SAT INDER CONSTRUCTIONS PRIVATE LIMITED,CUTTACK V. DCIT ASMNT, CIRCLE 2(1), CUTTACK

ITA 511/CTK/2024

AI Insights

The case involves Sat Inder Constructions Private Limited, which appealed against the order of the CIT (A), National Faceless Appeal Centre, Delhi. The appeal was concerning the assessment year 2017-18, where the AO had estimated the income of the assessee at 8% of total receipts after depreciation, without rejecting the books of accounts. The assessee argued that the estimation was not permissible without the rejection of the books. The Revenue contended that the AO had valid reasons for the estimation, citing issues like bogus labor charges and lack of sufficient plant and machinery. The Tribunal, however, noted the absence of any mention of rejection of books in the assessment order and thus allowed the appeal, directing the deletion of the estimated income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708904 (ITAT-CUTTACK)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NISHANTH RAO B
• Assessee Lawyers: P.K.MISHRA; B.N. BEHERA
• Keywords: Depreciation; Bogus
• Section: 145; 80G

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “CUTTACK” BENCH, CUTTACK BEFORE SHRI GEORGE MATHAN, JM AND SHRI RAJESH KUMAR, AM ITA No. 511/CTK/2024 (Assessment Year: 2017-18) Sat Inder Constructions Private Limitd Inder Bhawan, TV Station Road, Tulasipur, Cuttack, Odisha-753008 Vs. DCIT ASMNT, Circle 2(1) Aaykar Bhavan, Cuttack, Odisha- 753002 (Appellant) (Respondent) PAN No. AASCS8658P Assessee by : Shri P.K. Mishra & B.N. Behera, ARs Revenue by : Shri Nishanth Rao B, DR Date of hearing: 17.07.2025 Date of pronouncement: 17.07.2025 O R D E R PER PENCH: This is an appeal filed by the assessee against the order of the ld. CIT (A), National Faceless Appeal Centre, Delhi in appeal no. ITBA/NFAC/S/250/2024-25/1066723603(1) dated 15.07.2024 for A.Y. 2017-18. 02. Shri P.K. Mishra & B.N. Behera represented on behalf of the assessee and Shri Nishanth Rao B, represented on behalf of the Revenue. 03. It was submitted by the ld. AR that the assessee is in the business of doing civil contract. The assessee had filed its return of income on 04.11.2017, declaring an income of ₹1,31,21,770/- on a total receipts of ₹30,03,06,603/-. It was the submission that the ld. AO has estimated the income of the assessee at 8%. It was further submission that the said 8% was estimated after depreciation. It was the submission by the Page | 2 ITA No. 511/CTK/2024 SAT Inder Constructions Private Limited; A.Y. 2017-18 ld. AR that the ld. AO has not rejected the assessee’s books of account but estimated the income. It was the submission that the estimation of income was not permissible without the rejection of the books. 04. In reply, the ld. Sr. DR submitted that the ld. AO has mentioned the reasons for his estimation in para 3 of the assessment order at pages 2 and 3 of his order. It was further submitted that the ld. CIT (A) has categorically brought out the reasons for the estimation and rejection in para 6 of his order at page 14 of the appellate order. It was the submission that the reasons given by the ld. AO for the estimation should be considered as the books of the assessee having been rejected. It was further submission that the assessee has also not produced the details in regard to the deduction u/s 80G of the Act. It was the submission that the assessee was not in a position to substantiate its return and therefore, the estimation as made by the ld. AO was liable to be upheld. 05. We have considered the rival submissions. A perusal of the facts in the present case clearly shows that there is no mentioned by the ld. AO in the assessment order that the books of account are to be rejected. The ld. AO admittedly pointed out various errors in the assessment order such as the payment claimed under the head labour charges appeared to be bogus. Similarly, the ld. AO mentioned that the assessee did not have sufficient plant and machinery to execute the civil construction work of such huge magnitude and there was no claimed of plant and machinery of hire charges in the Profit and Loss account. The ld. CIT (A) in para no.6 of his order also brought the various points which has been mentioned by the ld. AO but no where in the assessment order the ld. AO has mentioned that the provisions of Section 145 have been invoked or that the books of accounts of the assessee have been Page | 3 ITA No. 511/CTK/2024 SAT Inder Constructions Private Limited; A.Y. 2017-18 rejected. For the purpose of estimating the income of an assessee, one of the compulsory requirements are that the provisions of Section 145 of the Act have to be invoked and the books of account of the assessee have to be rejected. As the ld. AO has not rejected the assessee’s books of accounts, we are of the view that the estimation has done by the ld. AO and has affirmed by the ld. CIT (A) is unsustainable and consequently, we direct the ld. AO to delete the estimation of income as done by him. 06. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 17.07.2025. Sd/- Sd/- (RAJESH KUMAR) (GEORGE MATHAN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Kolkata, Dated: 17.07.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Cuttack "