DEEP HOMES & CONSTRUCTIONS LLP,THANE vs. DCIT, CIRCLE 1, THANE , THANE

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH MUMBAI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No. 4422/Mum/2026 (Assessment Year: 2018-19) Deep Homes & DCIT Circle-1, Thane Construction LLP 6th Floor, Ashar IT Hajuri Lane, Off. Vs. Park, Road No. 16Z, Eastern Express Road, Wagle Estate, Opp. LIC Office, Thane(W), Panchpakhadi, Thane, Maharashtra-400604 Maharashtra-400 604 PAN/GIR No. AAIFD8334J (Applicant) (Respondent) Assessee by Ms. Vidhi Solani, Ld. AR Revenue by Shree Kumar C, Ld. DR Date of Hearing 17.06.2026 Date of Pronouncement 19.06.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: This appeal is directed against the order dated 24.02.2026 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as "CIT(A)"] under section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act"] for Assessment Year

2 ITA No. 4422/Mum/2026 Deep Homes & Construction LLP 2018-19, arising from the assessment order passed by the National e-Assessment Centre, Delhi[hereinafter referred to as "Assessing Officer"] under section 143(3) read with section 144B of the Act dated 21.04.2021. 2. Briefly stated, the facts of the case are that the assessee is a Limited Liability Partnership engaged in the business of real estate development. The assessee filed its return of income for Assessment Year 2018-19 on 16.10.2018 declaring total income of Rs.7,34,580/-. The case was selected for complete scrutiny assessment. During the course of assessment proceedings, the Assessing Officer noticed that the assessee was developing a real estate project named "Auralis" at Thane and had not recognized any sales during the year under consideration. Upon examination of the audited financial statements and the method adopted by the assessee for valuation of work-in-progress, the Assessing Officer was of the view that the profits disclosed by the assessee did not correctly reflect the income derived from the project activities. After considering the material available on record and the explanation furnished by the assessee, the Assessing Officer estimated the profit from the real estate project by applying a profit rate of 2.72% on the closing work-in-progress of Rs.158,82,38,032/- and consequently determined business income at Rs.4,32,00,000/-. After including income from other sources, the total income was assessed at Rs.4,38,47,366/-, resulting in an addition of Rs.4,31,12,786/- over and above the income returned by the assessee.

3 ITA No. 4422/Mum/2026 Deep Homes & Construction LLP 3. Aggrieved by the aforesaid assessment order, the assessee preferred an appeal before the learned CIT(A), NFAC. The learned CIT(A), however, vide order dated 24.02.2026 dismissed the appeal and upheld the action of the Assessing Officer. The appeal was disposed of substantially ex parte on account of non- compliance by the assessee with various notices issued during the appellate proceedings. 4. The assessee has raised various grounds challenging the addition of Rs.4,31,12,786/- made by the Assessing Officer by estimating profit from the assessee's real estate project. However, at the outset, the learned Authorised Representative (AR) submitted that the learned CIT(A) had disposed of the appeal ex parte without granting an effective opportunity of hearing and therefore the matter deserves to be restored to the file of the learned CIT(A) for adjudication on merits. 5. During the course of hearing, the learned AR invited our attention to the affidavit dated 16.06.2026 sworn by Shri Raju K. Khetwani, Managing Partner of the assessee LLP, which has been placed on record. It was submitted that the assessee had filed an appeal before the learned CIT(A), NFAC, Delhi on 19.05.2021 challenging the assessment order passed under section 143(3) read with section 144B of the Act dated 21.04.2021. It was further submitted that the assessee had completed its real estate project "Auralis" at Thane and had thereafter substantially suspended its operations. According to the deponent, the e-mail notices issued by the NFAC on various dates remained

4 ITA No. 4422/Mum/2026 Deep Homes & Construction LLP unattended as the office premises of the assessee were closed and the employee responsible for handling income-tax compliances had already resigned. 6. The learned AR further submitted that the assessee became aware of the pendency of the appellate proceedings only upon receipt of the hearing notice dated 09.02.2026. Thereafter, an adjournment application was filed before the learned CIT(A) on 24.02.2026 stating that the assessee was in the process of coordinating with a new Authorised Representative and collecting the necessary documents for preparation of appellate submissions. It was contended that without rejecting the said adjournment request and without granting any further opportunity, the learned CIT(A) proceeded to dispose of the appeal ex parte on the very same date. It was accordingly submitted that the non-compliance before the first appellate authority was neither deliberate nor intentional and that one more effective opportunity may be granted to the assessee for prosecuting the appeal on merits. 7. The learned Departmental Representative relied upon the orders of the lower authorities. However, he fairly left the issue of restoration of the matter to the discretion of the Bench. 8. We have heard the rival submissions and perused the material available on record. We have also carefully considered the affidavit dated 16.06.2026 filed by the Managing Partner of

5 ITA No. 4422/Mum/2026 Deep Homes & Construction LLP the assessee LLP explaining the circumstances which led to non- compliance before the learned CIT(A). 9. From the impugned order, it is evident that the appeal came to be disposed of ex parte primarily on account of non-compliance by the assessee to the notices issued during the appellate proceedings. At the same time, it is also borne out from the record that the assessee had filed an adjournment application on 24.02.2026 explaining that it was in the process of collecting the relevant documents and coordinating with a new Authorised Representative for preparation of submissions before the appellate authority. The affidavit now placed on record also sets out the reasons for the earlier non-compliance. 10. It is a settled proposition of law that substantial justice should prevail over technical considerations and that, as far as possible, disputes should be adjudicated on merits rather than dismissed for procedural defaults. The right of appeal is a valuable statutory right and ordinarily an assessee should not be denied adjudication of its appeal on merits unless the conduct is found to be contumacious or lacking in bona fides. In the present case, considering the explanation furnished by the assessee, the affidavit placed on record, the fact that the dispute relates to a substantial addition of Rs.4,31,12,786/-, and in order to provide a fair and reasonable opportunity to the assessee to present its case, we are of the considered view that the ends of justice would be met by restoring the matter to the file of the learned CIT(A).

6 ITA No. 4422/Mum/2026 Deep Homes & Construction LLP 11. Accordingly, without expressing any opinion on the merits of the addition challenged before us, we set aside the impugned order dated 24.02.2026 passed under section 250 of the Act and restore the entire matter to the file of the learned CIT(A) for adjudication afresh in accordance with law after granting adequate and effective opportunity of hearing to the assessee. The assessee is directed to promptly respond to all notices issued by the learned CIT(A) and shall not seek unnecessary adjournments. The learned CIT(A) shall decide the appeal by way of a speaking order after considering the submissions and evidences that may be placed on record by the assessee.

Order pronounced in the open court on 19.06.2026.

Sd/- Sd/- (CHALLA NAGENDRA PRASAD) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 19/06/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant

7 ITA No. 4422/Mum/2026 Deep Homes & Construction LLP 2. प्रत्यथी / The Respondent. 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