NAVKAR INVESTMENTS,DADAR vs. INCOME TAX OFFICER, WARD 20(2)(1), MUMBAI

आदेश / ORDER PER SMT. BEENA PILLIA, JUDICIAL MEMBER:

Present appeal filed by the assessee arises out of the order dated 28/10/2025 passed by NFAC, Delhi [hereinafter referred to as “Ld.CIT(A)”] for AY 2016-17, on the following grounds of appeal:-

“1) General Ground challenging the CIT Appeal order dated 28.10.2025 2) Ground Challenging the validity of reopening us 147 based on mere suspicion.

ITA 4905/MUM/2026 NAVKAR INVESTMENTS 3) Ground Challenging ex parte assessment us 144 due to non receipt of notices 4) Ground Challenging addition us 69B regarding property purchase 5) Ground Challenging the resulting tax demand of Rs. 2,32,21,598 6) Ground Challenging the Penalty us 271F 7) Ground Challenging non consideration of additional evidence by CIT Appeal 8) Ground challenging confirmation of Best Judgment assessment 9) Ground Without prejudice addition of Rs. 2,90,47,305 is excessive 10) Consequential Grounds” 2. At the outset, we find that there is a delay of 122 days in filing the present appeal before the Tribunal. The assessee has filed a petition seeking condonation of the said delay. It is stated in the petition that the order of the Ld. CIT(A) dated 28/10/2025 was delivered at the registered e-mail address of the assessee on the same date. However, owing to a sudden medical emergency and serious health issues, coupled with other personal exigencies, the said communication escaped the attention of the assessee. The petition states that the partner of the assessee remained physically and mentally incapacitated from 10/11/2025 to 15/01/2026 and was, therefore, not in a position to attend to business, professional or litigation matters during the said period.

2.1. It is further stated that the consultant who was earlier handling the tax matters of the assessee had relocated and was no longer accessible, leading to a bona fide belief on the part of the assessee that appropriate steps would be taken as and when required. The partner of the assessee allegedly became aware of the seriousness of the matter only when coercive recovery proceedings

ITA 4905/MUM/2026 NAVKAR INVESTMENTS were initiated by attachment of the assessee's bank account with the State Bank of India on 10/02/2026. Upon acquiring knowledge of the matter, the assessee made efforts to identify a suitable professional to handle the appellate proceedings, and immediately upon engaging the present counsel, necessary steps were taken for filing the appeal.

2.2. The petition further states that the prescribed period of 60 days expired on 27/12/2025, whereas the appeal was filed on 27/04/2026, resulting in a delay of 122 days. It has been pleaded that the delay was neither intentional nor deliberate, but occasioned on account of the aforesaid medical circumstances, change of consultant and lack of legal sophistication. The assessee has also pleaded that it has a prima facie case on merits involving, inter alia, the validity of reopening u/s. 147 and the additions made u/s. 69B of the Act, and that refusal to condone the delay would result in denial of an opportunity to have the matter adjudicated on merits.

2.3. We have considered the reasons stated in the petition and find that the explanation furnished by the assessee constitutes sufficient cause for the delay. The Hon'ble Supreme Court in Collector, Land Acquisition, Anantnag v. Mst. Katiji & Ors. reported in (1987) 167 ITR 471 (SC) has held that the expression “sufficient cause” is adequately elastic to enable the Courts to advance substantial justice and that ordinarily a litigant does not stand to benefit by lodging an appeal belatedly.

2.4. Further, in N. Balakrishnan v. M. Krishnamurthy reported in (1998) 7 SCC 123, the Hon'ble Supreme Court held that the length

ITA 4905/MUM/2026 NAVKAR INVESTMENTS of delay is not material and that the acceptability of the explanation is the determinative consideration. The Hon'ble Court observed that a delay, even of considerable length, may be condoned where the explanation is satisfactory, whereas even a shorter delay may not be condoned where no acceptable explanation is furnished.

2.5. Similarly, in Ram Nath Sao @ Ram Nath Sahu & Ors. v. Gobardhan Sao & Ors. (2002) 3 SCC 195, the Hon'ble Supreme Court reiterated that the expression “sufficient cause” should receive a liberal construction so as to advance substantial justice, particularly where negligence, inaction or want of bona fides cannot be attributed to the litigant. It was also held that there cannot be a straight-jacket formula for determining whether the explanation constitutes sufficient cause, the same being dependent upon the facts and circumstances of each case.

2.6. In the present case, the circumstances narrated in the petition, namely, the serious medical condition of the partner during the relevant period, the non-availability of the earlier consultant, the subsequent discovery of the proceedings upon initiation of recovery action and the steps taken thereafter to engage a professional and institute the appeal, cumulatively constitute sufficient cause for the delay. There is nothing on record before us to suggest that the delay was deliberate or actuated by any mala fide intention. At the same time, the assessee has raised issues requiring adjudication on merits. Therefore, keeping in view the settled principles that procedural rules are intended to advance, rather than thwart, substantial justice, we are of the considered view that the assessee deserves an opportunity to have the appeal adjudicated on merits.

ITA 4905/MUM/2026 NAVKAR INVESTMENTS Accordingly, the delay of 122 days in filing the present appeal is condoned and the appeal is admitted for adjudication on merits.

The assessee is a firm engaged in the business of real estate. For AY 2016-17, the assessee did not file its return of income u/s. 139(1) of the Income-tax Act, 1961. On the basis of information available with the Department, it was noticed that during FY 2015- 16 relevant to the year under consideration, the assessee had entered into a transaction relating to purchase of immovable property involving payment of Rs. 2,90,47,305/-, as reflected in Form 26QB. Since no return of income had been filed and the source of the aforesaid investment remained undisclosed, the Ld. AO formed a belief that income chargeable to tax had escaped assessment. Accordingly, after obtaining the requisite approval, notice u/s. 148 was issued on 27/03/2021.

3.1. In response to the reassessment proceedings, the assessee submitted that it had filed its return of income on 30/06/2021, declaring Nil income, though there had initially been technical difficulties in verifying the return. Thereafter, notices u/s. 142(1) were issued on 24/11/2021, 15/12/2021 and 15/03/2022, and notice u/s. 143(2) was issued on 23/02/2022. The assessee furnished certain replies/partial information in response to the earlier notices. However, no response was furnished to the notice u/s. 142(1) dated 15/03/2022 or the final show-cause notice dated 23/03/2022. The Ld. AO, therefore, proceeded to complete the assessment ex parte u/s. 144 of the Act.

ITA 4905/MUM/2026 NAVKAR INVESTMENTS 3.2. The Ld. AO observed that, as per the information available with the Department, the assessee had made investment of Rs. 2,90,47,305/- in purchase of immovable property, but had failed to explain the source thereof despite being afforded opportunities. The Ld. AO held that the assessee had failed to discharge the onus of establishing the genuineness and source of the investment and, accordingly, treated the amount of Rs. 2,90,47,305/- as unexplained investment u/s. 69B of the Act. The assessment was accordingly completed u/s. 147 r.w.s. 144 read with section 144B of the Act on 27/03/2022, determining the total income of the assessee at Rs. 2,90,47,305/-. Penalty proceedings u/s. 271F, 271(1)(c) and 271(1)(b) were also initiated.

Aggrieved by the aforesaid assessment order, the assessee preferred an appeal before the Ld. CIT(A).

3.3. Before the Ld. CIT(A), the assessee contended, inter alia, that it had not received the notices u/s. 142(1) dated 15/03/2022 and the show-cause notice dated 23/03/2022 on its registered e-mail and, therefore, was unaware of the same. It was submitted that the assessee came to know about the assessment order only on 28/03/2022, upon checking the e-filing portal. The assessee further submitted that it was in possession of the documents relating to the purchase of the property and that, had proper opportunity been granted, the addition could have been explained and substantiated. The assessee accordingly challenged the assessment on the ground of violation of principles of natural justice and also challenged the addition made u/s. 69B.

ITA 4905/MUM/2026 NAVKAR INVESTMENTS 3.4. The Ld. CIT(A), however, noted that the assessee had been largely non-compliant during the assessment proceedings and that the Ld. AO had consequently completed the assessment ex parte u/s. 144 of the Act. The Ld. CIT(A) further observed that, although the assessee had claimed to be in possession of documents relating to the property transaction, no such documents or other material were furnished even during the appellate proceedings to substantiate the claim. The Ld. CIT(A), therefore, concurred with the findings of the Ld. AO and dismissed the appeal.

Aggrieved by the aforesaid order of the Ld. CIT(A), the assessee is in appeal before the Tribunal.

Ground No. 2 raised by the assessee is challenging validity of reassessment proceedings

4.1. In the present case, the relevant assessment year is A.Y. 2016- 17. It is an undisputed fact that the assessee had not furnished its return of income for the relevant assessment year. The Assessing Officer had received information regarding the assessee's transaction relating to the immovable property. On the basis of the said information and after following the procedure prescribed under the applicable provisions of the Act, the reassessment proceedings were initiated.

ITA 4905/MUM/2026 NAVKAR INVESTMENTS 4.2. The contention of the assessee that the proceedings were initiated merely on the basis of information relating to the property transaction, in our considered view, cannot be accepted in the facts of the present case. The information available with the Assessing Officer was not considered in isolation. The same had to be considered in the backdrop of the fact that no return of income had been furnished by the assessee for the relevant assessment year. Thus, there was material before the Assessing Officer indicating a transaction having potential tax implications, whereas no return of income disclosing such income was available on record.

4.3. It is well settled that at the stage of initiation of reassessment proceedings, the Assessing Officer is required to possess material which would have a live nexus with the formation of the belief regarding escapement of income. The Assessing Officer is not required, at that stage, to conclusively establish the escapement of income. Whether the transaction ultimately gives rise to taxable income, and whether the amount proposed to be assessed is sustainable, are matters to be examined in the assessment proceedings.

4.4. In the present case, considering the information available with the Assessing Officer regarding the immovable property transaction and the undisputed fact that the assessee had not furnished its return of income for the relevant assessment year, we find that the Assessing Officer had sufficient basis to initiate the proceedings. The subsequent determination of the actual tax liability is a matter on merits and cannot, by itself, invalidate the assumption of jurisdiction. We, therefore, find no infirmity in the

ITA 4905/MUM/2026 NAVKAR INVESTMENTS initiation of reassessment proceedings in the facts of the present case.

Accordingly, Ground No. 2 raised by the assessee stands dismissed.

5.1. Accordingly, the addition made under section 69B of the Act and the grounds consequential thereto are set aside and restored to the file of the Assessing Officer for de novo adjudication. The assessee shall furnish all relevant documentary evidence in support of its claim, including documents relating to acquisition of the property, consideration paid, source of payment and any other material relevant to determination of the issue. The Assessing Officer shall examine the same in accordance with law and decide the issue afresh after affording reasonable opportunity of being heard to the assessee. Needless to state, all contentions of the assessee on the merits of the addition are left open and the Assessing Officer shall adjudicate the issue independently in accordance with law.

ITA 4905/MUM/2026 NAVKAR INVESTMENTS Accordingly, Grounds, 3-5 &7-9 stands allowed for statistical purposes.

Accordingly, Ground No. 6 is dismissed as not maintainable in the present appeal. 7. Ground no.7 is consequential in nature and do not require any adjudication. 8. Ground no.1 is general in nature and do not require any adjudication. In the result appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open court on 21/08/2026.

Sd/- Sd/- RATNA DASGUPTA BEENA PILLAI ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 21/08/2026 SC, Sr.P.S.

ITA 4905/MUM/2026 NAVKAR INVESTMENTS Copy to: NAVKAR INVESTMENTS, 1503 PARASMANI TOWERS, 95, MUMBAI MARATHI GRANTH 1 SANGRAHALAYA MARG, DADAR (EAST), MUMBAI-400014, MAHARASHTRA INCOME TAX OFFICER, WARD 20(2)(1), INCOME TAX OFFICE, PIRAMAL 2 CHAMBERS, LALBAUG, PAREL, MUMBAI, MUMBAI-400012, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE