MAKWISE GOLD AND DIAMOND PVT LTD,MUMBAI vs. DCIT CIRCLE 4(2)(1), MUMBAI, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH MUMBAI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER& SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No. 3286/Mum/2026 (Assessment Year: 2023-24) Makwise Gold and DCIT-4(2)(1) Diamond Pvt. Ltd. Aayakar Bhavan, M. K. 3rd Floor, Shop No. 62/ Vs. Road, Mubmai- Cabin No. 3, L. K. 400 020 Market, Vithalwadi, Zaveri Bazar, Mandvi, Mumbai-400 002 PAN/GIR No. AAOCM9398N (Applicant) (Respondent) Assessee by Shri A. K. Jain, Ld. AR Revenue by Shri Swapnil Choudhari, Ld. DR Date of Hearing 15.06.2026 Date of Pronouncement 17.06.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: This appeal filed by the assessee is directed against the order dated 16.01.2026 passed by the 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 the assessment year 2023-24, arising from the

2 ITA No. 3286/Mum/2026 Makwise Gold and Diamond Pvt. Ltd. assessment order dated 10.03.2025 passed by the Assessing Officer under section 144 read with section 144B of the Act. 2. Briefly stated, the facts of the case are that the assessee company is engaged in the business of trading in rough and polished diamonds, gold and jewellery. The assessee filed its return of income for the assessment year 2023-24 on 31.10.2023 declaring total income of Rs. 9,51,200/-. The case was selected for scrutiny under CASS, inter alia, on the ground that the assessee had made substantial purchases from suppliers who were non-filers and for verification of certain issues relating to ICDS compliance. During the course of assessment proceedings, the Assessing Officer carried out enquiries in respect of various suppliers from whom substantial purchases were stated to have been made by the assessee. Notices under section 133(6) were issued and verification through the Verification Unit was also undertaken. According to the Assessing Officer, several suppliers either did not respond to the notices issued under section 133(6), were not found at the addresses available on record, or were not filing their returns of income. The Assessing Officer further noted certain discrepancies relating to stock records, creditors and debtors and observed that the assessee had disclosed negligible profit despite a substantial turnover. 3. Being dissatisfied with the correctness and completeness of the accounts, the Assessing Officer invoked the provisions of section 145(3) of the Act, rejected the books of account and proceeded to frame the assessment under section 144 of the Act.

3 ITA No. 3286/Mum/2026 Makwise Gold and Diamond Pvt. Ltd. The Assessing Officer estimated the net profit at 8% of the turnover of Rs. 480,42,69,907/- and determined business income at Rs. 38,43,41,592/-. After adjusting the returned income, an addition of Rs. 38,33,90,392/- was made. The Assessing Officer further added interest income of Rs. 26,73,733/- and completed the assessment at a total income of Rs. 38,70,15,325/-.

4 ITA No. 3286/Mum/2026 Makwise Gold and Diamond Pvt. Ltd. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming addition of estimated net profit of Rs. 38,33,90,392/- being 8 percent of total turnover after adjusting Rs. 9,51,200/- of total income declared by the appellant by considering the case of the appellant as covered under section 44AD of the Income Tax Act, 1961. 5. On the facts and circumstances of the case and in law, the Ld CIT(A) erred in confirming the action of Ld AO in adding Rs. 26,73,733/- being interest income as income from other sources despite of the fact that the interest income was already credited in profit and loss account and offered to tax as business income of the appellant and thus the addition of the same would lead to double taxation which is bad in law and required to be deleted. 6. WITHOUT PREJUDICE GROUND NO 1 TO 5, On the facts and circumstances of the case and in law, the Ld. CIT(A) failed to consider that rejection of books of accounts can be made by estimating the net profit of the last preceding year turnover and thus the rate adopted by the Ld AO in is very high, excessive and unjustified. 7. On the facts and circumstances of the case and in law, the Ld CIT(A) erred in confirming the action of Ld AO in charging interest under section 234B of the Income Tax Act, 1961. 8. On the facts and circumstances of the case and in law, the Ld CIT(A) erred in confirming the action of Ld AO in initiating penalty proceedings under section 270A of the Income Tax Act, 1961. 9. Appellant craves leave to add further grounds OR to amend OR alter the existing grounds of appeal on OR before the date of hearing. 6. During the course of hearing before us, the learned Authorised Representative (AR) submitted that the assessee had duly participated in the assessment proceedings and had furnished various details and documentary evidences in response to the notices issued by the Assessing Officer. Referring to the chronology of events placed on record, it was submitted that in response to notice issued under section 142(1) dated 14.10.2024,

5 ITA No. 3286/Mum/2026 Makwise Gold and Diamond Pvt. Ltd. the assessee furnished its reply on 06.11.2024 along with details regarding the nature of business, copy of return of income and computation of income, audited financial statements, tax audit report, statements of party-wise purchases and sales, details of sundry creditors and sundry debtors, Form 26AS and brokerage details. It was further submitted that in response to the subsequent notice under section 142(1) dated 30.12.2024, the assessee furnished replies on 06.01.2025 and 07.01.2025 together with ledger accounts of purchase and sale parties, GST returns, TDS certificates and reconciliation of income as per Form 26AS with the books of account.The learned AR submitted that the assessment order itself records the aforesaid compliances and reproduces extracts from the replies filed by the assessee. It was, therefore, contended that the assessee had not remained completely non-compliant during the assessment proceedings and had furnished substantial material before the Assessing Officer. 7. The learned AR further submitted that against the assessment order passed under section 144 read with section 144B of the Act, the assessee preferred an appeal before the learned CIT(A) on 29.03.2025. However, after the lapse of more than six months from the filing of the appeal, only three hearing notices were issued by the learned CIT(A) on 30.09.2025, 04.10.2025 and 15.10.2025. It was submitted that all the three opportunities were confined to a short span of about twenty days. According to the learned Authorised Representative, such

6 ITA No. 3286/Mum/2026 Makwise Gold and Diamond Pvt. Ltd. opportunities could not be regarded as adequate and effective opportunities of hearing, particularly having regard to the nature and magnitude of the additions involved in the appeal.It was further submitted that the assessee's earlier consultant was heavily occupied with tax audit assignments and income-tax return compliances during the relevant period and, therefore, could not furnish submissions before the learned CIT(A). The learned AR pointed out that subsequently an intimation regarding change of the appellate authority was issued on 01.01.2026. However, no effective hearing opportunity was granted thereafter and the learned CIT(A) proceeded to pass the impugned order dated 16.01.2026 confirming the assessment without the benefit of submissions from the assessee. 8. The learned AR expressed regret for the non-compliance before the learned CIT(A) and submitted that the assessee is willing to fully cooperate in the appellate proceedings. He accordingly prayed that one effective opportunity may be granted to the assessee and the matter may be restored to the file of the learned CIT(A) for fresh adjudication on merits. It was assured that the assessee shall promptly comply with all notices and directions that may be issued by the learned CIT(A) in the set- aside proceedings. 9. The learned Departmental Representative (DR) relied upon the orders of the lower authorities. He, however, fairly pointed out that the assessment itself had been framed under section 144 of the Act. The learned DR did not raise any objection if the matter

7 ITA No. 3286/Mum/2026 Makwise Gold and Diamond Pvt. Ltd. was restored to the file of the learned CIT(A) for fresh adjudication after granting reasonable opportunity to the assessee. 10. We have considered the rival submissions and perused the material available on record. It is an undisputed fact that the assessment in the present case was completed under section 144 read with section 144B of the Act. It is further observed that though the appeal was instituted before the learned CIT(A) on 29.03.2025, the appellate order records issuance of notices dated 30.09.2025, 04.10.2025 and 15.10.2025, after which the appeal came to be disposed of ex parte. 11. From the assessment order, it is evident that the assessee had furnished replies during the course of assessment proceedings on 06.11.2024, 06.01.2025 and 07.01.2025 in response to notices issued under section 142(1) of the Act. The assessment order itself records that various details including audited financial statements, tax audit report, statements of purchases and sales, details of sundry creditors and debtors, GST returns, ledger accounts and reconciliation statements were furnished by the assessee and extracts of such submissions have also been reproduced therein. Thus, although the assessment ultimately came to be framed under section 144 of the Act, it cannot be said that there was complete absence of compliance on the part of the assessee during the assessment proceedings. 12. It is further observed that the appeal before the learned CIT(A) was filed on 29.03.2025 against the assessment order

8 ITA No. 3286/Mum/2026 Makwise Gold and Diamond Pvt. Ltd. dated 10.03.2025. The appellate order records issuance of notices dated 30.09.2025, 04.10.2025 and 15.10.2025. Thereafter, the appeal came to be disposed of ex parte. Having regard to the fact that the appeal involved substantial additions aggregating to more than Rs. 38 crores and considering that the opportunities granted by the learned CIT(A) were confined to a relatively short period, we are of the considered view that one more opportunity ought to be afforded to the assessee for proper presentation of its case before the first appellate authority. 13. We also find merit in the contention of the learned AR that the issues involved in the appeal have not been examined by the learned CIT(A) with the assistance of submissions from the assessee. Significantly, the learned DR, while supporting the orders of the lower authorities, fairly submitted that he would have no objection if the matter is restored to the file of the learned CIT(A) for fresh adjudication. 14. Considering the totality of facts and circumstances of the case, in the interest of substantial justice and without expressing any opinion on the merits of the additions made by the Assessing Officer, we deem it appropriate to set aside the impugned order of the learned CIT(A) and restore the entire matter to his file for adjudication afresh in accordance with law after providing adequate and effective opportunity of hearing to the assessee. The assessee is directed to extend full cooperation and promptly furnish all details and evidences as may be called for during the

9 ITA No. 3286/Mum/2026 Makwise Gold and Diamond Pvt. Ltd. appellate proceedings. All issues arising from the grounds of appeal are left open for fresh adjudication by the learned CIT(A).

Order pronounced in the open court on 17.06.2026.

Sd/- Sd/- (CHALLA NAGENDRA PRASAD) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 17/06/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 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