RAHUL HARAKHCHAND DHAROD,MUMBAI vs. ITO 41(3)(3), MUMBAI

PDF · subscribers
ITA 3275/MUM/2026Status: DisposedITAT Mumbai23 June 2026AY 2020-215 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A)'s dismissal based on technical grounds, without considering the merits, violated principles of natural justice. The assessee was granted an opportunity to present evidence before the Assessing Officer.

What were the facts?

The assessee's appeal was dismissed by the CIT(A) due to a delay in filing, without adjudicating on the merits. The assessee had faced additions to income concerning unsecured loans and sundry creditors, which were challenged.

What were the issues?

Whether the CIT(A) erred in dismissing the appeal due to delay without considering the merits, and whether additions for unsecured loans and creditors were justified.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE,Section 143(3),Section 144B,Section 270A,Section 271AAC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLEVIKRAM SINGH YADAV & HON’BLE SIDDHARTHA NAUTIYAL

For Respondent: Shri Nakul Agrawal Sr.DR

आदेश / ORDER

PERSIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:

This appeal is filed by the Assessee against the order of Ld. NATIONAL FACELESS APPEAL CENTRE(NFAC) vide DIN: ITBA/NFAC/S/250/2025- 26/1085515818(1) dated 03-Feb-2026 for the Assessment Year 2020-21.

2.

The Assessee has raised the following grounds of appeal:

1.

On the facts and circumstances of case and in law, the Ld. CIT has erred in 1. On the facts and circumstances of case and in law, the Ld. CIT has erred in 1. On the facts and circumstances of case and in law, the Ld. CIT has erred in confirming the Assessment Order passed by the Ld. AO under section 143(3) Assessment Order passed by the Ld. AO under section 143(3) Assessment Order passed by the Ld. AO under section 143(3) r.w.s 144B of Income Tax Act which is passed against the principal of natural r.w.s 144B of Income Tax Act which is passed against the principal of natural r.w.s 144B of Income Tax Act which is passed against the principal of natural justice. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT 2. On the facts and in the circumstances of the case and in law, the Ld. CIT 2. On the facts and in the circumstances of the case and in law, the Ld. CIT has erred in passing the order has erred in passing the order without condoning the delay although the without condoning the delay although the assessee had filed a detailed affidavit citing the reasons for the delay. assessee had filed a detailed affidavit citing the reasons for the delay. assessee had filed a detailed affidavit citing the reasons for the delay. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT 3. On the facts and in the circumstances of the case and in law, the Ld. CIT 3. On the facts and in the circumstances of the case and in law, the Ld. CIT has erred in confirming the addition of Rs.97,00,000/ has erred in confirming the addition of Rs.97,00,000/- (being unsecured loans unsecured loans from various parties) taken as unexplained cash under section 68 r.w.s from various parties) taken as unexplained cash under section 68 r.w.s from various parties) taken as unexplained cash under section 68 r.w.s 115BBE of the Income Tax Act, 1961 despite relevant documents being 115BBE of the Income Tax Act, 1961 despite relevant documents being 115BBE of the Income Tax Act, 1961 despite relevant documents being submitted in order to substantiate the claim. submitted in order to substantiate the claim. 4. On the facts and in the circumstances of the case 4. On the facts and in the circumstances of the case and in law, the Ld. CIT and in law, the Ld. CIT has erred in confirming the application of Section 115BBE (taxation of has erred in confirming the application of Section 115BBE (taxation of has erred in confirming the application of Section 115BBE (taxation of unexplained credits at a higher rate) without establishing that the amount was unexplained credits at a higher rate) without establishing that the amount was unexplained credits at a higher rate) without establishing that the amount was undisclosed income. Further the Ld. AO has mechanically invoked Section 68 undisclosed income. Further the Ld. AO has mechanically invoked Section 68 undisclosed income. Further the Ld. AO has mechanically invoked Section 68 r.w.s. 115BBE of the Income Tax Act, 1961 without Pointing out specific 115BBE of the Income Tax Act, 1961 without Pointing out specific 115BBE of the Income Tax Act, 1961 without Pointing out specific deficiencies in the submitted documents. Disproving the authenticity of deficiencies in the submitted documents. Disproving the authenticity of deficiencies in the submitted documents. Disproving the authenticity of evidence through independent inquiry (e.g., issuing notices to the lender u/s evidence through independent inquiry (e.g., issuing notices to the lender u/s evidence through independent inquiry (e.g., issuing notices to the lender u/s 131). The order is vitiated by suspicion 131). The order is vitiated by suspicion and non-application of mind, application of mind, warranting quashing of the impugned addition. warranting quashing of the impugned addition. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT 5. On the facts and in the circumstances of the case and in law, the Ld. CIT 5. On the facts and in the circumstances of the case and in law, the Ld. CIT erred in confirming the order passed by the Ld. AO although the assessee has erred in confirming the order passed by the Ld. AO although the assessee has erred in confirming the order passed by the Ld. AO although the assessee has discharged its onus of discharged its onus of proving the identity, genuineness and creditworthiness proving the identity, genuineness and creditworthiness of the lenders. 6. On the facts and in the circumstances of the case and in law, the Ld. CIT 6. On the facts and in the circumstances of the case and in law, the Ld. CIT 6. On the facts and in the circumstances of the case and in law, the Ld. CIT has erred in confirming the addition of Rs.1,51,73,928 on account of closing has erred in confirming the addition of Rs.1,51,73,928 on account of closing has erred in confirming the addition of Rs.1,51,73,928 on account of closing balance of creditors without balance of creditors without considering the documents submitted by the considering the documents submitted by the assessee. 7. On the facts and in the circumstances of the case and in law, the Ld. CIT 7. On the facts and in the circumstances of the case and in law, the Ld. CIT 7. On the facts and in the circumstances of the case and in law, the Ld. CIT erred in upholding initiation of penalty proceeding under section u/s 270A and erred in upholding initiation of penalty proceeding under section u/s 270A and erred in upholding initiation of penalty proceeding under section u/s 270A and 271AAC of the Income Tax Act 1961. 271AAC of the Income Tax Act 1961. 8. The Appellant craves leave to add amend and OR delete any of the above ppellant craves leave to add amend and OR delete any of the above ppellant craves leave to add amend and OR delete any of the above grounds of Appeals.

3.

The brief facts of the case are that the assessee filed his return of income The brief facts of the case are that the assessee filed his return of income The brief facts of the case are that the assessee filed his return of income declaring income of Rs.65,32,900/ declaring income of Rs.65,32,900/-. The case of the assessee was selected for . The case of the assessee was selected for limited scrutiny for verifying high creditors/liabilities and income from house rutiny for verifying high creditors/liabilities and income from house rutiny for verifying high creditors/liabilities and income from house property. During the course of assessment proceedings, the assessee furnished property. During the course of assessment proceedings, the assessee furnished property. During the course of assessment proceedings, the assessee furnished details relating to house property and capital borrowed by him, which were details relating to house property and capital borrowed by him, which were details relating to house property and capital borrowed by him, which were accepted by the Assessing Officer accepted by the Assessing Officer. However, according to the Assessing Officer, . However, according to the Assessing Officer, complete details in respect of sundry creditors and unsecured loans were not complete details in respect of sundry creditors and unsecured loans were not complete details in respect of sundry creditors and unsecured loans were not furnished by the assessee despite several notices. The Assessing Officer issued furnished by the assessee despite several notices. The Assessing Officer issued furnished by the assessee despite several notices. The Assessing Officer issued notices under section 133(6) of the Act to various p notices under section 133(6) of the Act to various parties, but only a few parties arties, but only a few parties filed response. The Assessing Officer held that the assessee had failed to filed response. The Assessing Officer held that the assessee had failed to filed response. The Assessing Officer held that the assessee had failed to discharge the onus regarding genuineness of creditors and unsecured loans, and discharge the onus regarding genuineness of creditors and unsecured loans, and discharge the onus regarding genuineness of creditors and unsecured loans, and therefore treated sundry creditors of Rs.1,51,73,928/ therefore treated sundry creditors of Rs.1,51,73,928/- as bogus purchas as bogus purchases and further treated unsecured loans amounting to Rs.97,00,000/ further treated unsecured loans amounting to Rs.97,00,000/- as unexplained cash as unexplained cash credits under section 68 of the Act. credits under section 68 of the Act.

4.

Aggrieved by the assessment order, the assessee preferred an appeal Aggrieved by the assessment order, the assessee preferred an appeal Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(Appeals) with a delay of 117 days. Before before the CIT(Appeals) with a delay of 117 days. Before the CIT(A), the the CIT(A), the assessee submitted that he was not conversant with the faceless assessment assessee submitted that he was not conversant with the faceless assessment assessee submitted that he was not conversant with the faceless assessment procedure and due to technical difficulties and in absence of familiarity with the procedure and due to technical difficulties and in absence of familiarity with the procedure and due to technical difficulties and in absence of familiarity with the online portal, complete details and attachments could not be uploaded before the online portal, complete details and attachments could not be uploaded before the online portal, complete details and attachments could not be uploaded before the Assessing Officer. The assessee also filed before CIT(Appeals) confirmations of ssessing Officer. The assessee also filed before CIT(Appeals) confirmations of ssessing Officer. The assessee also filed before CIT(Appeals) confirmations of parties, ITR copies of lenders and other supporting documents in support of his parties, ITR copies of lenders and other supporting documents in support of his parties, ITR copies of lenders and other supporting documents in support of his case and also submitted that the addition of Rs.21,75,000/ case and also submitted that the addition of Rs.21,75,000/- in the name of in the name of Harakhchand Dharod was Harakhchand Dharod was factually incorrect since only Rs.1,75,000/ factually incorrect since only Rs.1,75,000/- had been received by the assessee during the year from the said person. However, the received by the assessee during the year from the said person. However, the received by the assessee during the year from the said person. However, the CIT(A) rejected the application for condonation of delay by holding that CIT(A) rejected the application for condonation of delay by holding that CIT(A) rejected the application for condonation of delay by holding that ignorance of the faceless procedure and technical gl ignorance of the faceless procedure and technical glitches did not constitute itches did not constitute sufficient cause under section 249(3) of the Act. The CIT(A) dismissed the sufficient cause under section 249(3) of the Act. The CIT(A) dismissed the sufficient cause under section 249(3) of the Act. The CIT(A) dismissed the appeal of the assessee same without examining the merits of the additions or the appeal of the assessee same without examining the merits of the additions or the appeal of the assessee same without examining the merits of the additions or the documents furnished by the assessee. documents furnished by the assessee.

5.

The assessee is in appeal before The assessee is in appeal before us against the order passed by us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. CIT(Appeals) dismissing the appeal of the assessee.

6.

We have heard the rival contentions and perused the material on record. We have heard the rival contentions and perused the material on record. We have heard the rival contentions and perused the material on record. We find that the assessment order was framed primarily on account of non- We find that the assessment order was framed primarily on account of non We find that the assessment order was framed primarily on account of non furnishing of complete d furnishing of complete details with respect to sundry creditors and unsecured etails with respect to sundry creditors and unsecured loans. We further find that before the CIT(A), the assessee had specifically loans. We further find that before the CIT(A), the assessee had specifically loans. We further find that before the CIT(A), the assessee had specifically raised the plea that he was unfamiliar with the faceless assessment procedure raised the plea that he was unfamiliar with the faceless assessment procedure raised the plea that he was unfamiliar with the faceless assessment procedure and owing to technical difficulties and inabili and owing to technical difficulties and inability to properly upload documents, ty to properly upload documents, complete details could not be furnished before the Assessing Officer. It is also complete details could not be furnished before the Assessing Officer. It is also complete details could not be furnished before the Assessing Officer. It is also seen that before the CIT(A), the assessee had furnished confirmations from seen that before the CIT(A), the assessee had furnished confirmations from seen that before the CIT(A), the assessee had furnished confirmations from creditors and lenders, copies of returns and bank statements and had specifically creditors and lenders, copies of returns and bank statements and ha creditors and lenders, copies of returns and bank statements and ha pointed out that addition of Rs.21,75,000/ pointed out that addition of Rs.21,75,000/- in the name of Harakhchand Dharod in the name of Harakhchand Dharod was factually incorrect since the loan received during the year was only was factually incorrect since the loan received during the year was only was factually incorrect since the loan received during the year was only Rs.1,75,000/-. However, the CIT(A) dismissed the appeal solely on the ground . However, the CIT(A) dismissed the appeal solely on the ground . However, the CIT(A) dismissed the appeal solely on the ground that the delay of 117 days in filing the appeal was not liable to be condoned and y of 117 days in filing the appeal was not liable to be condoned and y of 117 days in filing the appeal was not liable to be condoned and declined to examine the issues on merits. In our considered view, such an declined to examine the issues on merits. In our considered view, such an declined to examine the issues on merits. In our considered view, such an approach has resulted in denial of opportunity to the assessee and is contrary to approach has resulted in denial of opportunity to the assessee and is contrary to approach has resulted in denial of opportunity to the assessee and is contrary to the principles of natural justi the principles of natural justice. It is a settled principle that substantial justice ce. It is a settled principle that substantial justice should prevail over technical considerations and matters should ordinarily be should prevail over technical considerations and matters should ordinarily be should prevail over technical considerations and matters should ordinarily be decided on merits. The Hon'ble Supreme Court in decided on merits. The Hon'ble Supreme Court in Collector, Land Acquisition v. Collector, Land Acquisition v. Mst. Katiji (167 ITR 471) and (167 ITR 471) and N. Balakrishnan v. M. Krishnamurthy n v. M. Krishnamurthy (248 ITR 577) has held that procedural provisions are intended to advance substantial 577) has held that procedural provisions are intended to advance substantial 577) has held that procedural provisions are intended to advance substantial justice and not to defeat it. justice and not to defeat it.

7.

Considering the particular facts of the case before us and in the interest of Considering the particular facts of the case before us and in the interest of Considering the particular facts of the case before us and in the interest of justice, we are of the view that the justice, we are of the view that the assessee deserves one more opportunity to assessee deserves one more opportunity to substantiate his claim with supporting evidence. substantiate his claim with supporting evidence.

8.

Accordingly, without expressing any opinion on the merits of the Accordingly, without expressing any opinion on the merits of the Accordingly, without expressing any opinion on the merits of the additions, we restore the matter to the file of the Assessing Officer for de novo additions, we restore the matter to the file of the Assessing Officer for de novo additions, we restore the matter to the file of the Assessing Officer for de novo adjudication. The assessee shall be at liberty to furnish complete details, . The assessee shall be at liberty to furnish complete details, . The assessee shall be at liberty to furnish complete details, confirmations, bank statements, ITR copies and all other evidences in support of confirmations, bank statements, ITR copies and all other evidences in support of confirmations, bank statements, ITR copies and all other evidences in support of sundry creditors and unsecured loans and the Assessing Officer shall consider sundry creditors and unsecured loans and the Assessing Officer shall consider sundry creditors and unsecured loans and the Assessing Officer shall consider the same in accordance with law a the same in accordance with law and pass a speaking order after granting nd pass a speaking order after granting adequate opportunity of being heard to the assessee. The assessee is also adequate opportunity of being heard to the assessee. The assessee is also adequate opportunity of being heard to the assessee. The assessee is also directed to extend full cooperation and furnish all details as may be called for by directed to extend full cooperation and furnish all details as may be called for by directed to extend full cooperation and furnish all details as may be called for by the Assessing Officer. Thus, in the interest of justice an the Assessing Officer. Thus, in the interest of justice and fair play, the issues are d fair play, the issues are restored to the file of the Assessing Officer for fresh adjudication. restored to the file of the Assessing Officer for fresh adjudication.

9.

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

Order pronounced in the open court on Order pronounced in the open court on 23.06.2026

Sd/- Sd/- VIKRAM SINGH VIKRAM SINGH YADAV SIDDHARTHA NAUTIYAL SIDDHARTHA NAUTIYAL ACCOUNTANTMEMBER MEMBER JUDICIALMEMBER MEMBER Mumbai

Dated: 23.06.2026 KRK, Sr. PS

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →