JAYDEEP CONSTRUCTION ,MUMBAI V. PCIT-41, MUMBAI

MA 124/MUM/2024

AI Insights

The case involves Jaydeep Construction appealing against the Principal Commissioner of Income Tax-41 regarding the revision of an assessment order under section 263 of the Income Tax Act. The primary contention was the erroneous application of sections 43CB and 43CA of the Act concerning the method of income recognition for project completion and the assessment of GST and unsecured loans. The Tribunal noted that the assessee had not pressed certain grounds during the initial hearing, yet these were addressed in the order, leading to a recall of the order for a fresh hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 782459 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2018-2019
• Appeal Filed On: 23-05-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITHA NAIR; LD.
• Assessee Lawyers: TANMAY PHADKE; LD
• Keywords: Opportunity of being heard; Prejudicial to interest
• Section: 263; 43CA

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “F”, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER MA No. 124/M/2024 (Arising out of ITA No.2086/M/2023) Assessment Year: 2018-19 Jaydeep Construction Shop No. 07/08, Patidar Complex, Kannamwar Nagar, Vikhroli (East), Mumbai- 400083 PAN: AAFFJ0346M Vs. Principal Commissioner of Income Tax- 41 Room No. 541, Kautilya Bhavan, C-41 to C-43, G Block, Bandra Kurla Complex, Bandra (East), Mumbai- 400051 (Appellant) (Respondent) Present for: Assessee by : Shri Tanmay Phadke, Ld. CA Revenue by : Ms. Smitha Nair, Ld. Sr. D.R. Date of Hearing : 16.05.2025 Date of Pronouncement : 27.10.2025 O R D E R Per : Narender Kumar Choudhry, Judicial Member: The assessee by filing instant Miscellaneous Application has sought for recalling of the impugned order dated 24.11.2023 passed in Captioned appeal. 2. The assessee has mainly claimed that it has raised 12 grounds of appeal in total which reads as under: Grounds of appeal “ 1. On the facts and in the circumstances of the case and as per the law, the learned principal Commissioner of income tax, Mumbai-41 (the learned PCIT\") erred in concluding that the assessment order dated 27.02.2021 is erroneous and prejudicial to the interest of the revenue Printed from counselvise.com MA No. 124/Mum/2025 in ITA No. 124/M/2025 Jaydeep Construction 2 requiring the revision under section 263 of the Act. The revision made by the learned PCIT is illegal and without jurisdiction and thus, the order dated 31.03.2023 passed by the learned PCIT may be reversed/quashed. 2. On the facts and in the circumstances of the case and as per the law, the learned PCIT erred in invoking the explanation 2 to section 263 of the Act blanketly and mechanically without appreciating that the assessment order dated 27.02.2021 was neither erroneous nor prejudicial to the interest of the revenue. Thus, the order dated 31.03.2023 passed by the learned PCIT may be quashed/reversed. Revision on the issue of non-declaration of profits of the project (i.e. project completion method or percentage completion method) 3. On the facts and in the circumstances of the case and as per the law, the learned PCIT erred in considering the assessment order erroneous and prejudicial to the interest of the revenue on the application of the provisions of section 43CB of the Act when the show cause notice was not issued on the same and the Appellant was never provided an opportunity of being heard on the application of Section 43CB of the Act. Thus, the revision of the assessment order being without jurisdiction, bad in law and in violation of the principle of justice. Thus, the order dated 31.03.2023 passed by the learned PCIT may be quashed/reversed. 4. On the facts and in the circumstances of the case and as per the law, the assessment order accepting the project completion method as followed by the Appellant is neither erroneous nor prejudicial to the interest of the revenue. Thus, the order dated 31.03.2023 passed by the learned PCIT directing the learned assessing officer to compute the income on a percentage completion basis on the alleged applicability of section 43CB of the Act being without jurisdiction, illegal and bad in law may be quashed. 5. On the facts and in the circumstances of the case and as per the law, the learned PCIT has reached the erroneous conclusion that the income accrued to the Appellant on the receipt of advance and the registration of the agreement as the risk and rewards were transferred. Thus, the said observation may be reversed and the project completion method as followed by the Appellant and accepted by the learned assessing officer may be upheld. Revision on the issue of invocation of Section 43CA of the Act with respect to the agreement registered on 22.09.2017 6. On the facts and in the circumstances of the case and as per the law, the learned PCIT erred in reaching the conclusion that the provisions of section 43CA of the Act apply to the transactions entered into on 04.11.2010 (prior to the incorporation of section 43CA. Thus, the observation of the learned PCIT regarding the applicability of Section 43CA of the Act being untenable in law may be reversed. Printed from counselvise.com MA No. 124/Mum/2025 in ITA No. 124/M/2025 Jaydeep Construction 3 7. Without prejudice to the above, on the facts and in the circumstances of the case and as per the law, the learned PCIT failed to appreciate that even if the section 43CA of the Act is held applicable, no income is liable to be assessed since the Appellant has been following a project completion method and the income can be added only in the year in which the project gets completed. Thus, the assessment order is neither erroneous nor prejudicial to the interest of the revenue and the order dated 31.03.2023 passed by the PCIT may be reversed/quashed. 8. Without prejudice to the above, on the facts and in the circumstances of the case and as per the law, the learned assessing officer may be directed to consider the applicability of Section 43CA(3) and 43CA(4) of the Act and make the addition if any only in the year in which the project is completed. Verification of GST Payable of Ra. 3,83,732/- 9. On the facts and in the circumstances of the case and as per the law, the learned PCIT failed to appreciate that the GST of Rs. 3,83,732/ was paid on 18.04.2018 requiring no revision in this regard since the assessment order is neither erroneous nor prejudicial to the interest of the revenue. Thus, the order dated 31.03.2023 passed by the learned PCIT may be quashed/reversed. Verification of interest expense 10. On the facts and in the circumstances of the case and as per the law the learned PCIT failed to appreciate that the Appellant has been following a project completion and did not avail any expenditure of interest in the year under consideration ruling out any disallowance of such interest expenditure in the present year. The assessment order is neither erroneous nor prejudicial to interest of the revenue and thus, the direction of revision may be reversed. Revision on the issue of unsecured loans of Rs. 2,47,20,530/- 11. On the facts and in the circumstances of the case and as per the law, the learned PCIT erred in revising the assessment order to the extent directing the learned assessing officer to verify the unsecured loans of Rs. 2,47,20,530/-. Thus, the order dated 31.03.2023 passed by the learned PCIT in this regard may be quashed/reversed. Miscellaneous ground: 12. The Appellant craves leave to add, alter, rescind, or amend any of the above grounds of appeal”. Printed from counselvise.com MA No. 124/Mum/2025 in ITA No. 124/M/2025 Jaydeep Construction 4 3. The assessee submits that during the course of hearing before the Tribunal, the Assessee did not press Ground nos. 6 to 11 as also noted by the Hon’ble Co-ordinate Bench of the Tribunal, in Para 12 specifically, which read as under: “12. At the outset, Ld.AR of the assessee submitted that the assessee prefers know to press the ground No. 6 to 11 raised in the grounds of appeal and he submitted that the assessee is intended to pressed only ground No. 1 to 5”. Therefore, the Assessee pressed Ground nos. 1 to 5 only during the course of hearing. 4. However, from the order dated 24.11.2023, came to know that the Hon’ble Tribunal despite of noting the fact that the assessee did not press ground nos. 6 to 11, decided the said grounds and issue involved in such grounds itself and by somehow sidelined the actual grounds emphasized or pressed by the Assessee i.e. Ground nos. 1 to 5, which pertains to other issues including applicability of section 43CB of the Act and also challenge to the legality of the impugned order but does not pertains to applicability of provision of section 43CA of the Act, as decided by Hon’ble Bench, while giving specific findings in para 14 to 18, which is contrary to the concession given by the assessee and/or not based on the arguments raised by the assessee and/or not based on the ground nos. 1 to 5, which were specifically emphasized or argued before the Court. 5. Though Ld. DR refuted the claim of the assessee qua recalling of the order, however did not refute the aforesaid factual aspect, as noted by the Hon’ble Bench in the order. Printed from counselvise.com MA No. 124/Mum/2025 in ITA No. 124/M/2025 Jaydeep Construction 5 6. Heard the parties and perused the material available on record. We observe from the grounds of appeal raised by the Assessee, there is specific marking by the Hon’ble Bench case against the Ground nos. 6 to 11 as “NP”, meaning thereby the contention of the Assessee that he has not pressed ground Nos. 1 to 11 is also substantiated with the noting of the Tribunal in para No. 12, which for the sake of brevity and ready reference, we deem it appropriate to reproduce again: “12. At the outset, Ld.AR of the assessee submitted that the assessee prefers know to press the ground No. 6 to 11 raised in the grounds of appeal and he submitted that the assessee is intended to pressed only ground No. 1 to 5”. 7. Admittedly the Hon’ble Bench decided the controversy pertaining to applicability of the provisions of section 43CA of the Act to the case of the Assessee, which was not the subject matter in Grounds of appeal nos. 6 to 11, as the same were never pressed by the Assessee, as has become clear from the grounds of appeal, as well as, noting at para no. 12 of the impugned order. 8. Thus, considering the peculiar facts and circumstance in totality, we are of the considered view that grounds raised by the assessee and specifically emphasized and/or pressed, remained to be adjudicated, may be over looking or inadvertently. Hence for just and proper decision of the case and substantial justice and fair play, we inclined to recall the order, as the mistake occurred is apparent from record. 9. Thus, the order dated 24.11.2023 is recalled and consequently the Registry is directed to fix this case for hearing afresh before the regular bench, in due course of time, suffice to say by serving advance notice to the parties. Printed from counselvise.com MA No. 124/Mum/2025 in ITA No. 124/M/2025 Jaydeep Construction 6 10. In the result, MA filed by the assessee stands allowed. Order pronounced in the open court on 27.10.2025. Sd/- Sd/- (NARENDRA KUMAR BILLAIYA) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER * Disha Raut, Stenographer Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai. Printed from counselvise.com "