HOUSING DEVELOPMENT AND INFRASTRUCTURE LIMITED,MUMBAI vs. DCIT, CENTRAL CIRCLE 5(4), MUMBAI

These appeals involve substantially identical facts and issues and, therefore, were heard together with the consent of the parties and are being disposed of by this composite order, taking ITA No. 5907/MUM/2026 as the lead case. The decision therein shall apply mutatis mutandis to the remaining appeals.

Coming to ITA No. 5907/MUM/2026, we observe that the Assessing Officer, vide assessment order dated 10.04.2023, passed under section 147 read with section 144 of the Act, made an addition of Rs. 50,14,79,452/- under section 68 of the Act, treating the accommodation entries as unexplained cash credits. The addition was sustained in the first appeal.

Thereafter, the Assessing Officer, vide order dated 29.12.2023, imposed a penalty of Rs. 3,87,39,288/- under section 271AAC(1) of the Act, holding that the Assessee had neither included the impugned income in its original return nor paid the tax under section 115BBE within the prescribed time and, therefore, was not entitled to the protection of the proviso to section 271AAC(1) of the Act.

Thus, the Assessee, being aggrieved, has filed the instant appeal.

We have heard the parties and perused the material available on record. The ld. Counsel submitted that the Assessee Company is undergoing the Corporate Insolvency Resolution Process (CIRP), pursuant to the order dated 20.08.2019 passed by the Hon’ble National Company Law Tribunal, Mumbai Bench. The consequent transition in the management and control of its affairs and records caused practical difficulties in retrieving the documents required for the proceedings before the authorities below. The ld. Counsel sought a further opportunity and undertook to furnish the relevant submissions and documents.

The ld. DR did not dispute this explanation and suggested that the matter be restored to the ld. Commissioner, rather than the Assessing Officer.

Considering the difficulties arising from the CIRP proceedings, we find the explanation for non-compliance prima facie plausible. Further, the ld. Commissioner sustained the penalty without the benefit of the Assessee’s relevant submissions and documents. We, therefore, deem it appropriate, in the interest of justice, to grant the Assessee one further opportunity to substantiate its case.

Accordingly, the impugned order is set aside, and the appeal concerning the penalty under section 271AAC(1) of the Act is restored to the file of the ld. Commissioner for fresh adjudication, subject to the Assessee depositing costs of Rs. 11,000/- with the Revenue Department under the “Other” head, within 15 days from the date of this order, and furnishing proof thereof before the ld. Commissioner.

The ld. Commissioner shall examine the relevant submissions and documents and pass a reasoned order in accordance with law, after affording the Assessee a reasonable opportunity of being heard. In terms of its undertaking, the Assessee shall furnish the requisite submissions and documents within the time afforded, without delay or default. No opinion is expressed on the merits of the penalty. Accordingly, ITA No. 5907/MUM/2026 is allowed for statistical purposes, subject to the aforesaid condition.

The remaining appeals also involve ex parte impugned orders passed owing to non-compliance by the Assessee and substantially identical facts and issues. Therefore, the aforesaid reasoning and directions shall apply mutatis mutandis to those appeals. Accordingly, the respective impugned orders are set aside, and the matters are restored to the file of the ld. Commissioner for fresh adjudication, subject to payment of costs of Rs. 11,000/- in each appeal, within the period and in the manner specified above.