CRANES REAL ESTATE PRIVATE LIMITED,MUMBAI vs. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 3 (1)(2), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C”, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No.958/Mum/2024 (Assessment year: 2012-13)

Cranes Real Estate Private vs Assistant Commissioner of Limited Income Tax, Circle 3(1)(2), Unit No. 34A, 2nd Floor, Mumbai Arsieala Building, Wode Aayakar Bhavan, M.K. Road, House Road, Colaba, Mumbai Mumbai – 400020. – 400005. PAN: AADCC1763G APPELLANT RESPONDENT Assessee by : Shri Dhaval Shah, Advocate Revenue by : Shri V.S. Mahajan (Sr. DR) Date of hearing : 22/05/2026 Date of pronouncement : 04/06/2026 O R D E R Per:Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2012-13, date of order 13.12.2022. The impugned order emanated from the order of the Ld. Assistant Commissioner of Income Tax, Circle 3(1)(2), Mumbai order passed under section 143(3) r.w.s 147, date of order 26.12.2019.

ITA No. 958/Mum/2024; Cranes Real Estate Private Limited. 2. The assessee has taken the following Grounds. “1. On the facts and circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in deciding the appeal exparte. 2. On the facts and circumstances in the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming re-opening the assessment done by the Assessing Officer u/s 147 of the Act. 3. On the facts and circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in sustaining the addition made by the Id. A.O. u/s section 68 of the Act of Rs. 22,02,22.002 on account of alleged non genuine purchases. 4. On the facts and circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in holding the purchases as unexplained investment in the hands of appellant (para 9 &10 of the assessment order) & thus the order passed is without any application of mind 5. The appellant craves leave to alter, amend, modify or substitute any ground/grounds and to add any new ground or grounds on or before the appeal is disposed off.”

ITA No. 958/Mum/2024; Cranes Real Estate Private Limited. 4. The Ld. CIT(A) has erred in law and in facts in passing the appellate order in violation of principles of natural justice and hence it is invalid and bad in the eyes of law.” 4. The brief facts of the case are that the assessee filed its return of income declaring a net loss of Rs. 2,19,115/-. Information was received from the DDIT (Investigation), Unit-1, Vapi, indicating that substantial debit and credit transactions had been observed in the bank account of M/s. Raves Trade Pvt. Ltd., as reported in the Suspicious Transaction Report (STR). Upon verification, it was found that the assessee had made purchases aggregating to Rs.22,02,22,002/- from M/s. Raves Trade Pvt. Ltd. Based on the said information, the assessment was reopened under section 147 of the Act and a notice under section 148 was issued. In response thereto, the assessee filed its return of income declaring the same net loss of Rs. 2,19,115/-. Thereafter, the Ld. AO completed the reassessment and made an addition of Rs. 22,02,22,002/- by treating the entire transactions with M/s. Raves Trade Pvt. Ltd. as bogus. Consequently, the addition was sustained in the assessment order. Aggrieved by the same, the assessee preferred an appeal before the Ld. CIT(A). However, the Ld. CIT(A) dismissed the appeal for non-prosecution. Being further aggrieved, the assessee has filed the present appeal before us. 5. The Ld. AR filed a paper book comprising pages 1 to 41, which has been taken on record. He primarily advanced arguments in support of the additional ground raised before the Bench. The Ld. AR submitted that the assessee had declared a net loss of Rs. 2,19,115/- in its return of income. Referring to CBDT Instruction No. 1/2011 dated 31.01.2011, he contended that the assessee’s case ought to have been assigned to an Income Tax Officer (ITO), as the Instruction provides that cases involving non-corporate returns with income up to Rs. 20 lakhs fall within the jurisdiction of an ITO, whereas cases exceeding 3

ITA No. 958/Mum/2024; Cranes Real Estate Private Limited. Rs. 20 lakhs are to be handled by an ACIT/DCIT. Accordingly, it was argued that the reassessment framed by the Ld. ACIT was without jurisdiction, as the pecuniary jurisdiction vested with the ITO and not with the ACIT. 6. In support of his contention, the Ld. AR placed reliance on the decision of the Coordinate Bench of the ITAT, Mumbai in the case of ACIT vs. Khadamat Integrated Solutions Pvt. Ltd., ITA No. 3766/Mum/2024, order dated 24.12.2025; the decision of the Coordinate Bench of the ITAT, Raipur in Amarjit Singh Bhatiya vs. ACIT reported in 167 taxmann.com 3; and Chowaram Dharwar vs. ITO reported in 171 taxmann.com 644.

ITA No. 958/Mum/2024; Cranes Real Estate Private Limited. 8. In response, the Ld. DR submitted that the CBDT Instruction relied upon by the assessee pertains to the determination of jurisdiction based on the returned income. However, according to him, the returned income as on the date of issuance of notice under section 148 has not been clearly brought on record. He contended that pecuniary jurisdiction is required to be examined with reference to the position prevailing on the date of issuance of the notice under section 148. The Ld. DR further relied upon a report received from the jurisdictional DCIT-3(1)(1), Mumbai, dated 21.05.2026. The relevant extract of the said report is reproduced below: “Time Limit for objecting the AO's jurisdiction 2. If the assessee feels that the AO who has decided to proceed against him has no jurisdiction in law he can object to his jurisdiction. However, the law mandates that such an objection has to be lodged before the AO within the tame prescribed under the law which is mentioned under sub-section (3) of Section 124 of the Income-tax Act, 1961 which reads as under; "(3) No person shall he entitled to call in question the jurisdiction of an Assessing Officer- (a) where he has made a return u/s 115 WD(V), 139(1) after the expiry of one month from the date on which he was served with a notice u/s 142(1), 115WE(2) or u/s 143(2) or after completion of assessment proceedings. (b) where he has made no such return, after the expiry of the time allowed by the notice under sub-section (2) of section 115WD or sub-section (1) of section 142 or under sub-section (1) of section 115 WII or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer whichever is earlier.”

ITA No. 958/Mum/2024; Cranes Real Estate Private Limited. Thus, going by the plain language of the law, when assessee fails to raise objection to AO's jurisdiction within the time prescribed, he would, later on, be estopped to rake it up. In view of the above circumstances it is respectfully requested that the matter be decided on merits based on the available records if deemed fit.” 9. The Ld. DR further contended that the assessee had actively participated in the reassessment proceedings and had never raised any objection regarding the jurisdiction of the Ld. AO during the course of assessment. In support of his contention, the Ld. DR relied upon the judgment of the Hon’ble Allahabad High Court in the case of Shivaaditiya Gems & Jewellery Pvt. Ltd. vs. ITO reported in (2022) 143 taxmann.com 64 (Allahabad), wherein it was held that where the assessee had filed its return of income declaring income exceeding Rs.15 lakh and the assessment was completed by the Assistant Commissioner, the pecuniary limits prescribed for distribution of work amongst officers would not imply that the Assessing Officer having territorial jurisdiction over the assessee lacked jurisdiction to issue a notice for reopening the assessment. The Ld. DR further submitted that the appeal before the Ld. CIT(A) had been dismissed ex parte due to the non-appearance of the assessee and that no reasonable cause was shown for such non-compliance. Accordingly, he prayed that the addition made by the Ld. AO be sustained. 10. We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the assessee had entered into purchase transactions with M/s. Raves Trade Pvt. Ltd. during the year under consideration. Based on the information received, the Ld. AO reopened the assessment under section 147 of the Act and treated the entire transaction as bogus, resulting in an addition of Rs.22,02,22,002/- in the reassessment proceedings. During the course of hearing before us, the Ld. AR raised an 6

ITA No. 958/Mum/2024; Cranes Real Estate Private Limited. additional ground challenging the jurisdiction of the Ld. AO to frame the impugned reassessment order. The Ld. AR also submitted that in the assessment proceedings of the counter-party, namely M/s. Raves Trade Pvt. Ltd., the returned income had been accepted by the revenue and no adverse finding or addition had been made in respect of the sales affected to the assessee. On the other hand, the Ld. DR contended that the issue of jurisdiction must be examined with reference to the date of issuance of the notice under section 148 and not merely on the basis of the returned income. He further pointed out that the assessee had participated in the reassessment proceedings without raising any objection regarding pecuniary jurisdiction. 11. We find that the appeal before the Ld. CIT(A) was dismissed ex parte and that the assessee did not get an effective opportunity to place all relevant facts and supporting documents on record. Considering the facts and circumstances of the case, we are of the view that the interests of justice would be served by granting the assessee one more opportunity to present its case before the first appellate authority. Accordingly, we set aside the impugned appellate order and restore the matter to the file of the Ld. CIT(A) with a direction to adjudicate both the legal grounds, including the additional ground relating to jurisdiction, as well as the issues on merits, after duly considering the submissions and evidence that may be placed on record by the assessee. Needless to say, the Ld. CIT(A) shall afford a reasonable opportunity of being heard to the assessee and shall pass a speaking order in accordance with law. At the same time, the assessee is directed to remain diligent and extend full cooperation in the appellate proceedings so as to facilitate expeditious disposal of the matter.

ITA No. 958/Mum/2024; Cranes Real Estate Private Limited. 12. In the result, the appeal of the assessee bearing ITA No.958/Mum/2024 is allowed for statistical purposes. Order pronounced in the open court on 04th day of June 2026. Sd/- Sd/- (MAKARAND VASANT MAHADEOKAR) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 04/06/2026 Soumili Das, PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध,आय.अपी.अिध.,मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI