M/S PATHARE CONSTRUCTION & INVESTMENTS PVT LTD,MUMBAI V. PRINCIPLE COMMISSIONER OF INCOME TAX, MUMBAI-8, MUMBAI

ITA 2770/MUM/2024

AI Insights

The case involves M/s. Pathare Constructions & Investments Pvt. Ltd., which appealed against the order of the PCIT, Mumbai-8, concerning the assessment year 2018-19. The PCIT invoked section 263 of the Income Tax Act, 1961, claiming that the original assessment order was erroneous and prejudicial to the interests of the revenue because it did not address the deemed rental income from unsold flats, as reflected in the company's balance sheet. The Tribunal heard arguments from both sides, reviewed the submissions and financial records, and decided to uphold the PCIT's order for further verification of the unsold stock, allowing the appeal for statistical purposes.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470670 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R.A. DHYANI
• Assessee Lawyers: APURV GANDHI
• Keywords: Set aside; Assessment record; Revision of order
• Section: 143(3); 263

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “C”, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No. 2770/Mum/2024 Assessment Year 2018-19 M/s. Pathare Constructions & Investments Pvt. Ltd. 1252, Pushpanjali Apartment, Old Prabhadevi Road, Prabhadevi – 400025, Maharashtra. PAN: AAACP 2329 Q Vs. PCIT, Mumbai-8, Aayakar Bhavan, Mumbai. (Appellant) (Respondent) Present for: Assessee by : Shri Apurv Gandhi Revenue by : Shri R.A. Dhyani, CIT/DR Date of Hearing : 23.01.2025 Date of Pronouncement : 19.03.2025 O R D E R PER AMARJIT SINGH, ACCOUNTANT MEMBER: The appeal of the assessee for the assessment year 2018-19 is directed against the order dated 18.03.2024 passed by the ld. National Faceless Appeal Centre (NFAC), Delhi. The assessee has raised the following grounds of appeal: “1. On the facts and in the circumstances of the case and in law, the Hon’ble Principal Commissioner of Income Tax erred in invoking the provisions of section 263 in the appellant’s case in holding that the assessment order dated 22.04.2021 passed by ld. AO is erroneous and prejudicial to the interest of the revenue. The appellant prays that the matter was dealt during the assessment proceedings and hence order of the Hon’ble Principal Commissioner of Income Tax under section 263 may be held as bad in law and kindly be quashed. 2. Without prejudice to the above, the Hon’ble Principal Commissioner of Income Tax erred in holding that the assessment order dated 22.04.2021 ITA No. 2771/Mum/2024 M/s. Pathare Constructions & Investments Pvt. Ltd. A.Y. 2018-19 2 passed by the ld. AO is prejudicial to the interests of the Revenue without considering the current facts of the case. The Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing.” 2. Fact in brief is that return of income declaring total loss of Rs. 86,410/- was filed on 02.11.2018. The case was subject to scrutiny assessment and assessment u/s 143(3) r.w.s. 143(3B) of the Act was finalized on 22.04.2021 accepting the return income / loss declared by the assessee. Subsequently, the ld. PCIT-8, Mumbai has initiated proceedings u/s 263 of the Act on perusal of the assessment record that in the balance sheet of the assessee company as on 31.03.2018 closing balance stock of Rs. 2,15,88,392/- in respect of unsold flat was reflected and the assessee has not shown any deemed rental income on the unsold property. In response to the show cause notice, the assessee explained that during the course of assessment proceedings it has furnished the financial as well as the computation of income and other details on the basis of which the assessing officer has completed the assessment and accepted the returned income. However, the ld. CIT(A) was not agreed with the submission of the assessee stating that there was nothing on record to show that the assessing officer had carried out detailed inquiry with regard to charging of income for unsold flat. Therefore, the ld. PCIT has treated the assessment order passed by the assessing officer as erroneous and prejudicial to the interest of the Revenue and same was set aside to tax income arising from unsold stock laying with the assessee company. 3. During the course of appellate proceedings before us, the assessee has filed a paper book showing the submission made before ITA No. 2771/Mum/2024 M/s. Pathare Constructions & Investments Pvt. Ltd. A.Y. 2018-19 3 the assessing officer and financial of the assessee company for F.Y. 2017-18. The ld. Departmental representative in his submission supported the order of PCIT and submitted that assessing officer failed to make any enquiry relating to the unsold stock available with the assessee company. 4. Heard both the sides and perused the material on record. The assessee is engaged in the business of property development and had developed a building known as ‘Avarsekar Height’. The construction of the building was completed on 14.09.2016. As per the information available in the balance sheet of the assessee company as on 31.03.2018 there was closing stock of Rs. 2,15,88,392/- in respect of unsold flats. However, we find that AO has not made any specific enquiry on the issue of unsold stock, therefore, for the limited purpose of verification of unsold stock of flats as discussed supra we uphold the order of ld. PCIT passed u/s 263 of the Act with liberty to the assessee to file any submission as required before the assessing officer in the set aside proceedings. Therefore, the appeal of the assessee is allowed for statistical purpose. 5. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 19.03.2025. Sd/- Sd/- (RAHUL CHAUDHARY) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 19.03.2025 Biswajit, Sr. P.S. ITA No. 2771/Mum/2024 M/s. Pathare Constructions & Investments Pvt. Ltd. A.Y. 2018-19 4 Copy to: 1. The Appellant: 2. The Respondent: 3. The CIT, 4. The DR //True Copy// [ By Order Assistant Registrar ITAT, Mumbai Benches, Mumbai "