ZIRCON CONTEX PRIVATE LIMITED ,MUMBAI vs. CIT, CENTRAL CIRCLE 5(4), MUMBAI

PER PAWAN SINGH, JUDICIAL MEMBER: 1. These group of five appeals by the assessee are directed against the

separate orders of ld. Commissioner of Income Tax (Appeals) – 53,

Mumbai, [for short “CIT(A)”] all dated 15/11/2025, for the assessment

years (AYs) 2014-15 to 2018-2019. In all the appeals, the assessee has

raised the certain common grounds of appeals; certain are common

therefore, with the consent of both the parties all the appeals were

clubbed, heard together and decided by the way of common order to avoid

conflicting decision. The Assessing Officer (‘AO’) levied penalty in the first

ITA No. 8989,8988,8987,8986 & 8985/M/2025 (A.Y. 2014-15 to 2018-19) Zircon Cotex Private Limited, Mumbai.

three appeals under Section 271(1)(c) of the Act and in last two

assessment years under Section 270A of the Income Tax Act, for under-

reporting income and thereby levied penalty at the rate 50% on tax which

was sought to be evaded.

perused. The Learned Authorised Representative (‘Ld. AR’) of the assessee

fairly submits that the order of CIT(A) is ex-parte. Further, the AO issued a

show cause notice on 13.06.2024 and on 20.06.2025 and penalty order

was passed on 27.06.2025. The Ld. AR of the assessee submits that, the

assessment was completed pursuant to the search action on the assessee’s

group. Though, the assessee was searched, however, the Assessment

Order was passed under Section 153(C). In the assessment order for AY

2014-15, the AO disallowed depreciation on fixed asset by taking view that

there was certain bogus purchase. In all subsequent years and

consequential depreciation was disallowed. Though, the assessee filed an

appeal in a quantum assessment but without any success. When initially

the AO issued show cause notice for levy of penalty, the assessee filed

reply and filed reply that matter is in appeal and the levy of penalty may be

kept in abeyance. After dismissal of the appeal the assessee in the

quantum assessment, the AO issued show cause notice in June 2025.

Before the assessee could reply, the penalty was levied vide order dated

27.06.2025 in all the assessment years. Before CIT(A), the order was

confirmed in ex-parte order. The Ld. AR of the assessee submits that, in all

ITA No. 8989,8988,8987,8986 & 8985/M/2025 (A.Y. 2014-15 to 2018-19) Zircon Cotex Private Limited, Mumbai.

fairness, he accepted that there were certain lapses on the part of the

assessee. Though, the assessee has good case on merit and may succeed,

if the appeals are heard on merits. Though, the matter can be adjudicated

by the Bench due to smallness of the quantum of penalty in each

assessment years. Yet, to give the opportunity to lower authorities to

consider the merit of case, all the appeals may be restored back to the file

of the CIT(A) or the AO for adjudicating matter afresh. He also undertakes

on behalf of the assessee to be more vigilant in making the timely

compliance.

Sr. DR’) for the revenue supported the order of the lower authorities. The

Ld. Sr. DR for the revenue submits that the AO as well as CIT(A) has given

reasonable and sufficient opportunity, it is the assessee who has not

responded. Though, the assessee does not deserve any further leniency.

Still, if the Bench is of the view that the assessee be allowed opportunity, in

such position, the appeals may be restored back to the file of CIT(A) with

the direction to the assessee to file their submission.

gone through the orders of the lower authorities carefully. We find that the

addition on the basis of which the penalty was levied relates to

disallowance of depreciation. The addition/disallowance of depreciation has

been upheld by First & Second Appellate Authority. The penalty

proceedings are separate and independent, no doubt initiated on the basis

ITA No. 8989,8988,8987,8986 & 8985/M/2025 (A.Y. 2014-15 to 2018-19) Zircon Cotex Private Limited, Mumbai.

of additions/disallowance. It is the matter of fact that the lower authorities

have passed the order with ex-parte proceedings. Before us, the Ld. AR of

the assessee vehemently urged that, he undertake on behalf of the

assessee to be more vigilant in making timely compliance, if the assessee is

given one more opportunity to contest the penalty proceedings on merit.

Considering the overall facts of the cases and keeping in view the principal

of natural justice, we deem it appropriate to restore all the matter back to

the file of the Jurisdictional Assessing Officer (‘JAO’) to pass the order

afresh. Needless to direct that JAO shall allow fair and reasonable

opportunity to the assessee. The assessee is also directed to be more

vigilant in the future in making timely compliance. With these directions

and observations, the grounds of appeal in all the appeal are allowed for

statistical purposes.

Order pronounced in open Court on 07.07.2026.

Sd/- Sd/- OM PRAKASH KANT PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 07/07/2026 Aditi Pandare, Aditi Pandare, PS Aditi Pandare, Aditi Pandare, PS PS PS Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. By order,

Assistant Registrar ITAT, Mumbai