PRADEEP SANTKUMAR JOSHI,THANE vs. WARD 3(1),THANE, THANE

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ITA 202/MUM/2026Status: DisposedITAT Mumbai07 October 2026AY 2014-157 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessee was severely prejudiced in defending his case. Firstly, before the CIT(A), the assessee was deprived of an opportunity to present his defense as hearing notices were sent to wrong email addresses, resulting in an ex-parte order without adjudication on merits. Secondly, before the Assessing Officer, the addition of Rs. 65,13,62,382/- under section 68 was made on account of alleged sham sales without confronting the assessee with the full search materials, statements, or third-party investigation reports of M/s Loha Ispaat Ltd. relied upon by the Department. Applying the principle of natural justice (audi alteram partem), the Tribunal set aside the order of the CIT(A) and restored the matter to the file of the Assessing Officer for fresh adjudication on all issues, including legal grounds regarding reopening and the merits of the addition. The Assessing Officer was directed to provide all relied-upon material, grant a reasonable opportunity of being heard, and pass a speaking order. The assessee was directed to cooperate. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Pradeep Santkumar Joshi, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Mumbai, challenging an order passed by the Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre (NFAC), Delhi. This order was passed against an assessment order dated May 22, 2023, issued by the Assessment Unit of the Income-tax Department under sections 147 read with 144B of the Income Tax Act, 1961, for the Assessment Year 2014-15. The assessee's appeal to the ITAT was filed with a delay of 424 days. The assessee contended that the delay was due to hearing notices being sent to incorrect email addresses during the first appellate proceedings, leading to an ex-parte order. The Tribunal condoned the delay. The reassessment proceedings were initiated based on information that the assessee had received bogus accommodation entries in the form of sales amounting to Rs. 65,13,62,382/- from M/s Loha Ispaat Limited.

What were the issues?

1. Whether the assessment order passed under section 147 read with section 144B of the Income Tax Act is without jurisdiction, invalid, and bad in law. (Assessee's contention: The reopening of assessment under section 148 was invalid as the notice should have been issued by the Faceless Assessing Officer as per section 151A, vitiating the reassessment proceedings. The notice under section 148 was issued without a DIN, and the subsequent intimation letter with DIN was void. The Assessing Officer failed to make any addition based on the reason for reopening and did not drop the proceedings. The Assessing Officer failed to provide relied-upon documents for reopening, causing injustice. The sanction for reopening under section 151 was mechanical and lacked a live nexus. Revenue's contention: Supported the orders of the authorities below, stating the assessee failed to comply with notices.) 2. Whether the addition of sales amounting to Rs. 65,13,62,382/- to M/s Loha Ispaat Ltd. under section 68 of the Act was erroneous. (Assessee's contention: The addition was made on surmises without providing material. Alternatively, if purchases were bogus, only commission should be considered, which was already declared. Revenue's contention: Supported the orders of the authorities below.)

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 148,Section 151A,Section 148A,Section 151,Section 68,Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI GIRISH AGRAWAL

For Respondent: Shri Ajay Soneji, Sr. DR
Pronounced: 07.10.2026

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: C BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA 202/MUM/2026 (िनधा�रण वष�/Assessment Year: 2014-15) Pradeep Santkumar Joshi Ward 3(1),Thane B-10, Kripa, Willows CHS Dadlani Qureshi Mansion, Road, Opp Ashok Nagar, Gokhale Road, Vs. Balkum Thane West, Thane-400602, Maharashtra Thane-400608, Maharashtra अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of Assessee: AKNPJ8970D

अपीलाथ� �ारा/Appellant represented by: Shri Rushabh Mehta, CA ��थ� �ारा/Respondent represented by: Shri Ajay Soneji, Sr. DR

सुनवाई की तारीख / Date of conclusion of hearing: 14.07.2026 घोषणा की तारीख / Date of pronouncement: 07.10.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by assessee is against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, vide Order No. ITBA/NFAC/S/250/2024-25/1068626486(1) dated 12.09.2024 passed against the assessment order by Assessment Unit of Income-tax Department, u/s. 147 r.w.s. 144B of the Income-tax Act, 1961 (‘the Act’) dated 22.05.2023, for Assessment Year 2014-15.

2.

Assessee has raised the following grounds of appeal: 1. (a) The assessment order passed u/s. 147 r.w.s. 144B of the Income Tax Act (herein referred as "the Act") by the ld. Assessing Officer is without jurisdiction, invalid, bad in law and is not in accordance with the procedures laid down in the Act.

(b) The reopening of assessment u/s. 148 of the Act by the Jurisdictional Assessing Officer i.e. ITO Ward 3(4), Thane is invalid as the notice ought to have been issued by the Faceless Assessing Officer in view of section 151A of the Act and therefore, the entire reassessment proceedings is vitiated and consequently, the assessment order passed u/s. 147 r.w.s. 144B of the Act is void-ab-initio, invalid and bad in law. (c) The Ld. CIT(A) erred in facts and law in not appreciating the fact that the notice u/s 148 of the Act was passed without DIN and Assessing Officer merely issued a separate letter of intimation with DIN dated 28.07.2022 informing that notice u/s 148 is passed, which is void ab initio, invalid, bad in law. (d) The ld. CIT(A) erred in facts and law in not appreciating that the Ld. Assessing Officer erred in not making any addition on the issue based on which notice u/s. 148 or 148A(b) of the Act was issued and thereby not dropping the reassessment proceedings. (e) The Ld. CIT(A) erred in facts and law in not appreciating that the Ld. Assessing Officer failed to provide the copy of documents relied upon for the purpose of reopening the assessment and merely provided the copy of insight portal without the relevant material against the assessee, thereby causing grave injustice in not providing adequate opportunity of being heard. (f) The Ld. CIT(A) erred in facts and law in not appreciating that the sanction granted for reopening the assessment u/s. 151 of the Act by Ld. Pr. CCIT, Pune is mechanical and devoid of any material/ evidence against the assessee and without appreciating that there was no live nexus of the information with the allegation of escapement of income. 2. (a) The ld. CIT(A) erred in facts and law in confirming the addition of the sales made to M/s. Loha Ispaat Ltd. of Rs. 65,13,62,382/- u/s. 68 of the Act on his own surmises and conjectures, without providing any material based on which the said addition is made. (b) Without prejudice to Ground no. 2(a) above, corresponding purchases are also bogus and therefore, only commission @ 0.01% ought to have been considered, which even otherwise need not be added as the profit on these transactions is already declared in the return of income. 3. All grounds of appeal are without prejudice to each other.

3.

At the outset, it is observed that there is a delay of 424 days in filing the present appeal before the Tribunal. In this regard, assessee has filed an application along with a supporting affidavit explaining the reasons for the delay. Ld. Counsel for the assessee submitted that during the first appellate proceedings, the hearing notices dated 05.08.2024, 13.08.2024 and 19.08.2024 were delivered to incorrect email addresses viz., steve.saldanha@hdfcbank.com and pawankumar.shukla@hdfcbank.com belonging to banking officials, which were not controlled by assessee. Consequently, assessee remained completely unaware of the hearing notices as well as the passing of the impugned ex-parte order, dated 12.09.2024. It was only in December 2025, upon making inquiries through his accountant regarding the status of pending matters that assessee became aware of the impugned order. Thereafter, steps were immediately taken to file the present appeal before the Tribunal on 09.01.2026. It was submitted that there was no deliberate neglect or contumacious conduct on the part of assessee and he placed reliance on the decisions of the Hon'ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 (SC) and the Hon'ble Bombay High Court in Vijay Vishin Meghani v. DCIT [2017] 86 taxmann.com 98 (Bom). On the other hand, ld. DR relied upon the orders of the authorities below.

3.1. We have considered the rival submissions and perused the affidavit as well as the evidence on record. It is noted that the hearing notices issued by the ld. CIT(A) were communicated to email addresses not belonging to assessee, thereby preventing assessee from receiving timely knowledge of the proceedings. Satisfied that there was sufficient cause for the delay and following the settled proposition of law that technicalities should not override substantial justice, the delay of 424 days in filing the present appeal is hereby condoned and the appeal is admitted for hearing on merits.

4.

Briefly stated, assessee is engaged in the business of trading in steel and iron products under the proprietary concern M/s Green Field Overseas. Assessee filed his return of income on 30.11.2014, reporting total income at Rs. 2,46,960/-. The proceedings and notices issued under section 148 / 148A of the Act along with the responses submitted by assessee during the reassessment proceedings are tabulated hereunder:

Sr. Notice / Proceeding Due Date / Response / Remarks / Description No. / Notice Date Compliance Date Reply Date Notice u/s 148 1. (Initial) – — — Initial reassessment notice issued. 08.04.2021 Notice u/s 142(1) – Details called for; proceedings 2. — — 16.07.2021 subsequently closed on 16.01.2023. Issued pursuant to Apex Court ruling in Notice u/s 148A(b) 3. 28.06.2022 28.06.2022 Ashish Agarwal; detailed reply filed by – 27.05.2022 assessee. Order u/s 148A(d) Order passed holding that income 4. — — – 28.07.2022 chargeable to tax escaped assessment. Notice u/s 148 – Return filed declaring total income of 5. 26.08.2022 26.08.2022 28.07.2022 Rs. 2,46,960/-. Notice u/s 143(2) – 6. 02.02.2023 02.02.2023 Assessee requested adjournment. 20.01.2023 Assessee filed partial response, Notice u/s 142(1) – 7. 28.02.2023 27.02.2023 financial statements, bank statement, 22.02.2023 and tax audit report. Show Cause Proposed addition u/s 68 regarding 8. Notice – 16.05.2023 No Response alleged bogus sales to M/s Loha Ispaat 12.05.2023 Ltd.

4.1. The factual matrix surrounding the addition made by ld. Assessing Officer as extracted from the assessment order is reproduced as under: "The assessee filed return of income in response to the notice issued under section 148 on 26/08/2022 at total income of Rs. 2,46,960/- declaring total revenue from operations of Rs.944,64,85,678/- and purchases of Rs. 944,56,70,112/- having no closing and opening stock. The evidences unearthed in search and seizure action conducted on M/s Loha Ispaat Limited that they were involved in providing bogus accommodation entries. It is identified that the assessee is one of the beneficiaries who has taken bogus accommodation entry from M/s Loha Ispaat Limited. As per the investigation report during the financial year 2013-14 the assessee has received accommodation entries in terms of bogus sales amounting to Rs.65,13,62,382/-. The information was also received from credible sources that the assessee has credits of Rs.425,20,82,561/- during the financial year 2013-14 in HDFC Bank account number 11182000002 123 held in the name of M/s Green Field Overseas, proprietorship concern of Shri Pradeep Santkumar Joshi. On verification it is noticed that majority of the credits are from M/s Loha Ispaat Limited. While completing the scrutiny assessment proceedings under section 143(3) of the Income Tax Act, 1961 of M/s Loha Ispaat Limited, it was confirmed that M/s Loha Ispaat Limited has provided bogus sales accommodation entries to the assessee during the financial year 2013-14 relevant to the assessment year 2014-15 amounting to Rs.65,13,62,382/-. The assessee has also failed to furnish any clarification regarding transaction with M/s Loha Ispaat Limited during the proceedings order under section 148A(d) of the Income Tax Act, 1961. The assessee was requested vide notice under section 143(2) and 142(1) dated 20/01/2023 and 22/02/2023 respectively, to furnish explanations/ details to substantiate the genuiness of transactions with M/s Loha Ispaat Limited. On perusal of the responses made to the aforesaid notices it is noticed that the assessee has not furnished any explanations or details in this regard. The findings by the Department in the case of the entry provider, M/s Loha Ispaat Limited, in form of documents, evidentiary statements given on oath and other circumstantial evidences prove that the assessee has received bogus accommodation entries. Therefore, the sales so shown by the assessee as genuine needs to be substantiated in the light of the findings in the case of M/s Loha Ispaat Limited. The assessee failed to explain the issue considering the findings of the department in the case of M/s Loha Ispaat Limited. In the light of the above, it is evident that the sale of Rs.65,13,62,382/- claimed to have been made to M/s Loha Ispaat Limited wherein it failed to explain the genuineness of said sale is bogus. The assesse did not respond to the SCN and did not submit any explanation to the transactions with M.s. Lohaspaat Ltd. In their reply to 142(1) notice. Hence Rs.65,13,62,382/- is proposed to be treated as the unexplained income of the assesse u/s. 68 of the Income tax Act..."

4.2. From the above, it is noted that ld. Assessing Officer treated the alleged sham sales made by assessee to Loha Ispaat Ltd. amounting to Rs. 65,13,62,382/- as unexplained income under section 68. Aggrieved, assessee went in appeal before the ld. CIT(A) who dismissed the appeal ex-parte in limine for lack of compliance without adjudicating the issues on merits. Aggrieved, assessee is in appeal before the Tribunal.

5.

We have heard the rival contentions, perused the material available on record and carefully examined the impugned orders passed by the authorities below. Ld. Counsel for the assessee argued that ld. CIT(A) passed an ex-parte order dismissing the appeal without giving assessee an effective and real opportunity of being heard on merits. It was demonstrated that hearing notices before ld. CIT(A) were inadvertently dispatched to third-party email addresses belonging to bank officers, resulting in total non-service of notices upon assessee. He further contended that ld. Assessing Officer made a high-pitched addition of Rs. 65,13,62,382/- under section 68 of the Act treating alleged sales to Loha Ispaat Ltd. as sham sales without providing the underlying adverse material, search statements, or investigation reports relied upon by the Department, thereby violating the principles of natural justice.

5.1. On the other hand, ld. DR supported the orders of the authorities below and submitted that assessee failed to comply with the show-cause notices before ld. Assessing Officer as well as hearing notices before ld. CIT(A).

6.

Upon perusal of the record, we find that assessee has been severely prejudiced in defending his case. Firstly, before ld. CIT(A), assessee was deprived of an opportunity to present his defence as hearing notices were sent to wrong email addresses, resulting in an ex- parte order without adjudication on the merits of the addition. Secondly, before ld. Assessing Officer, addition of Rs. 65,13,62,382/- was made under section 68 on account of alleged sham sales made to Loha Ispaat Ltd. without confronting assessee with the full search materials, statements recorded, or third-party investigation report of Loha Ispaat Ltd., relied upon by the Department.

6.1. It is a well-established principle of natural justice, as encapsulated in the maxim audi alteram partem that no person should be condemned unheard. Denying an assessee a reasonable opportunity to meet the adverse evidence used against him creates a serious prejudice, vitiating the fairness of the proceedings.

7.

Considering the totality of facts and circumstances and in the interest of substantial justice, we find it fit to set aside the order of ld. CIT(A) and restore the matter back to the file of ld. Assessing Officer for fresh adjudication on all issues, including legal grounds regarding reopening and the merits of the addition. Ld. Assessing Officer shall provide copy of all material/evidences relied upon against assessee, give a reasonable opportunity of being heard to assessee and pass a speaking order in accordance with the provisions of the Act. Assessee is also directed to co-operate in the fresh assessment proceedings and furnish necessary documents without seeking unnecessary adjournments.

8.

In the result, appeal filed by the assessee is allowed for statistical purposes.

Order is pronounced in the open court on 07 October, 2026

Sd/- Sd/- (Saktijit Dey) (Girish Agrawal) Vice President Accountant Member Dated: 07 October, 2026 MP, Sr.P.S. Copy to : 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER, ABHINAV ANANT Digitally signed by ABHINAV ANANT GAVANDE GAVANDE Date: 2026.10.15 15:45:14 +05'30' (Dy./Asstt.Registrar) ITAT, Mumbai

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