PANKAJ JETHALAL SHAH,MUMBAI vs. INCOME TAX OFFICER , MUMBAI

The appeal was filed with a delay for 72 days. The assessee filed a notarized affidavit duly sworn on 29.06.2026. The assessee contended that the appeal order was not served due to the said order was served in the email of the previous Charted Accountant who had ceased to act for him. So, the assessee had not received the proper intimation within the time. Finally, when demand recovery notice was issued the assessee was intimated about the appellate order. Then after contacting the tax consultant the assessee filed the appeal before ITAT. The Ld. DR had not made any strong objection against the submission of the assessee. Considering the assessee’s submission seeking for condonation of delay, we find there is sufficient cause to condone the delay and the delay for 72 days is condoned and the appeal is taken for adjudication.

The brief facts of the case are that the assessee filed the return of income declaring a total income of Rs.1,71,410/-. Subsequently, the assessment was reopened under section 147 of the Act on the ground that the assessee had allegedly made purchases from M/s. Shradhha Trading Company, which was treated by the Ld. AO as a non-genuine concern. During the course of the assessment proceedings, the assessee furnished all the relevant documentary evidence in support of the genuineness of the impugned purchases. However, the Ld. AO treated the entire purchases made from M/s. Shradhha Trading Company as bogus and added the purchase amount of Rs.8,37,752/- to the total income of the assessee under section 69C of the Act. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), after granting opportunities of being heard, proceeded to dispose of the appeal ex parte for non-prosecution and upheld the assessment order passed by the Ld. AO. Being further aggrieved, the assessee has preferred the present appeal before us.

The Ld. AR contended that the assessee is engaged in the business of trading in various hardware items required for the repair and maintenance of sugar manufacturing plants. Purchase orders are issued by the sugar factories from time to time for the supply of different hardware and allied items. Pursuant to such purchase orders, the assessee procures the required materials from various suppliers in the open market and supplies the same to its customers. It was submitted that the assessee had also purchased goods from the alleged party and, in support of the genuineness of such purchases, had furnished before the Ld. AO copies of purchase invoices, payment details evidencing transactions through banking channels, VAT returns, and material delivery receipts. These documents have also been placed on record in the Assessee's Paper Book at pages 1 to 80. The Ld. AR further submitted that the assessee could not effectively participate in the appellate proceedings before the Ld. CIT(A), as the notices were issued to the email address of the assessee's tax consultant, who failed to communicate the same to the assessee. Consequently, the assessee remained unaware of the hearing notices and was deprived of an effective opportunity of being heard. The Ld. AR, therefore, prayed that the matter be restored to the file of the Ld. CIT(A) for de novo adjudication after affording the assessee a reasonable opportunity of hearing.

The Ld. DR argued and contended that the assessee had not complied the notices issued by the Ld. CIT(A). No such proper explanation was filed for non-compliance before the Ld. CIT(A). The Ld. DR stands in favor of the orders of revenue authorities.

We heard the rival submission and considered the documents available in the record. The assessee filed the return and the assessee’s case was reopened related to the purchase transactions with M/s. Shradhha Trading Company amount to Rs.8,37,752/-. The Ld. AO treated the purchase as a fictitious transaction and added back with the total income of the assessee. Being aggrieved on assessment order the assessee has preferred an appeal before the Ld. CIT(A). However, the appeal was disposed of exparte due to nonappearance on the part of assessee. During the course of hearing before us, the Ld. AR was unable to satisfactorily explained the reasons for non- compliance during appellate proceeding. The Ld. DR objected to the assessee’s plea and submitted that the reasons for non-compliance had not been properly substantiated or supported by any cogent material. Therefore, in the interest of substantial justice, and principle of natural justice, we are of the considered view that the assessee deserves one more opportunity to present its case before the Ld. CIT(A). during the course of hearing, the Ld. AR was ready to bear the reasonable costs for non-appearance in the appellate proceedings. Accordingly, the acceptance of the Ld. AR was fairly accepted by the Ld. DR. So, we impose a cost of Rupees Five Thousand (Rs.5000/-) upon assessee which shall be deposited under the “other head” of the Income Tax Department within one month from the date of receipt of this order. Subject to verification of payment of the aforesaid cost, by the Ld. CIT(A), all the issues are restored to the file of Ld. CIT(A) for adjudication afresh on merits in accordance with law. We make it clear that we have not expressed any opinion on merit of the case. So, as to ensure that the appellate proceedings before the Ld. CIT(A) remain uninfluenced. Needless to say, the assessee shall be afforded a reasonable opportunity of being heard and shall also extend full cooperation for expeditious disposal of the appellate proceedings.

In the result, the appeal of the assessee bearing ITA No.3990/Mum/2026 is allowed for statistical purpose. Order pronounced in the open court on 03rd day of July 2026