DOLPHIN DEVELOPERS,SANTACRUZ EAST vs. ASSESSING OFFICER, PIRAMAL CHAMBER, MUMBAI

Whether, on the facts and circumstances of the case and in law, the ld. Commissioner of Income Tax (Appeals) of NFAC, is correct in dismissing the appeal without hearing the case and without considering the facts and merits of the case placed before the ld. Assessing Officer and the first appellate authority.

Whether, on the facts and circumstances of the case and in law, the ld. Commissioner of Income Tax (Appeals) of NFAC, is correct in confirming the addition of Rs. 2,47,500/- being 3.33% of the agreement value of a flat of an under-construction project registered in the name of allottee, made by the ld. Assessing Officer, without considering the facts and merits of the case.

Whether, on the facts and circumstances of the case and in law, the ld. Commissioner of Income Tax (Appeals) of NFAC, is correct in confirming the addition of Rs. 8,32,746/- u/s. 43CA of the I.T. Act, made by the ld. Assessing Officer in gross violation of law and principles of natural justice.

Without prejudice to the above grounds, whether, on the facts and circumstances of the case and in law, the ld. Commissioner of Income Tax (Appeals) of NFAC, is correct in not correcting the taxation on the addition u/s. 43CA of the I.T. Act, under the head ‘Income from other Source’ instead of ‘Income from Business or Profession’.”

The appellant craves leave to add, alter, amend, modify or withdraw any or all the grounds of appeal on or before the hearing.

Briefly stated, the facts of the case are that the assessee is a partnership firm engaged in the business of builder and developer and undertakes development and redevelopment projects of buildings and immovable properties. The assessee filed its return of income for the year under consideration on 28.03.2018 declaring total income at Nil. The assessee had undertaken

During the previous year relevant to the assessment year under consideration, the assessee sold one flat for a consideration of Rs.75,00,000/-. The stamp duty valuation authority adopted the value of the said property at Rs.83,32,746/-. The Assessing Officer observed that the sale consideration disclosed by the assessee was lower than the stamp duty value by Rs.8,32,746/- and accordingly invoked the provisions of section 43CA of the Act. The Assessing Officer further observed that the assessee had not properly disclosed the transaction and proceeded to complete the assessment under section 147 r.w.s. 144B of the Act vide order dated 09.05.2023 determining the total income at Rs.10,80,250/-.

Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). In the statement of facts filed before the first appellate authority, the assessee reiterated that the project was affected by litigation with tenants and consequent adverse market conditions. It was further contended that the property was sold under distress circumstances and, therefore, the difference between the actual sale consideration and stamp

The learned CIT(A) noted that notices fixing the appeal for hearing were issued on various dates. According to the learned CIT(A), except seeking adjournments on two occasions, the assessee did not furnish any effective submissions or documentary evidences. The learned CIT(A) observed that the conduct of the assessee demonstrated lack of interest in prosecuting the appeal. Relying upon the decisions referred to in the appellate order and considering the material available on record, the learned CIT(A) dismissed the appeal and upheld the additions made by the Assessing Officer.

During the course of hearing before us, Mohd. Shakil Khamkar, the learned Authorised Representative (AR), who is one of the partners of the assessee firm, appeared and submitted that the appeal before the learned CIT(A) came to be dismissed without effective adjudication of the issues raised by the assessee. It was submitted that the notices issued by the NFAC were not properly attended as the e-mail account (td_shah@yahoo.co m) through which the notices were being received was handled by the consultant and the matter could not be effectively pursued. The AR submitted that after commencement of the project, disputes arose with certain tenants which resulted in prolonged litigation. The said litigation

The learned Departmental Representative fairly submitted that he has no objection if the matter is restored to the file of the learned CIT(A) for fresh adjudication after providing reasonable opportunity of hearing to the assessee.

We have considered the rival submissions and perused the material available on record. We find that the learned CIT(A) has dismissed the appeal primarily for non-compliance and has not adjudicated the issues involved after considering the evidences and contentions sought to be raised by the assessee. The grounds raised before us involve examination of factual aspects relating to the addition made under section 43CA of the Act, the nature of the transaction, the assessee's explanation regarding distress sale

We further find that the assessee has expressed its readiness to furnish all relevant evidences and submissions before the appellate authority. Considering the facts and circumstances of the case, and particularly in view of the fair stand taken by the learned Departmental Representative that he has no objection to restoration of the matter, we are of the considered view that the ends of substantial justice would be met by restoring the appeal to the file of the learned CIT(A).

Accordingly, we set aside the impugned order passed by the learned CIT(A) and restore the entire matter to his file for fresh adjudication in accordance with law after affording adequate opportunity of being heard to the assessee. The assessee is directed to promptly comply with all notices and furnish all evidences and submissions in support of its case. We clarify that we have not expressed any opinion on the merits of the additions and all issues are left open for adjudication by the learned CIT(A).

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 18.06.2026. (CHALLA NAGENDRA PRASAD) ACCOUNTANT MEMBER Mumbai, Dated 18/06/2026 Dhananjay, Sr.PS