Mahendra Kalyanji Ghelani Vs DCIT (ITAT Mumbai)
ITAT Restores AIF Exemption Matter Because Additional Evidence Was Rejected on Technical Grounds; Additional Evidence Must Be Liberally Admitted Where Non-Compliance Was Bona Fide; NFAC Order Set Aside Because Appeal Was Decided Without Examining Merits of AIF Exemption Claim; ITAT Directs Fresh Review of AIF Exemption Claim Because Natural Justice Was Not Properly Applied.
In , the appeal before the Income Tax Appellate Tribunal challenged the order dated 05.01.2026 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for assessment year 2024-25.
The assessee raised grounds alleging that the NFAC had wrongly dismissed the appeal on technical grounds by refusing to admit additional evidence under Rule 46A of the Income Tax Rules, 1962, despite sufficient cause for non-production before the Assessing Officer (AO). The assessee also contended that the appellate authority failed to adjudicate the issues on merits and violated principles of natural justice by not providing a reasonable opportunity of hearing.
The assessee had filed a return under Section 139(1) of the Income Tax Act, 1961 on 30.01.2024 declaring total income of ₹3,46,71,980. During scrutiny assessment proceedings, the AO noticed that the assessee had claimed substantial exempt income under Section 10 of the Act. The AO called for details relating to income derived from Category II Alternative Investment Funds (AIFs), including the nature and characterization of income, details of AIFs, evidence establishing their status as Category II AIFs, profit and loss statements or intermediary summaries, and statutory provisions supporting the exemption claim.
