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Facts
The assessee filed an appeal before the ITAT, Mumbai, which was delayed by 150 days. The delay was attributed to the death of a partner, the illness of the remaining partner, and lapses by tax consultants. The lower authorities (AO and CIT(A)) had completed proceedings ex-parte due to non-compliance and non-appearance of the assessee.
Held
The Tribunal condoned the delay, citing the principle that procedural rules are subservient to substantial justice, especially when the assessee doesn't benefit from the delay. Given the circumstances, the Tribunal restored the matter to the Assessing Officer (AO) for de novo adjudication on merits, allowing the assessee to present their case and documents.
Key Issues
Whether the delay in filing the appeal should be condoned and whether the matter should be remanded to the AO for fresh adjudication on merits due to ex-parte proceedings before lower authorities.
Sections Cited
250, 148, 142(1), 144, 147, 144B, 43CA, 68, 270A, 271AAC(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI OM PRAKASH KANTSHRI SANDEEP SINGH KARHAIL
Date of Hearing – 18/03/2026 Date of Order – 26/03/2026
O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal against the impugned order dated 28/03/2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2017-18. present appeal, duly supported by the affidavit of the partner of the assessee’s firm stating as follows: - “1. I, Hamid Rashid Khan, Age appx. 57 years, having current address at C- 502, Azim Apt.
5. V. Road, Jogeshwari-West, Mumbai-400102, have to state that I, am making this affidavit on behalf Hameeclass Builders (hereinafter “HB") in the Capacity of a Partner. In this connection, I affirm the following.
I and the Other Two Partners viz., Hameed Rashid Khan - Myself (hereinafter "HK") - 47% Share Address - B-502, Azim Apt., off. S. V. Road, Jogeshwari-West, Mumbai- 400102. PAN - AAHPK3914G Mohamed Umar Ebrahim Lakdawala (hereinafter "ML") - 47 % Share Address - B-802, Cheval Class, J. P. Road, Andheri-West, Mumbai - 400058. PAN - AABPM4843L Mohammed Abdul Qavi (hereinafter "MQ”) - 6% Share Address - 404, Sukoon Apt., S. V. Road, Dahisar East, Mumbai - 400068. PAN - AABPQ3101H had formed a Partnership Firm on 18-07-2008 in the name and style of "Hameeclass Builders", having Registered Office at 9, Mona Shopping Centre, J. P. Road, Andheri - West, Mumbai - 400058.
3. We had mutually agreed to share the responsibilities of the Business, wherein, I used to look after the Business Operations, ML looked after the Accounts, Billing, Recoveries, Banking, Receipts and Payments, Compliances including Income Tax Returns etc. with Revenue Departments and MQ was always stationed in the Office for co-ordination, trouble shooting.
4. HB is bearing PAN -AAFFH1537E and had regularly filed Income Tax Returns. The Accounts of Financial Years 2012-13 onwards to 2017-18 have also been Audited under the Tax Laws by Auditors A. A. Kapadia & Co., Chartered Accountants.
Sometime in the year 2021, our Income Tax Assessment for Asst. Year 2017-18 was re-opened vide Notice issued u/s 148 of the Income Tax Act, 1961 (hereinafter the "Act"). We had responded to the same. However, subsequently, for complying the directions of Hon. Supreme Court in case of "Ashish Agarwal" - (2022) 138 taxmann.com 64-SC, Id. AO regularized the issuance of Notice u/s. 148 of the Act. HB had filed IT Return pursuant to the said re-opening of Assessment.
Sometime on 29/05/2020 HB's aforesaid Partner ML expired. Since inception, HB's Tax Consultants, M. M. Bora holding email Ad020dress "bora.mim@gmail.com" had undertaken the responsibility of looking after the compliance with Tax Department. Besides, there was also one more consultant appointed by the said ML. However, as ML is not alive, I am unable to identify the said person holding the email address "jsr.andheri3@igrmaharashtra.gov.in". In fact, all the emails were sent to the said two email addresses. The other two Partners never looked into these compliances due to the lack of adequate knowledge about the accounts.
7. I had also developed severe illness due to erratic Blood Pressure. Starting from December 2021.Thereafter, I had a fall on my Head in my Bathroom. Within Six Months thereafter, I had to be admitted to Criticare Hospital, Andheri undergoing Operation for Brain Hemorrhage. Thereafter, I have lots of restrictions on type of Food Intake and also avoiding Stressful Work.
Incidentally, after the demise of ML and my illness, our business operations in HB also came to a halt. The same could not be revived till date. Further, our third partner, i.e. MQ also expired on 20-12-2023. Now, I am the only living partner out of the original three and therefore looking after everything including the recoveries, disposal of the pending projects and now the additional responsibility of attending to the appeal proceedings of the Pending Assessment Years including AY-2017-18.
Ld. AO had issued various Notices u/s 142(1) and 144 of the Act on the aforesaid two email addresses. However, ML was not available due to his demise, and it appears that even the aforesaid two consultants holding the respective email addresses) also did not pay attention to the said notices, except maybe, on one or two occasions. They also did not think it necessary to inform me about the same. I am unable to understand the reasons for the same.
Ld. AO passed Assessment Order dated 16-05-2023 by making Various Additions and Disallowances. However, as I have noticed that all the said additions / disallowances are made due to the non-submission of adequate details. My aforesaid two consultants advised me to filean appeal against the assessment order. However, I was not aware of the reasons of the additions / disallowances made in the Assessment Order. Further, as ML was not available, I bonafide trusted my said two consultants and signed the Appeal. Memo Form 35 before the due date.
I am now informed that the Ld. AO had also initiated Penalty Proceedings under sections 270A and 271AAC(1) of the Act, which as I understand, are levied in extreme conditions.
While filing Form 35, I had asked my consultants to mention our firm's email address "hameeclassbuilders@gmail.com" so that I could get the communication. However, Hon. NFAC has sent the Notices to the same previous email addresses viz., "bora.mim@gmail.com" and "isr.andheri3@igrmaharashtra.gov.in". Unfortunately, my said two consultants on the said email addresses neither responded to the said notices nor informed me about the same being issued by Hon. CIT-Appeals / NFAC. I was also not informed about the Show Cause Notices for levying the aforesaid penalties.
In absence of any representation and non-submission of any explanation / clarification, Hon. CIT-Appeals / NFAC passed the Appellate Order on 28-03- 2025 in which he has confirmed all the additions made in the Original Assessment. The said Appellate Order was also sent on the same previous two email addresses. I am really surprised as to why the said consultants did not inform me about the same.
Incidentally, around Mid-September, 2025, I asked my new consultant to check the email address and mobile contact number registeredon the Income Tax Portal, andalso requested him to change the official email address of HB i.e. "hameeclassbuilders@gmail.com" and also my personal mobile number for ensuring direct communication to me.
Thereafter, due to the confirmation of the additions made in Assessment Order, Id. FAO also passed Orders for levying Penalties vide orders dated 21- 09-2025 - Penalty u/s 271AAC(1) of the Act and 24-09-2025 - Penalty u/s 270A of the Act,and due to the changed email and contact. number I immediately came to know about the Penalties levied in HB's Assessment Year 2017-18 u/ss 270A and 271AAC(1) of the Act. Therefore, I contacted our previous consultant, who was evasive in giving proper replies.Simultaneously, I also noticed that Hon. CIT-Appeals / NFAC had passed adverse order on 28- 03-2025.
Now that I have appointed new consultant, I requested him to file Appeals against both the Penalty Orders, which were filed on 21-10-2025. The due date for filing Order against Penalty u/s 271AAC(1) of the Act was 21-10-2025 and against Penalty u/s 270A was 24-10-2025.
However, the appeal against the Order passed by Hon. CIT-Appeals / NFAC, which was due on 28-05-2025, is delayed because, my new counsel wanted to ensure that I had all the relevant data / information in my possession before I filed the second appeal. It may be noted that the said information / data was managed by my deceased partner ML. However, I have tostate that the delay has occurred due to the aforesaid circumstances, which are mainly the lapses / inferior services by HB's consultants.
Now I have taken control of the entire pending work of HB and located the relevant information in respect of the following. a. Details of the date of Allotment / Agreement and Payments from concerned Purchasers /Allottees of the 3 Flats against which addition of Rs.59,37,200/-u/s 43CA of the Act has been made. b. Details of Various Business Expenses, which were subjected to an ad-hoc disallowance Rs.6,27,610/- being 10% of those Expenses. The details of which are always available in our files and could be easily filed. HB is not only facing huge addition of Rs. 65,64,810/- but has also been levied Penalty of Rs.10,14,263/-u/s 270A of the Act. c. Similarly, the details of Further Capital of Rs.15,00,000/- introduced by me from my own source and Rs.41,00,000/- introduced by ML from his own personal source - Total Rs.56,00,000/- are also available with us. HB is not only facing huge addition of Rs.56,00,000/- but has also been levied Penalty of Rs.4,32,600/-u/s 271AAC(1) of the Act.
I am unable to understand as to why these details were not filed before the lower authorities.
As I have said, preparation of the second appeal against the aforesaid additions / disallowances is in process and likely to be filed around 27th October,2025, which will be a delay of appx. 153 days.
I have to submit that on the basis of the available details all the aforesaid additions / disallowances can be explained and HB can seek the deletion thereof. In this connection, I intend to file the following papers. a. Copies of the Agreements / Consent Terms, Allotment Letters and Ledger Account of the respective Flats subjected to addition u/s 43CA of the Act etc. - Fresh Evidence. b. Copies of the Tax Audit Report / Audited Balance Sheet and Profit and Loss Account and relevant schedules (already on Record) and relevant Vouchers / Orders / TDS Returns / Ledger Accounts etc. - Fresh Evidence c. Personal Ledger Accounts of Partners and other relevant records = Fresh Evidence. The aforesaid details, though available on records were not filed before the lower authorities by previous Consultants for the reasons best known to them.
I have to submit that there are indeed lapses on our part. However, these are inadvertent and totally unintended and due to the unavoidable circumstances, i.e. death of one of ML, the main partner and thereafter my illness. My consultants also did not co-operate with me. I was never given any information about these requirements or the pending compliances. However, in spite of my not so strong health after the very critical operation for Brain Hemorrhage in August, 2022 I have taken the initiative to approach Hon. Judges of the Income Tax Appellate Tribunal, Mumbai for a sympathetic view.
I pray to Honourable Judges of the Income Tax Appellate Tribunal, Mumbai to consider my above said submissions with sympathy and pardon me and my Firm Hameeclass Builders for the following. a. Admit the appeal by Condoning the delay of appx. 150 days in filing the same before Hon. ITAT, Mumbai, b. Consider my plea sympathetically and condone our various lapses mentioned above and give us a chance to make fair representation before the lower authorities, and c. Consider my aforesaid request sympathetically and Admit the fresh Evidence being filed at the stage of appeal before Hon. Income tax Appellate Tribunal, Mumbai. I solemnly state on oath that whatever stated above is true and correct to the best of my knowledge and belief and are the True and Correct Facts. I say and submit that full reliance may be kept on the aforesaid contents.”
We find that the reasons stated by the assessee for seeking condonation of delay fall within the parameters for grant of condonation laid down by the Hon’ble Supreme Court in the case of Collector Land Acquisition, Anantnag Vs. MST Katiji and others: 1987 SCR (2) 387. It is well established that rules of procedure are handmaid of justice. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. In the present case, the assessee did not stand to benefit from the late filing of the appeal. In view of the above and having perused the affidavit, we are of the considered view that there exists sufficient cause for not filing the present appeal within the limitation period and therefore, we condone the delay in filing the appeal by the assessee and we proceed to decide the appeals.
In its appeal, the assessee has raised the following grounds: - “
1. On the Facts and Circumstances of the case and in law, learned lower authorities have erred in making various additions / disallowances.
2. On the Facts and Circumstances of the case and in law, learned lower authorities have erred in making addition u/s 43CA of the Act in respect of the Agreements made during the financial years 2011 and 2013.
3. On the Facts and Circumstances of the case and in law, learned lower authorities have erred in making ad-hoc disallowance of 10% of the Business Expenses which are subjected to the Tax Audit.
4. On the Facts and Circumstances of the case and in law, learned lower authorities have erred in making addition u/s 68 of the Act, in respect of the Capital Introduced in the Firm by their partners.
5. On the Facts and Circumstances of the case and in law, Hon. NFAC / CIT- Appeals erred in sending notices of hearing to the email address different from the one mentioned in the Appeal Memo F-35 and thereby erred in holding that there was no compliance from the appellants to the same.”
5. It is evident from the record that the learned CIT(A) has passed the impugned order ex parte due to the non-appearance of/on behalf of the assessee. We further find that even during the assessment proceedings, the assessee could not produce the document as sought by the AO and, therefore, the assessment was completed on the best judgment basis under section 147 read with section 144 read with section 144B of the Act on the basis of the material available on record. In the affidavit of the assessee’s partner as reproduced in the foregoing paragraphs, the reasons for not filing the details during the assessment proceedings have been stated. During the hearing before us, the learned AR placed on record certain documents in support of the grounds raised by the assessee. However, it is evident from the record that none of these details was submitted before the lower authorities and thus could not be examined.
6. Therefore, in the facts and circumstances as noted above, we are of the considered view that, in the interest of justice and fair play, the assessee be granted one more opportunity to represent its case on merits and produce all the documents in support of its claim. Since in the present appeal, the assessee has neither appeared before the AO nor before the learned CIT(A), we deem it fit and proper to restore the matter to the file of the jurisdictional AO for de novo adjudication on merit after considering all the details/submissions as may be filed by the assessee and after providing due opportunity of hearing to the assessee. The assessee is directed to cooperate in the assessment proceedings and furnish all the details as may be sought by the AO for complete adjudication. As a matter is being restored to the (A.Y. 2017-18) jurisdictional AO for adjudication on merits, the other grievances raised by the assessee in the present appeal do not call for adjudication at this stage. Accordingly, the impugned order is set aside, and the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 26/03/2026