SEA SIDE HOTEL PRIVATE LIMITED,MUMBAI vs. WARD 11(2)(1), MUMBAI

ITA 7336/MUM/2026Status: DisposedITAT Mumbai08 October 2026AY 2015-167 pages
AI SummaryPartly Allowed

What were the facts?

The assessee, Sea Side Hotel Private Limited, filed an appeal against an order passed by the Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi. This order pertained to a reassessment proceeding initiated under Section 147 read with Section 144B of the Income-tax Act, 1961, for Assessment Year 2015-16. The original assessment order was dated 25.03.2022. The appeal before the CIT(A) was delayed by 115 days, which the CIT(A) dismissed for lack of sufficient cause. The assessee's return declared a total income of (-) Rs. 15,95,250/-. The reassessment proceedings were based on information that the assessee received Rs. 8,50,000/- from M/s RNG Finlease Pvt. Ltd., a shell company managed by an individual involved in providing accommodation entries. The assessee failed to substantiate this receipt during reassessment, leading to its addition as unexplained cash credit under Section 68.

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal before the CIT(A), citing the well-settled principle that the expression 'sufficient cause' in Section 249(3) of the Act should be construed liberally to advance substantial justice, especially when no mala fide or deliberate negligence is attributable to the assessee. Reliance was placed on the Supreme Court's decision in Collector, Land Acquisition v Mst. Katiji And Others. Consequently, the Tribunal decided to afford the assessee one more opportunity to substantiate its grounds on merits. The matter was restored to the CIT(A) for de novo consideration, adhering to the principles of natural justice. The assessee's Ground No. 2, challenging the jurisdiction and legal validity of reassessment proceedings under Section 147, was withdrawn by the assessee and dismissed as such. Grounds 1, 3, and 4 were allowed for statistical purposes, meaning they would be adjudicated on merits by the CIT(A). The Tribunal clarified that this restoration should not affect the merits of the case, which the CIT(A) is empowered to decide independently. The operative direction was to set aside the order and restore the appeal to the CIT(A) for fresh adjudication.

What were the issues?

1. Whether the Ld. CIT(A), NFAC erred in dismissing the appeal petition of the Appellant on the sole ground of lack of sufficient cause for delay in filing the appeal, ignoring the difficulties and bonafide reasons for the delay, contrary to the principles of natural justice? 2. Whether the Ld. CIT(A), NFAC erred in assuming jurisdiction in conducting reassessment proceedings where the alleged amount escaping assessment was only Rs 8.50 lakhs, and whether the proceedings were invalid due to the AO obtaining approval from the Range Head? 3. Whether the Ld. CIT(A), NFAC erred in confirming the addition of Rs. 8,50,000/- under Section 68 of the Income Tax Act, 1961, as unexplained cash credits, without appreciating that the receipts were explained and declared as turnover? 4. Whether the AO passed an order based on unsubstantiated information, without confirmation from the appellant and without providing an opportunity to cross-examine allegations based on an alleged statement of an unknown person? Assessee's Contentions: - The delay in filing the appeal before the CIT(A) was due to severe financial distress and a bona fide misconception of law related to Section 249(4) of the Act, compounded by COVID-19 restrictions affecting business operations. The delay was unintentional and non-deliberate. - The reassessment proceedings were invalid due to the amount in dispute and the AO obtaining approval from the Range Head. - The receipt of Rs. 8,50,000/- was explained and declared as turnover. - The AO's order was based on unsubstantiated information and without providing an opportunity for cross-examination. Revenue's Contentions: - The judgment records no specific contentions for the revenue on the merits of the grounds of appeal, other than not opposing the restoration of the matter to the CIT(A).

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 68,Section 249(3),Section 249(4)

AI-generated summary — verify with the full judgment below

Before: SHRI SIDDHARTHA NAUTIYAL & SHRI PRABHASH SHANKAR

For Appellant: Shri Asif A. Karmali a/w Shri Jayesh Dhabaria,ARs
For Respondent: Shri Basavaraj Hiremath,CIT DR a/w, Shri Rajgopal Parthasarthy, Sr. DR
Hearing: 24.09.2026Pronounced: 08.10.2026

PER PRABHASH SHANKAR [A.M.] :- The instant appeal arising from the appellate order dated 17.04.2026 is preferred by the Assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 147 r.w.s. 144B of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 25.03.2022 for the Assessment Year [A.Y.] 2015-16. P a g e | 2 A.Y. 2015-16 Sea Side Hotel Private Limited 2. The grounds

The order continues below.

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