ASHISH JAYRAM RAI,NAVI MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX, 27(1), MUMBAI, MUMBAI

CO 91/MUM/2026

AI Insights

The case involves an appeal by the revenue against the order of the Ld. Commissioner of Income Tax (Appeals), which had deleted an addition made by the Assessing Officer under section 143(1) of the Income Tax Act, 1961. The addition was initially made due to undisclosed receipts under the head 'income from other sources' as reported in Form No. 26AS. The assessee, a contractor, argued that the income reflected in Form No. 26AS had already been taxed in the hands of M/s. Ashcons Infrastructure Pvt. Ltd., which had taken over the assessee's business. The CIT(A) accepted the assessee's explanation and deleted the addition without a remand report from the AO, leading to the revenue's appeal. The tribunal found that the CIT(A) had violated the principles of natural justice by not providing the AO an opportunity to respond to the new evidence and thus restored the matter for re-examination.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 848254 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-03-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Mumbai
• Assessment Year: misc
• Appeal Filed On: 25-02-2026
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SURENDRA MOHAN
• Assessee Lawyers: K. GOPAL; NEHA PARANJPE
• Keywords: Opportunity of being heard; Additional evidence; Principle of natural justice; TDS; FORM 26AS

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A”, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.9499/Mum/2025 (Assessment year: 2017-18) DCIT -27(1), Mumbai Room No.408, 4th Floor Tower no.6, Vashi Railway Station, Mumbai-400703 vs Ashish Jayram Rai F-24 RH-VI Navi Mumbai, Thane- 400703 PAN: ACNPR3445F APPELLANT RESPONDENT CO No.91/Mum/2026 (Assessment Year: 2017-18) Ashish Jayram Rai F-24 RH-VI Navi Mumbai, Thane-400703 PAN: ACNPR3445F vs DCIT -27(1), Mumbai Room No.408, 4th Floor Tower no.6, Vashi Railway Station, Mumbai-400703 CROSS OBJECTOR RESPONDENT Assessee by : Shri K. Gopal & Ms. Neha Paranjpe Respondent by : Shri Surendra Mohan (Sr.DR) Date of hearing : 24/03/2026 Date of pronouncement : 27/03/2026 Printed from counselvise.com 2 ITA No.9499/Mum/2025 And CO No.91/Mum/2026 Ashish Jayram Rai O R D E R Per: Anikesh Banerjee (JM): The instant appeal of the revenue and cross objection of the assessee filed against the order of the Ld. Commissioner of Income Tax,Appeal- ADDL/JCIT (A)-2, Ludhiana [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2017-18, date of order 09.10.2025. The impugned order emanated from the order of the ADIT (CPC) Bengaluru (for brevity the ‘Ld. AO’) order passed under section 143(1) of the Act date of order 29.03.2019. 2. The brief facts of the case are that the assessee filed the income tax return by declaring total income of Rs.35,38,760/-. The return was processed u/sec. 143(1) of the Act by determining total income of Rs.4,45,15,700/- by making addition of Rs.4,09,76,941/- as undisclosed receipt under the head income from other sources as reported in the Form No.26AS for the impugned assessment year. Aggrieved by the impugned assessment order, the assessee filed an appeal before the Ld. CIT(A). The assessee filed the submission before the Ld. CIT(A) and stated that the assessee is a contractor and carrying business as proprietary of M/s. Ashish Construction up to 14.01.2015. The entire business in the name of Ashish Construction Proprietary Mr. Ashish J Rai with all assets and liabilities was taken over by M/s. Ashcon Infrastructure P. Ltd. from 14.01.2015. Related to explanation in entries in Form No.26AS the assessee explained that the contract receipt of Rs.3,60,81,926/- reflected in Form No.26AS is credited in the books of accounts of the company and offered the tax in the return of company. The Printed from counselvise.com 3 ITA No.9499/Mum/2025 And CO No.91/Mum/2026 Ashish Jayram Rai company had claimed the TDS accordingly. The assessee had never recognized the income and also had not claimed the TDS in the return of income. Related to other receipts amount to Rs.49,17,222/- the assessee stated that the other income also related to mismatch in Form No.26AS and without giving opportunity to assessee the addition was made by the Ld. AO. Finally, the Ld. CIT(A) deleted the addition and allowed the appeal of the assessee. However, the legal ground raised by the assessee was not adjudicated by the Ld. CIT(A) in the impugned order. Aggrieved by the relief granted, the revenue has preferred an appeal before us, while the assessee has filed a cross-objection to support and safeguard the deletion made by the Ld. CIT(A). 3. The Ld. DR contended that the Ld. CIT(A) deleted the addition and allowed the appeal without affording a reasonable opportunity to the Ld. AO, as mandated under Rule 46A of the Income-tax Rules, 1962 (Rules). It was further submitted that the Ld. CIT(A), without calling for a remand report, admitted and relied upon additional evidence furnished by the assessee, which had not been duly verified by the Ld. AO. The revenue has specifically raised a ground challenging the failure of the Ld. CIT(A) to call for a remand report. The Ld. DR further submitted that the return was processed under section 143(1) of the Act, and the Ld. CIT(A) accepted the assessee’s submissions and evidence without providing an opportunity to the Ld. AO. Therefore, the admission of additional evidence by the Ld. CIT(A) without complying with the procedure prescribed under Rule 46A is bad in law. The Ld. DR drew our attention to paragraphs 6.1 and 6.4 of the impugned appellate order, which are reproduced hereunder: “6.1. Ground No.1: The appellant has raised that AO erred in computing income from other sources amounting to Rs. 4,14,73,009/- by wrongly treating total receipts as income as the Printed from counselvise.com 4 ITA No.9499/Mum/2025 And CO No.91/Mum/2026 Ashish Jayram Rai entries shown in Form 26AS against income from other source of Rs.4,96,068/- shown in income tax return filed by appellant. 6.2 During the appellate proceedings, the appellant has submitted that total receipts shown in his 26AS amounting to Rs. 4,14,73,009/- except the receipts of Rs. 36,00,000/- from M/s Ashcons Infrastructure Private Limited and receipts of Rs. 7.80,000/- from Raval Vishnu Maneklal. Further, the appellant has submitted that he was doing Road Construction work, Civil Work in the name and style of M/s Ashish Construction as sole proprietor up to 14.01.2015. M/s Ashcons Infrastructure Pvt. Ltd. took over appellant's proprietary business along with all assets and liabilities from 15.01.2015. Further, the appellant has submitted letter dated 21.12.2022 of Executive Engineer, PW division -2 Thane wherein it has been mentioned that receipts amounting to Rs. 49,17,222/- shown in the 26AS related to Ashok Pandurang Gaikwad (PAN: AEVPG3266M) and the same was rectified by the deductor. Also, the appellant has submitted that receipts of Rs. 3,60,81,926/- shown in the 26AS of the appellant relates to M/s Ashcons Infrastructure Pvt. Ltd and the same receipt has been disclosed by the company in its income tax return filed for the year under consideration. The appellant has submitted copy of income tax return & computation of income, profit & loss account of M/s Ashcons Infrastructure Pvt. Ltd for the A.Y. 2017-18 and also CA certificate to substantiate its claim that the receipts shown in the 26AS of the appellant which was actually belongs to the company has been disclosed in its income tax return for the A.Y. 2017-18 and claimed the corresponding TDS. 6.3 Further, the appellant the appellant has submitted that he has not claimed the TDS credit which corresponding income/receipts has not been considered in his income tax return for the year under consideration being the said receipts belongs to others. The appellant has also submitted the reconciliation of receipts shown in the 25AS of the appellantalonwith supporting documents. 6,4 On the perusal of the written submission and the documentary evidence submitted by the appellant, it is noted that the total receipts shown in the 26AS do notpertain the appellant. The receipts belong to M/s Ashcons Infrastructure Pvt. Ltd as appearing in the 26AS of the appellant has been disclosed by the company in its income tax return and also claimed the corresponding TDS. On the perusal of the reconciliation chart submitted by the appellant, it is noted that he has disclosed all the receipts pertaining to him as shown in the 26AS. In view of the above discussion, it is held that the addition 4,09,76,941/- made by the CPC u/s 143(1) of the Act to the income under the head income from other sources of the appellant is entirely based on incorrect appreciation of the facts of the case and is, thus, not sustainable in law. Printed from counselvise.com 5 ITA No.9499/Mum/2025 And CO No.91/Mum/2026 Ashish Jayram Rai The AO, is, therefore directed to give relief to the appellant by recalculating the tax liability by correctly calculating the total income without adding the same income. Thus, as per the above discussion, the ground of appeal is hereby allowed.” 4. The Ld. AR made submissions and filed a paper book comprising pages 1 to 160, which has been placed on record. The Ld. AR fairly conceded that the Ld. CIT(A) passed the order and deleted the addition without calling for a remand report. The Ld. AR, therefore, prayed that the matter may be restored to the file of the Ld. Jurisdictional Assessing Officer for de novo verification of the addition made under section 143(1) of the Act. Further, the Ld. AR did not press the grounds raised in the cross-objection during the course of hearing. 5. We have heard the rival submissions and perused the material available on record. The assessee is a contractor who declared income while filing the return under section 139(1) of the Act. The return of income was processed, and additions were made on account of differences in entries appearing in Form No. 26AS & books of accounts of the assessee amounting to Rs.3,60,81,926/- and Rs.49,17,222/-. The assessee contended that its business was taken over by M/s. Ashcon Infrastructure Pvt. Ltd. with effect from 14.01.2015. Accordingly, the income reflected in the assessee’s Form No. 26AS had already been offered to tax in the hands of the said company, and the corresponding TDS was also claimed therein. The assessee further explained before the Ld. CIT(A) that the amount of Rs.49,17,222/- represented incorrect entries in Form No. 26AS. On perusal of the impugned appellate order, we find that the Ld. CIT(A) admitted and relied upon the additional evidence without calling for a remand report from the Ld. AO, as mandated under Rule 46A of the Rules. In our considered view, this amounts to a violation of the principles of natural justice, as a reasonable opportunity was not Printed from counselvise.com 6 ITA No.9499/Mum/2025 And CO No.91/Mum/2026 Ashish Jayram Rai afforded to the Ld. AO. We, therefore, accept the plea raised by the Ld. DR regarding denial of such opportunity. Considering the submissions of both the parties, we deem it appropriate to restore the matter to the file of the Ld. Jurisdictional Assessing Officer (JAO) for de novo verification of the assessee’s claim regarding the differences between Form No. 26AS and the books of account. It is clarified that we have not expressed any opinion on the merits of the case. The assessee is directed to extend full cooperation during the set-aside proceedings, and the Ld. JAO shall decide the issue in accordance with law after affording reasonable opportunity of being heard. Accordingly, the appeal of the revenue is allowed for statistical purposes, and the cross-objection filed by the assessee is dismissed as infructuous. 8. In the result, the appeal of the revenue bearing ITA No.9499/Mum/2025 is allowed for statistical purpose and the cross objection of the assessee’s CO No.91/Mum/2026 is dismissed. Order pronounced in the open court on 27th day of March 2026. Sd/- Sd/- (GIRISH AGRAWAL) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 27/03/2026 SAUMYASr.PS Copy of the Order forwarded to: 1. अपीलाथŎ/The Appellant , 2. Ůितवादी/ The Respondent. 3. आयकरआयुƅ CIT 4. िवभागीयŮितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाडŊफाइल/Guard file. Printed from counselvise.com 7 ITA No.9499/Mum/2025 And CO No.91/Mum/2026 Ashish Jayram Rai BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI Printed from counselvise.com "