RANGOLI HOTEL,MEHSANA vs. DCIT, CIRCLE, GANDHINAGAR, GANDHIANGAR

ITA 2286/AHD/2026Status: DisposedITAT Ahmedabad21 October 2026AY 2020-215 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the appeal was dismissed by the Ld. CIT(A) solely due to the assessee's non-compliance with notices issued during appellate proceedings. The assessee provided a reasonable explanation for this non-compliance, citing a change in email address and the inaccessibility of the previous account. In the interest of substantial justice, the Tribunal decided to restore the matter to the file of the Ld. CIT(A) for a fresh adjudication on merits. The Ld. CIT(A) was directed to issue notices to the assessee's updated email address, consider the grounds of appeal afresh, examine relevant documentary evidence, and pass an order in accordance with the law after providing a reasonable opportunity of being heard. The assessee was also directed to comply with notices and furnish all necessary documents. The ratio decidendi is that procedural lapses due to genuine reasons, such as change of contact details, should not preclude a substantive hearing on merits, especially when substantial justice is at stake.

What were the facts?

The assessee, Rangoli Hotel, a partnership firm engaged in hospitality, filed its return for AY 2020-21 under Section 44AD. The Assessing Officer (AO) received information of a mismatch in interest income. A notice under Section 133(6) was issued, and the assessee provided details. Subsequently, a notice under Section 148 was issued, and the assessee filed a revised return. During reassessment, the AO noted the assessee advanced Rs. 10,82,14,751/- to M/s Raj Corporation and received interest of Rs. 1,18,35,991/-. The AO observed a discrepancy between the agreed interest rate (12.25%) and the received rate (10.90%), leading to an addition of Rs. 5,77,271/- for differential interest. The assessee appealed to the NFAC (CIT(A)), which dismissed the appeal for non-compliance with notices.

What were the issues?

1. Whether the addition of Rs. 5,77,271/- towards differential interest in respect of advance to M/s Raj Corporation is illegal, unlawful, and against the principles of natural justice (mixed law and fact, relating to Section 250 of the Income-tax Act, 1961)? - Assessee's contention: The addition was made without appreciating the actual flow of funds, verifying the nature of internal adjustments, and interest receipts. The assessee also argued that there was a sufficient cause for non-compliance with notices due to a change in email address and inaccessibility of the old account, making the non-compliance neither intentional nor deliberate. - Revenue's contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 250,Section 44AD,Section 133(6),Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

For Appellant: Shri Samir Vora, A.R
For Respondent: Shri Kalpesh Rupavatia, Sr.DR
Hearing: 19.10.2026Pronounced: 21.10.2026

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:

- Delay Condoned This appeal has been filed by the Assessee against the order dated 29.01.2026 passed by the National Faceless Appeal Centre(NFAC), Delhi (hereinafter referred to as ‘Ld. CIT (A)’ in short), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’ in short) for Assessment Year 2020-21. ITA No. 2286/AHD/2026, AY-2020-21 Rangoli Hotel - 2–

2.

The Assessee has raised the following grounds of Appeal: -

1.

1 The order passed by U/s.250 passed on 29.01.2026 for A.Y. 2020-21 by NFAC, [CIT(A)], Delhi (for short CIT(A)" upholding the addition towards the differential interest of Rs.5.77,271/- in respect of advance to M/s Raj Corporation is wholly ille

The order continues below.

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