K MORDANI CONSTRUCTIONS PRIVATE LIMITED (FORMERLY KNOWN AS K MORDANI CONSTRUCTIONS LLP),MUMBAI V. DCIT 22(1), MUMBAI

ITA 1737/MUM/2025

AI Insights

The case involves K Mordani Constructions Private Limited, which appealed against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Assessment Centre, which confirmed a disallowance of Rs. 58,76,385 under section 40(a)(ia) of the Income-tax Act, 1961. The disallowance was initially made by the Assessing Officer, who did not appreciate the assessee's method of revenue recognition, specifically the Percentage Completion Method (POCM). The CIT(A) dismissed the appeal ex-parte due to non-compliance with notices, which the assessee attributed to an oversight involving a former employee's email. The Tribunal found merit in restoring the matter to the CIT(A) for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708379 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: REVENUE RECOGNITION; THEREBY; HEMANSHU JOSHI
• Assessee Lawyers: AJAY R. SINGH AW
• Section: 143(3); 40(a)(ia)

Judgement Text

" |आयकर अपीलीय न्यायाधिकरण न्यायपीठ, म ुंबई| IN THE INCOME-TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER आयकर अपील सुं./ITA No. 1737/MUM/2025 (नििाारण वर्ा / Assessment Year :2018-19) K Mordani Constructions Private Limited (Formerly Known As K Mordani Constructions LLP) Office No. 105, 1st Floor, Amore Commercial Premises Co-Op. Soc. Ltd., Junction of 2nd and 4th Road Khar (West), Mumbai -400052 v/s. बिाम Additional/Joint/Deputy/ Assistant Commissioner of Income Tax/Income-tax Officer, National e- Assessment Centre, Delhi, DCIT22(1) Piramal Chambers, Mumbai स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AALFK2128G Appellant/अपीलार्थी .. Respondent/प्रनिवादी निर्ााररती की ओर से /Assessee by: Shri Ajay R. Singh a/w Shri Akshay Pawar राजस्व की ओर से /Revenue by: Shri Hemanshu Joshi, Sr. DR. स िवाई की िारीख / Date of Hearing 08.07.2025 घोर्णा की िारीख/Date of Pronouncement 14.07.2025 P a g e | 2 ITA No. 1737/Mum/2025 A.Y. 2018-19 K Mordani Constructions Private Limited (Formerly known as K Mordani Constructions LLP) आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Assessment Centre [CIT(A)] dated 16.01.2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2018-19. 2. The assessee has raised the following grounds of appeal: “1. The learned Commissioner of Income Tax (Appeals), National Faceless Assessment Centre (NFAC) has erred in law and facts by confirming the disallowance of Rs. 58,76,385/- made u/s. 40(a)(ia) of the Act by the learned Assessing Officer which was made by the learned Assessing Officer without appreciating the fact that the appellant is following Percentage Completion Method ('POCM') for revenue recognition and thereby disallowance u/s 40(a)(ia) of the Act, being 30% of entire expenditure of Rs. 5,25,99,220/- is not justified as the appellant has claimed expenses to an extent of 62 76% ie. cost of construction completed till 31.03.2018 in the Profit and Loss Account of AY 2018-19 and remaining amount was not claimed as an expenditure in the Profit and Loss Account while deriving profit for the year under consideration. 2. The appellant craves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal.” 3. Brief facts of the case are that the assessee filed its return declaring income of Rs. 13,40,820/- on 25.03.2019 for A.Y. 2018-19. The case was selected for limited scrutiny and assessment was completed at an income of Rs. 7217205/- vide order u/s. 143(3) dated 16.04.2021 after making addition of Rs. 5876385/- on account of disallowance u/s. 40(a)(ia) of the Act. Aggrieved with the order, the assessee preferred an appeal before the Ld. CIT(A). As there was P a g e | 3 ITA No. 1737/Mum/2025 A.Y. 2018-19 K Mordani Constructions Private Limited (Formerly known as K Mordani Constructions LLP) no compliance to various notices issued by the Ld. CIT(A), the appeal was dismissed him ex-parte vide order dated 16.01.2025. 4. The assessee has filed an appeal before the Tribunal against the order of Ld. CIT(A). Before us, Ld. AR has submitted that no compliance was made during the first appellate proceedings as the e-mail of a senior accountant of the assessee was mentioned in form 35 who had subsequently resigned from the company. Due to oversight, the company did not update the office of Ld. CIT(A) and hence the notices issued on the e-mail of ex-employee were not received by the assessee. He has prayed that the matter may be restored back to Ld. CIT(A) for a fresh decision on merits. Ld. DR has also not objected to the said proposition. 5. In view of the facts and circumstances narrated hereafter, and in the interest of justice, we deem it appropriate to restore the matter to Ld. CIT(A) for fresh adjudication on merits after giving due opportunity to the assessee. The assessee is also directed to make requisite compliance before Ld. CIT(A). 6. In the result, the appeal is allowed for statistical purposes. Order pronounced in the open court on 14.07.2025. Sd/- Sd/- ANIKESH BANERJEE RENU JAUHRI (न्यानयक सदस्य/JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai P a g e | 4 ITA No. 1737/Mum/2025 A.Y. 2018-19 K Mordani Constructions Private Limited (Formerly known as K Mordani Constructions LLP) दिन ुंक /Date 14.07.2025 अननक ेत स ुंह र जपूत/ स्टेनो आदेश की प्रनतनलनि अग्रेनित/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यानित प्रनत //True Copy// आदेशािुसार/ BY ORDER, सहायक िंजीकार (Asstt. Registrar) आयकर अिीलीय अनर्करण/ ITAT, Bench, Mumbai. "