Sd/- SIDDHARTHA NAUTIYAL VIKRAM SINGH YADAV (JUDICIAL MEMBER) (ACCOUNTANT MEMBER)

Mumbai, Dated: 09.07.2026 Karishma J. Pawar, SR. PS

Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file

By Order

Dy./Asst. Registrar I.T.A.T, Mumbai