KANHA HEIGHTS ,VADODARA V. THE ITO, WARD 3(1)(1), VADODARA

ITA 2085/AHD/2025

AI Insights

The case involves Kanha Heights, the appellant, contesting an order from the National Faceless Appeal Centre (NFAC), which dismissed their appeal due to a delay of 425 days in filing. The original assessment for the Assessment Year 2015-16 was completed under sections 143(3) and 263 of the Income Tax Act, resulting in a significant increase in assessed income due to various additions, including an unexplained sundry creditor. The Tribunal noted procedural lapses, including the lack of opportunity for the assessee to explain the genuineness of the sundry creditors, which was crucial in the assessment. The Tribunal emphasized the principle of natural justice and referenced a precedent from the Gujarat High Court, advocating that meritorious cases should not be dismissed on technical grounds such as limitation.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 838553 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 04-11-2025
• Other Referred Cases: Vareli Textiles Limited (284 ITR 238) (Gujarat)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KALPESH RUPAVATIA
• Assessee Lawyers: HEMANT SUTHAR
• Keywords: Set aside; Reasonable cause; Principle of natural justice
• Section: 144; 143(3); 263; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SHRI TR SENTHIL KUMAR, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER ITA No. 2085/AHD/2025 Assessment Years:2015-16 Kanha Heights, M.M. Vora Showroom, Soma Talav Char Rasta, Waghodia Dabhoi Ring Road, Waghodia, Vadodara, Gujarat – 390019 [PAN – AAKFK6060A] Vs. Income Tax Officer, Ward – 3(1)(1), Vadodara - 390007 (Appellant) (Respondent) Assessee by Shri Hemant Suthar, AR Revenue by Shri Kalpesh Rupavatia, SR-DR Date of Hearing 17.02.2026 Date of Pronouncement 19.02.2026 O R D E R PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER: This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’], dated 10.10.2025 for the Assessment Year (A.Y.) 2015-16 in the proceedings u/s 144 r.w.s. 263 of the Income Tax Act. 2. The brief facts of the case are that the assessee had filed its return of income for A.Y. 2015-16 on 31.10.2025 declaring total income of Rs.12,76,450/-. The original assessment was completed u/s. 143(3) of the Act on 11.12.2017 at income of Rs. 12,94,450/-. Thereafter the matter was set aside by the order of Ld. PCIT-3, Vadodara passed u/s. 263 of the Act, Printed from counselvise.com ITA No. 2085/Ahd/2025 Kanha Heights Vs ITO, AY- 2015-16 2 and a fresh assessment was completed u/s. 144 r.w.s. 263 of the Act, on 22.09.2021 at total income of Rs. 2,21,92,755/-, wherein various additions were made. h adhad 3. Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which was decided by the learned CIT(A), vide the impugned order and the appeal of the assessee was dismissed. 4. Now the assessee is in second appeal before us. The following grounds have been taken in this appeal: 1. The Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in law and in facts in dismissing the appeal by not condoning the delay in filing the appeal within the prescribed time limit. The Ld. CIT(A) ought to have appreciated that there were sufficient and reasonable cause for the delay in filing the appeal and he ought to have adjudicated the appeal on merits by condoning the delay. The appeal of the appellant may kindly be restored to the filed of Ld. CIT (Appeals), NFAC, and he may please be directed to adjudicate the same on merits by condoning the delay in filing the appeal. 2. Your appellant craves liberty to add, alter, amend substitute or withdraw any of the ground(s) of appeal hereinabove contained. 5. Shri Hemant Suthar, the Ld. AR of the assessee submitted that the Ld. CIT(A) did not condone the delay of 425 days in filing of appeal and the grounds taken by the assessee was not adjudicated on merits. He explained that the delay in filing of appeal before the Ld. CIT(A) was due to Covid pandemic, non-availability of order and lack of coordination between the partners. He, therefore, requested that the assessee may be Printed from counselvise.com ITA No. 2085/Ahd/2025 Kanha Heights Vs ITO, AY- 2015-16 3 allow another opportunity by setting aside the matter to Ld. CIT(A) with a direction to adjudicate the grounds taken by the assessee on merits. 6. Per contra, Shri Kalpesh Rupavatia, the Ld. SR. DR submitted that the assessee did not make any compliance before the AO. Further, out of total delay of 425 days, only 222 days was covered by the pandemic period and the assessee did not give any cogent explanation for the balance delay of 203 days. Therefore, the Ld. CIT(A) had rightly rejected the appeal of the assessee. 7. We have considered the rival submissions. It is found that the Ld. CIT(A) did not adjudicate the grounds taken by the assessee on merits and had dismissed the appeal by not condoning the delay of 425 days in filing of appeal before him. It is further noted that the delay of 222 days was covered by the pandemic period and the Ld. CIT(A) was not convinced with the explanation of the assessee regarding balance delay of 203 days. The non-compliance before the AO was also during the covid pandemic period itself. It transpires that the major addition was on account of unexplained sundry creditor of Rs.1,76,55,835/-, which was not held as genuine. It is found from the assessment order that notices u/s. 133(6) of the Act, were issued to the various sundry creditors on 12.09.2021, which was not responded and, therefore, the AO had doubted the genuineness of sundry creditors. However, no opportunity was provided to the assessee thereafter, to explain the genuineness of the sundry creditors. As per the assessment order the last notice issued to the assessee was on 10.09.2021, which was prior to the notices issued to the sundry creditors. Thus, the addition of Rs.1,76,55,835/- was made without Printed from counselvise.com ITA No. 2085/Ahd/2025 Kanha Heights Vs ITO, AY- 2015-16 4 allowing any opportunity to the assessee, which was against the principle of natural justice. Considering these facts, the ld. CIT(A) should have examined the grounds taken by the assessee on merits rather than dismissing the appeal on technical ground of delay. The Hon’ble Gujarat High Court, has held in the case of Vareli Textiles Limited (284 ITR 238) (Gujarat), that meritorious case should not be thrown out on the ground of limitation. In the interest of justice, therefore, we deem it proper to set aside the matter to the file of Ld. CIT(A) with a direction to adjudicate the grounds taken by the assessee on merits, after condoning the delay in filing of appeal before him. 8. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the Court on 19/02/2026 at Ahmedabad. Sd/- Sd/- (TR SENTHIL KUMAR) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 19th February, 2026 Neelesh True Copy आदेश आदेश आदेश आदेश क\u0002 क\u0002 क\u0002 क\u0002 \u0003ितिलिप \u0003ितिलिप \u0003ितिलिप \u0003ितिलिप अ ेिषत अ ेिषत अ ेिषत अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b यथ\u0007 / The Respondent. 3. संबंिधत आयकर आयु / Concerned CIT 4. आयकर आयु (अपील) / The CIT(A) 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड\u0014 फाईल /Guard file. Printed from counselvise.com ITA No. 2085/Ahd/2025 Kanha Heights Vs ITO, AY- 2015-16 5 आदेशानुसार आदेशानुसार आदेशानुसार आदेशानुसार/BY ORDER, उप उप उप उप/सहायक सहायक सहायक सहायक पंजीकार पंजीकार पंजीकार पंजीकार (Dy./Asstt.Registrar) आयकर आयकर आयकर आयकर अपीलीय अपीलीय अपीलीय अपीलीय अिधकरण अिधकरण अिधकरण अिधकरण, अहमदाबाद अहमदाबाद अहमदाबाद अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "