ADVANCE LIFESPACES PRIVATE LIMITED,AHMEDABAD V. ACIT, CIRCLE 1(1)(1), AHMEDABAD, AHMEDABAD

ITA 411/AHD/2025

AI Insights

The case involves Advance Lifespaces Pvt. Ltd., which appealed against the rectification of its income assessment for the Assessment Year 2017-18. Initially, the assessee filed a return claiming a loss, which was scrutinized, and the Assessing Officer estimated a gross profit, leading to a revised income assessment. The assessee contested this through a Rectification Order under Section 154 of the Income Tax Act, which was upheld by the CIT(A). The Tribunal, however, found that the gross profit estimation was not legally tenable as similar assessments in previous years had not resulted in such discrepancies, and thus, the rectification was unnecessary.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712716 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B.P. SRIVASTAVA
• Assessee Lawyers: P. D. SHAH; SAIYAM SHAH
• Keywords: Proportionate interest; Rejection of books of accounts; Gross profit estimation; Rectification of order
• Section: 143(3); 154

Judgement Text

" आयकर अपीलीय अिधकरण,अहमदाबाद Ɋायपीठ ‘A’ अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER ITA No.411/Ahd/2025 Assessment Year: 2017-18 Advance Lifespaces Pvt. Ltd., S-202/B/4/205, City Centre, Nr. Idgah Gate, Asarwa, Ahmedabad-380016 Vs Assistant Commissioner of Income Tax, Circle-1(1)(1), Ahmedabad [PAN No.:AAJCA2338M] अपीलाथŎ/ (Appellant) Ů̝ यथŎ/ (Respondent) Appellant by : Shri P. D. Shah, AR & Shri Saiyam Shah, AR Respondent by : Shri B.P. Srivastava, Sr. DR सुनवाई की तारीख/Date of Hearing: 22.07.2025 घोषणा की तारीख /Date of Pronouncement: 28.07.2025 आदेश/O R D E R PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER: This appeal is filed by the assessee against the appellate order dated 03.07.2024 passed by Ld. Commissioner of Income Tax (Appeals) (hereinafter referred to as “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi arising out of the Rectification Order passed under Section 154 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) relating to the Assessment Year 2017-18. 2. The Registry has noted that there is a delay of 145 days in filing the present appeal. The assessee explained vide Notarized Affidavit stated originally the appeal was filed by the assessee by paying appropriate fees on 30.08.2024 by e-filing. However, there is some mistakes in Form No. 36 which was required to be rectified, the same was rectified and filed on 21.02.2025 thereby the Registry has noted that there is a delay of 145 days. In view Printed from counselvise.com ITA No.411/Ahd/2025 A.Y. 2017-18. 2 of the explanation offered by the assessee, the delay of 145 days in filing of the above is hereby condoned. 3. The brief facts of the case is for the Assessment Year 2017- 18 the assessee filed its Return of Income claiming a loss of Rs. 88,83,761/-. The Return was selected for scrutiny assessment and the Assessing Officer noted the gross profit declared by the assessee was much on lower side thereby rejected the books of accounts and estimated the total income at Rs. 1,99,65,892/- under the normal provisions of the Act. However, while doing so the claim of loss of Rs. 88,86,761/- which ought to have been disallowed but not disallowed, which is a mistake apparent on record. Therefore, Rectification Order was passed rectifying the total income to Rs. 2,88,52,653/-. 4. Aggrieved against the revision order, assessee filed appeal before CIT(A) claiming that it is a debatable issue which cannot be rectified under Rectification Order. The Ld. CIT(A) considered the submissions and dismissed the assessee appeal, that the rectification made by the Assessing Officer is well within the scope of Section 154 of the Income Tax Act. 5. Aggrieved against the appellate order the asessee is in appeal before us raising the following grounds of appeal: “1. That the Ld. CIT(A)/National Faceless Appeal Centre (NFAC), has erred by confirming the addition of Rs.88,86,761/- made in the proceedings u/s. 154 of the Act by the learned AO and therefore the learned AO be directed to delete the said addition while computing the total income. 2. Without prejudice to above Ground 1, that the Ld. CIT(A)/National Faceless Appeal Centre has erred in law and facts, by not allowing the amount of finance cost and other expense out of the amount of gross profit Printed from counselvise.com ITA No.411/Ahd/2025 A.Y. 2017-18. 3 determined by the ld.AO, while estimating gross profit on adopting section 145(3) of the Act, as the same has not been considered to determine the gross profit. 3. That your appellant craves leave to add, alter or amend any grounds at or before the time of hearing.” 6. At the outset, Ld. Counsel Shri P. D. Shah submitted that the regular assessment order passed under Section 143(3) was travelled before this Tribunal and the estimation of 9.94% arrived by the Assessing Officer was deleted by this Tribunal observing that no such disallowance made in assessee’s own case for the earlier Assessment Years 2015-16 and 2016-17. Consequentially the Rectification Order passed by the Assessing Officer become infructuous and therefore Ld. Counsel requested to set-aside the orders passed by the Lower Authorities. 7. Per contra, Ld. Sr. DR appearing for the Revenue supported the orders passed by the Lower Authorities. 8. We have given our thoughtful consideration and perused the material available on record. As against the assessment order passed under Section143(3) of the Act, Coordinate Bench of this Tribunal deleted the estimation made by the Assessing Officer observing as follows: “9. Next issue is Estimation of Gross Profit. The Ld AO adopted an average GP rate of 9.94% based on earlier years’ data. However for the Asst. Year 2016–17, the GP of 4.49% was accepted by the department in the scrutiny assessment u/s.143(3) of the Act for the very same project. Further the fall in GP was adequately explained by the assessee namely delayed project sales, fixed sale prices due to early bookings and increased interest burden capitalized into cost of land. The valuation working of closing stock (₹61.44 crore) was submitted by the assessee and includes proportionate interest cost based on sold verses unsold unit ratio. The Ld AO could not find any discrepancy in the above reports and information furnished by the assessee. Printed from counselvise.com ITA No.411/Ahd/2025 A.Y. 2017-18. 4 9.1. There is no comparable industry data or market survey to justify the arbitrary estimation at 9.94% arrived by the Ld AO. Hence, such estimation, in the absence of any suppression of income or defects in accounting, is unwarranted and such addition is liable to be deleted. 9.2. Further perusal of the scrutiny assessment orders passed by the department in assessee’s own case for the Assessment Year 2015-16 dated 22-12-2017 and for Asst. Year 2016-17 dated 24-12-2018 wherein no discrepancy in GP ratio was found by the Assessing Officer and the returned income were accepted by making some small addition on other disallowances. More particularly, when the same commercial project of shops and offices were sold by the assessee. Thus gross profit estimation made by the Assessing Officer is not legally tenable and the additions made thereon are liable to be deleted. Thus the Ground Nos. 2 & 3 raised by the assessee are hereby allowed.” 9. Thus, while giving effect to this order the Assessing Officer is required to consider the loss return filed by the Assessee. Thus, the addition made in the Rectification Order passed by the Assessing Officer is hereby to be deleted. 10. In the result, the appeal filed by the assessee is allowed. Order pronounced in the Court on 28.07.2025 at Ahmedabad. Sd/- Sd/- (NARENDRA P. SINHA) ACCOUNTANT MEMBER (T.R. SENTHIL KUMAR) JUDICIAL MEMBER Ahmedabad, dated 28/07/2025 Tanmay, Sr. P.S. TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ ) अपील ( / The CIT(A)- 5. िवभागीय Ůितिनिध , अिधकरण अपीलीय आयकर , राजोकट/DR,ITAT, Ahmedabad, 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad Printed from counselvise.com "