MUFADDAL NAJMUDDIN INDOREWALA,MUMBAI vs. INCOME TAX OFFICER,WARD-20(2)(1).MUMBAI, MUMBAI

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ITA 3514/MUM/2026Status: DisposedITAT Mumbai22 May 20266 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessee was not afforded sufficient and effective opportunity of hearing, violating principles of natural justice. The matter was restored to the CIT(A) for fresh adjudication on merits.

What were the facts?

The assessee's appeal was dismissed by the CIT(A) for non-compliance without a proper opportunity to be heard. The assessee argued that the short notice period prevented them from submitting required details.

What were the issues?

Whether the CIT(A) erred in dismissing the appeal for non-compliance without granting adequate opportunity of hearing. Whether the addition made by the AO under Section 69C was justified.

Which sections of the Income-tax Act were involved?

Section 144,Section 69C,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “H(SMC

For Appellant: Shri B. N. Rao & Ms. Monu Verma, Ld
For Respondent: Shri Pravin Salunkhe, Ld. DR
Hearing: 20.05.2026Pronounced: 22.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “H(SMC)” BENCH MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No. 3514/Mum/2026 (Assessment Year: 2017-18) Mufaddal Najmuddin ITO Ward 20(2)(1), Indorewala Room No. 216, 2nd 6D, 6th Floor, Cyrus Vs. floor, Piramal Avenue Almadina Road, Chamber, Lalbaug, Agripada Mumbai- Parel, Mumbai – 400 008 400 012 PAN/GIR No. AAFPI3199F (Applicant) (Respondent) Assessee by Shri B. N. Rao & Ms. Monu Verma, Ld. ARs Revenue by Shri Pravin Salunkhe, Ld. DR Date of Hearing 20.05.2026 Date of Pronouncement 22.05.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: This appeal filed by the assessee is directed against the order passed by the learned Addl./JCIT(A),from the Office of Commissioner of Income Tax (Appeals), Prayagraj [hereinafter referred to as "CIT(A)"]dated 06.02.2026 for Assessment Year 2017-18 arising out of the assessment order passed by the

2 ITA No. 3514/Mum/2026 Mufaddal Najmuddin Indorewala Income Tax Officer, Ward 20(2)(1), Mumbai [hereinafter referred to as "Assessing Officer or AO"]under section 144 of the Income Tax Act, 1961 [hereinafter referred to as "the Act"]dated 25.12.2019.

2.

The assessee has raised the following grounds of appeal:

1.

Erred in confirming the assessment order of the AO without affording adequate opportunity of hearing and without appreciating that the order passed by the AO was defective and unjustified. 2. Agreeing the appellant did not respond for his own reasons, the AO and the JCIT(A) should have appreciated that the appellant was a salaried person and has been a regular assessee filing his tax returns, that he had no other source of income other than salaries and he had spent through credit card to get extra time to make payments by EMI or otherwise and had paid through Bank to the Credit card account and the same could not have been held as an unexplained expenditure; 3. The learned JCIT(A) ought to have appreciated that the AO has made a simple mistake in addition in respect of the credit card payments and that was a simple obvious mistake. From the Assessment order on page 2 under the heading the Credit card expense details are given and an amount of Rs. 2,59,600 through ICICI Bank Credit card No. 4629863022646016 has been duplicated and therefore, the addition made is wrong. 4. Learned Assessing officer has erred in assessing the payment of Rs.1209000/- made through credit cards as unexplained expenditure u/s 69C of the Act, as these expenses have been incurred out of loan taken through credit cards, meaning sources of expenditure stands explained. 5. The order passed by the AO and the JCIT (Appeal) is against the facts of the case and law applicable thereto. 3. Brief facts of the case are that the assessee filed return of income for the year under consideration on 30.03.2018 declaring

3 ITA No. 3514/Mum/2026 Mufaddal Najmuddin Indorewala total income at Rs. 6,00,000/-. The case of the assessee was selected for limited scrutiny under CASS for verification of credit card payments. Notice under section 143(2) of the Act was issued and served upon the assessee. Thereafter, notices under section 142(1) were also issued calling upon the assessee to furnish details regarding source of funds for payment of credit card dues. However, according to the Assessing Officer, there was continuous non-compliance on the part of the assessee.

4.

The Assessing Officer observed that despite grant of various opportunities, the assessee neither attended nor furnished any details regarding the source of payment of credit card expenses. The Assessing Officer noted from the SFT information that the assessee had made payment towards credit card bills aggregating to Rs. 12,09,000/-. The details of the credit cards as reproduced in the assessment order were as under: -

(i) Standard Chartered Bank Credit Card No. Rs. 1,86,400/- 5444388756232452 (ii) HDFC Bank Credit Card No. 000000000080417793 Rs. 0/- (iii) Citi Bank Credit Card No. 4564070095642000 Rs. 2,61,300/- (iv) ICICI Bank Credit Card No. 4629863022646016 Rs. 2,59,600/- (v) ICICI Bank Credit Card No. 4629863022646016 Rs. 2,59,600/-

5.

The Assessing Officer held that since the assessee failed to explain the source of such expenditure, the aggregate amount of Rs. 12,09,000/- was liable to be treated as unexplained expenditure under section 69C of the Act. Accordingly,

4 ITA No. 3514/Mum/2026 Mufaddal Najmuddin Indorewala assessment under section 144 of the Act was completed vide order dated 25.12.2019 determining the total income at Rs. 18,09,000/- as against returned income of Rs. 6,00,000/-. 6. Aggrieved by the assessment order, the assessee preferred appeal before the learned CIT(A). The learned CIT(A) noted that the appeal was instituted on 19.02.2020 against the assessment order dated 25.12.2019. The learned CIT(A) further observed that notice under section 250 dated 29.01.2026 was issued calling upon the assessee to furnish submissions and documentary evidences on or before 05.02.2026. Since no reply was furnished by the assessee, the learned CIT(A) dismissed the appeal for non- compliance. 7. During the course of hearing before us, the learned Authorised Representative submitted that though the appeal was filed in the year 2020, only one effective opportunity was granted by the learned CIT(A) vide notice dated 29.01.2026 requiring compliance on or before 05.02.2026 and immediately thereafter the appeal was dismissed on 06.02.2026. It was submitted that due to shortage of time and inability to compile the requisite details within such short period, the assessee could not furnish reply before the learned CIT(A). The learned AR therefore requested that in the interest of justice one more opportunity may kindly be granted to the assessee and the matter may be restored back to the file of the learned CIT(A) for adjudication afresh on merits.

5 ITA No. 3514/Mum/2026 Mufaddal Najmuddin Indorewala 8. The learned Departmental Representative fairly submitted that he has no objection if the matter is restored back to the file of the learned CIT(A) for fresh adjudication. 9. We have heard the rival submissions and perused the material available on record. It is noticed that the appeal before the learned CIT(A) was filed on 19.02.2020 and remained pending for considerable period. Thereafter, the learned CIT(A) issued notice under section 250 of the Act dated 29.01.2026 granting time only upto 05.02.2026 for compliance and the impugned order came to be passed on 06.02.2026 dismissing the appeal for non-prosecution. In our considered view, the assessee was not afforded sufficient and effective opportunity of hearing before disposal of the appeal. 10. It is a settled proposition of law that the first appellate authority is duty bound to adjudicate the issues raised before it on merits after granting adequate and effective opportunity of hearing to the assessee. The principles of natural justice require that no adverse order should be passed without providing reasonable opportunity to the concerned party. In the present case, considering the short time granted by the learned CIT(A) for compliance and the fact that the appeal was dismissed without adjudicating the grounds on merits, we are of the considered opinion that the matter deserves to be restored back to the file of the learned CIT(A). 11. Accordingly, we set aside the impugned order passed by the learned Addl./JCIT(A), Prayagraj and restore the entire matter

6 ITA No. 3514/Mum/2026 Mufaddal Najmuddin Indorewala back to his file with direction to decide the appeal afresh on merits in accordance with law after granting reasonable and effective opportunity of hearing to the assessee. The assessee is also directed to cooperate in the appellate proceedings and furnish requisite details and evidences as may be called for by the learned CIT(A) without seeking unnecessary adjournments.

12.

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

Order pronounced in the open court on 22.05.2026.

Sd/- Sd/- (KAVITHA RAJAGOPAL) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 22/05/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant प्रत्यथी / The Respondent. 2. 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

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