GANESH CONSTRUCTION COMPANY,MUMBAI vs. ITO 22(1)(1), MUMBAI

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ITA 2846/MUM/2026Status: DisposedITAT Mumbai30 September 2026AY 2009-108 pages
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What did the Tribunal hold?

The Tribunal condoned the delay of 922 days, subject to the assessee depositing a cost of Rs.33,000/- with the Revenue Department within 30 days. The Tribunal found the assessee's explanation plausible and bona fide, constituting sufficient cause. The reasoning was based on the prolonged cessation of business activity, absence of transactions in Form 26AS, AIS, and bank accounts, consequent non-access of the income-tax portal, the ex parte nature of the impugned order, stated absence of actual knowledge, subsequent discovery of the penalty demand, and the absence of material suggesting deliberate delay or mala fides. The Tribunal noted that the underlying assessment had been quashed by the Tribunal earlier. On merits, the Tribunal noted that the impugned order was passed ex parte and did not consider the effect of the Tribunal's earlier order dated 10.08.2016 which quashed the assessment. Since the complete relevant record was not before the Tribunal, and in the interest of justice, the Tribunal set aside the impugned order and restored the matter to the file of the Ld. Commissioner for fresh adjudication in accordance with law, after considering the Tribunal's order dated 10.08.2016 and all relevant material. The assessee was directed to cooperate without seeking unnecessary adjournments.

What were the facts?

The assessee, Ganesh Construction Company, filed an appeal against an order dated 26.06.2023 passed by the National Faceless Appeal Centre (NFAC)/Ld. Commissioner of Income Tax (Appeals) for Assessment Year 2009-10. The appeal was delayed by 922 days. The assessee sought condonation of delay, explaining that the impugned order was passed ex parte and remained unnoticed due to the firm not carrying on business activity for a considerable period, leading to infrequent access of the income-tax portal. The assessee provided evidence like Form 26AS, AIS particulars, and bank statements to show no business transactions. The assessee became aware of the outstanding penalty demand of Rs.10,49,797/- while pursuing refunds for other years, prompting the filing of the present appeal on 13.03.2026. The revenue opposed the condonation of delay.

What were the issues?

1. Whether the delay of 922 days in filing the appeal before the ITAT is liable to be condoned on the grounds of sufficient cause, as per Section 253(1) of the Income-tax Act, 1961. Assessee's Contention: The assessee argued that the delay was due to bona fide reasons, specifically the ex parte passing of the impugned order, lack of knowledge of the order due to no business activity and infrequent access to the income-tax portal, and subsequent discovery of the penalty demand. They relied on the Supreme Court's decision in Collector, Land Acquisition, Anantnag & Ors. v. M/s Katiji & Ors. (1987) 167 ITR 471 (SC) and Basawaraj & Anr. v. Special Land Acquisition Officer (2013) 14 SCC 81, emphasizing that the length of delay is not decisive and acceptability of the explanation is primary. Revenue's Contention: The Ld. DR opposed the prayer for condonation of delay and alternatively prayed for imposition of substantial cost if the delay was condoned.

Which sections of the Income-tax Act were involved?

Section 250,Section 271(1)(c),Section 253(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI

Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI RAKESH KUMAR LODHA

For Appellant: Shri C.V. Dharkar
For Respondent: Shri Rajgopal K
Hearing: 12.08.2026Pronounced: 30.09.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “G”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER And SHRI RAKESH KUMAR LODHA, ACCOUNTANT MEMBER ITA No. 2846/M/2026 Assessment Year: 2009-10 GANESH CONSTRUCTION ITO, 22(1)(1) COMPANY 3rd Floor, Piramal 601, Suryadarshan COOP HSG SOC, Yashwant Vs. Chambers, Lalbaug, Nagar, Santacruz East, Mumbai 400 12 Mumbai 400 055 Maharastra Maharashtra PAN-AAGFG3076L (Appellant) (Respondent) Present for: Assessee by : Shri C.V. Dharkar Revenue by : Shri Rajgopal K. Parthasarathy- SR DR Date of Hearing : 12.08.2026 Date of Pronouncement : 30.09.2026 O R D E R

Per : Rakesh Kumar Lodha, Accountant Member: This appeal has been preferred by the Assessee against the order dated 26.06.2023, passed by the National Faceless Appeal Centre (NFAC)/Ld. Commissioner of Income Tax (Appeals) (in short, “Ld. Commissioner”) under section 250 of the Income-tax Act, 1961 (in short, “the Act”), for A.Y. 2009-10.

2.

At the outset, we observe that the present appeal is delayed by 922 days. The Assessee has filed an affidavit seeking condonation of delay, inter alia, on the grounds stated below:

“ We, Ganesh Construction Co. (the Said Firm) through its Managing Partner Shri RAMNARAYAN SHITALAPRASAD UPADHYAY aged about 67 yrs R/o 803, Bhoomi Towers, Nehru Road, Santacruz East, Mumbai – 400 055, PAN: AAJPU6472H in the capacity as a Partner of Ganesh Construction Co. do solemnly affirm that the Said firm was assessed and re-assessed to tax twice. We state that appeals were filed challenging the additions and relief was granted by the appellate forums. We state that in the first reassessed income the additions of Rs. 37,14,067/- was sustained vide CIT(A) Order dated 30.12.2014 and, on the said additions the AO levied Penalty u/s 271(1)(c) of Rs.10,49,797/- vide Order dated 30.03.2016. Appeal filed against the said Order was dismissed on an ex-parte basis vide Order dated 26.06.2023 and was, however, not known to the Said-firm. We state and submit that being unaware of this Order no further appeal was filed before the Hon. ITAT. We state and submit that the appeal thus had remained uncontested before the Hon. ITAT. We state that the order of dismissal of the appeal was not known till the recent pursuance of the Refund for various years. We state and submit that the demands to be adjusted, included this demand of Rs10,49,797/-, which was intimated to the Said firm. It is stated and submitted that steps were thereafter taken to file an appeal before the Hon. ITAT. The appeal before the Hon. ITAT was thus filed on 13.03.2026 which resulted in delay of 922 days. We state and submit that the additions sustained in the quantum appeal was quashed by the Hon. ITAT vide Order of 10.08.2016. It is sincerely urged and pleaded that the undue delay in filing of the appeal was on account of the bona fide impression that the Order dismissing the Penalty Order was not known. We state and submit that being unaware of the dismissal of appeal the further filing of the appeal before Hon. ITAT remained to be filed. We submit and state that non-filing of the appeal was thus on account of the given circumstances and that the Said firm intends to file the appeal and is interested in prosecuting the appeal. It is sincerely urged and prayed that the delay in filing of the appeal by 922 days be condoned and a lenient view be taken.It is submitted that there was no ulterior motive for not filing the appeal in time nor any gain has accrued or enured to the Said-firm on account of the delay. We state and submit that the Said-firm reiterates that it is seriously interested in prosecuting the case. We state and submit that the delay in filing the appeal was due to unavoidable circumstances beyond our control. We therefore pray your Honour that the delay in filing of the appeal by around 922 days is for the circumstances beyond our control. We state and submit that the appeal remained to be filed in filing of timely appeal due to related circumstances mentioned above. We pray your Honour’s to condone the delay and take the appeal on record. We submit that the admission of the appeal would serve the interest of justice and an opportunity to be heard be granted. We once again sincerely pray that the appeal be admitted and taken on record in the interest of justice. We remain obliged for the indulgence sought and the intervention requested. Prayer for condonation of delay:

In continuation of our earlier Prayer of 03.08.2016 we state and submit as below: The appellant-firm had not filed the appeal within the prescribed time before the Hon. ITAT, that the delay of 922 days was on account of being unaware about the Order being passed and reflected on the Income tax portal. That the appellant firm had no business activity for a long period of time and thus the income tax portal was not accessed. We submit and state that the resultant dismissal Order of the CIT (A) NFAC passed on an ex-parte basis was not known and steps to file the appeal before the Hon. ITAT could not be taken up. That to demonstrate about the business activity, being carried or not, the Statements generated by the Income tax department were downloaded on 06/08/2026. Statement of 26AS and AIS downloaded were for FIVE years and FOUR years respectively. Upon a perusal of these statements it is seen that 26AS has no transactions appearing under any of the category and class of transactions. With regard to AIS is also indicated that there are NO transactions appearing on these statements as well. It is stated and submitted that while 26AS statements could be generated the statement of AIS pdf cannot be generated in absence of any transactions for that period. The “Screenshot” taken has a remark, ERROR: “You don’t have any AIS details to download”. 26AS has been downloaded for AY 2022-23 to 2026- 27 which covers and is about 27 months prior to the notice date of CIT (A) being 26.06.2023 and extends 33 months after the notice date, while AIS is for FY 2022-23 to 2025-26. The Bank statement has been obtained for the period of FOUR years which also reveals that there were no transactions during this period. We therefore state and submit that there were no transactions are reflected in any of these statements. We state and submit that a reading of all these statements clearly evidences that no business has been carried out in any of these years. We solemnly affirm that no business was carried out in any manner and thus there was no occasion to access and view the e-portal of income tax. We state and submit that the Order passed by CIT (A) NFAC went unnoticed and remained to be attended. Copies of the above statements are annexed. It is therefore stated and submitted that no business activity was carried out for the past many years and the income tax portal was not viewed for a long time. It is stated and submitted that the CIT (A) NFAC dated 26.06.2023 went unnoticed and the appellant was thus not aware about the appeal being dismissed on an ex-parte basis. Being unaware about the dismissal, no appeal could be filed against the appeal within the prescribed limit of 60 days before the Hon. ITAT. It is thus sincerely urged that the delay in filing of the appeal was beyond the control and circumstances of the appellant and prayed that the delay of 922 days be condoned in the interest of justice and an opportunity to be heard be granted. We remain obliged. Whatever stated above is true to the best of our knowledge and belief.” 3. The Assessee on the basis of above submissions more or less has claimed that the impugned order dated 26.06.2023 was passed ex parte and remained unnoticed as the Assessee-firm had not carried on any business activity for a considerable period and, consequently, the income-tax portal was not being regularly accessed. To substantiate the explanation, the Assessee referred to Form 26AS for A.Ys. 2022-23 to 2026-27, AIS particulars for F.Ys. 2022-23 to 2025-26 and bank statements for four years, which, according to the Assessee, did not reflect any business transactions. It was further stated that the Assessee came to know of the outstanding penalty demand of Rs.10,49,797/- only while pursuing refunds for other years, whereupon necessary steps were taken and the present appeal was filed on 13.03.2026.

4.

The Ld. DR on the contrary opposed the prayer for condonation of delay and, alternatively, prayed for imposition of substantial cost in case the delay is condoned.

5.

In rejoinder, the Ld. AR reiterated the prayer for condonation of delay and, alternatively, voluntarily offered payment of reasonable cost of Rs.33,000/- for condonation of delay and for affording the Assessee an opportunity of being heard by restoring the matter to the file of the Ld. Commissioner for fresh adjudication.

6.

We have considered the rival submissions and perused the material available on record. We have considered the rival submissions and perused the material available on record. The Hon’ble Supreme Court in Collector, Land Acquisition, Anantnag & Anr. v. Mst. Katiji & Ors., (1987) 167 ITR 471 (SC) : (1987) 2 SCC 107, emphasized that the expression “sufficient cause” should receive a liberal and justice-oriented construction so as to advance substantial justice. Similarly, in N. Balakrishnan v. M. Krishnamurthy, (1998) 7 SCC 123: AIR 1998 SC 3222, the Hon’ble Supreme Court held that the length of delay is not decisive and that the acceptability of the explanation is the primary criterion; even a long delay may be condoned where the explanation is satisfactory. At the same time, in Basawaraj & Anr. v. Special Land Acquisition Officer, (2013) 14 SCC 81, the Hon’ble Supreme Court reiterated that “sufficient cause” must be satisfactorily established and that delay cannot be condoned where it is attributable to negligence, inaction or want of bona fides.

7.

Tested on the aforesaid principles, the present case has peculiar and distinguishable facts. The Assessee has not merely pleaded lack of knowledge of the impugned order but has sought to substantiate the circumstances resulting in such non-awareness. As specifically stated in the affidavit, the Assessee-firm had ceased carrying on business for a considerable period and, therefore, its income-tax portal was not being accessed regularly. To demonstrate the same, the Assessee placed reliance upon Form 26AS for A.Ys. 2022-23 to 2026-27, AIS particulars for F.Ys. 2022-23 to 2025-26 and bank statements for four years, which, according to it, did not reflect any business transaction. It was also stated that the AIS portal displayed the message “You don’t have any AIS details to download” for the relevant period.

8.

These circumstances assume significance because the impugned order was passed ex parte on 26.06.2023. According to the explanation furnished, the order remained unnoticed because the firm had no ongoing business activity requiring regular access to the income-tax portal. The Assessee came to know of the outstanding penalty demand of Rs.10,49,797/- only subsequently while pursuing refunds for other years, whereupon steps were taken to ascertain the cause of such demand and the present appeal was filed.

9.

We further notice that even otherwise no material has either been brought or available before us to suggest that the delay was deliberate, actuated by mala fides or intended to secure any collateral advantage. The Assessee could derive no apparent benefit by allowing the subsisting penalty demand to remain uncontested. The sequence explained by the Assessee, namely prolonged business inactivity, non-access of the portal, passing of the order ex parte and subsequent discovery of the demand while pursuing refunds, provides a reasonable nexus between the circumstances pleaded and the delay occasioned.

10.

We are also conscious that the assessment giving rise to the impugned penalty had subsequently been quashed by the Tribunal vide order dated 10.08.2016. However, the delay is not being condoned merely on account of the merits of the appeal or because the underlying assessment stood quashed. The prayer for condonation has been examined independently on the explanation furnished by the Assessee.

11.

Therefore, considering cumulatively: (i) prolonged cessation of business activity; (ii) stated absence of transactions in Form 26AS, AIS and bank account during the relevant period; (iii) consequent non-access of the income-tax portal; (iv) passing of the impugned order ex parte; (v) stated absence of actual knowledge thereof; (vi) subsequent discovery of the penalty demand while pursuing refunds; and (vii) absence of any material suggesting deliberate delay or mala fides, we are satisfied that the explanation furnished by the Assessee is plausible, bona fide and constitutes sufficient cause for the delay.

12.

Considering the substantial delay involved and the fact that condonation of delay is an equitable relief, we deem it appropriate to condone the delay of 922 days, however, subject to deposit of cost of Rs.33,000/-, as voluntarily offered by the Assessee during the course of hearing, with the Revenue Department under the head “Others”, within 30 days from the date of receipt of this order. We clarify that the Assessee shall not claim adjustment of the said amount against any existing or future tax demand, refund or other liability.

13.

Thus, subject to the aforesaid compliance, the delay is condoned and the appeal is admitted for adjudication on merits.

14.

Coming to the merits, the Ld. AR submitted that the additions aggregating to Rs.37,14,067/-, forming the basis of penalty of Rs.10,49,797/- under section 271(1)(c) of the Act, stood extinguished upon the Tribunal quashing the assessment vide order dated 10.08.2016 and, therefore, the consequential penalty could not survive.

15.

We have considered the submission and perused the material available on record. Since the impugned appellate order dated 26.06.2023 was passed ex parte, the effect of the Tribunal’s order dated 10.08.2016 on the survivability of the penalty has not been examined by the Ld. Commissioner. Further, the complete relevant record is not before us.

16.

In these circumstances and in the interest of justice, accepting the alternative claim of the Assessee, we set aside the impugned order and restore the matter to the file of the Ld. Commissioner for fresh adjudication in accordance with law, after considering the Tribunal’s order dated 10.08.2016 and all relevant material placed on record. The Assessee shall be afforded reasonable opportunity of being heard and shall extend due cooperation without seeking unnecessary adjournments.

17.

Accordingly, the grounds on merits are allowed for statistical purposes, subject to compliance with the direction regarding payment of cost of Rs.33,000/-.

18.

In the result, the appeal filed by the Assessee is allowed for the limited purpose of fresh adjudication.

Order pronounced in the open court on 30.09.2026

Sd/- Sd/- (NARENDER KUMAR CHOUDHRY) (RAKESH KUMAR LODHA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated 30.09.2026 Sharath Kumar,PS. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy./Asstt. Registrar, ITAT, Mumbai.

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