SENGHANI AND ASSOCIATES ,MUMBAI V. ITO WARD 28(3)(1), MUMBAI

ITA 5039/MUM/2025

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The case involves Senghani And Associates, a partnership firm engaged in construction, appealing against an order by the CIT(A) which confirmed additions made by the Assessing Officer to the firm's income for the assessment year 2016-17. The additions were based on discrepancies between the income declared in the tax return and the turnover reported in Form 26AS. The firm argued that certain amounts included in the reported turnover were already taxed in previous years or were not taxable in the year under consideration, leading to double taxation. The CIT(A) upheld the AO's additions without a fresh hearing, prompting the appeal to the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783647 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 14-08-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEYAQAT ALI AAFAQUI
• Assessee Lawyers: VIJAY MEHTA
• Keywords: Set aside; Opportunity of being heard; TDS; FORM 26AS
• Section: 143(3); 142(1); 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No.5039/MUM/2025 (Assessment Year 2016-17) Senghani And Associates, 808, 8th Floor Ecstacy Business Park, JSD Road Mulund West, Mumbai – 400080 PAN: ACAFS6377C ............... Appellant v/s Income Tax Officer, Ward - 28(3)(1), ITO, Vashi Railway Station Building, Navi Mumbai ……………… Respondent Assessee by : Shri Vijay Mehta Shri Ajay Bhagat Revenue by : Shri Leyaqat Ali Aafaqui, Sr. AR Date of Hearing – 04/11/2025 Date of Order - 07/11/2025 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal against the impugned order dated 17/06/2025, passed under section 250 of the Income Tax Act, 1961 (\"the Act\") by the learned Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre, Delhi [“learned CIT(A)”], for the assessment year 2016-17. 2. In this appeal, the assessee has raised the following grounds: – “1. First Appellate order dated 17 June 2025 ['impugned order'], passed by Hon'ble CIT(A), under section 250 of the Income-tax Act, 1961 ['the Act'] in Printed from counselvise.com ITA No.5039/Mum/2025 (A.Y. 2016-17) 2 the case of M/s. Senghani and Associates ['Appellant) is based upon conjectures, surmises, assuming incorrect facts & incorrect application of law. 2. On the facts & circumstances of the case, the Hon'ble CIT (A) erred in taxing INR 1,00,25,000 on receipt basis instead of accrual basis which is regular method accounting in accordance with section 145(1) of the Act. Thus the additions made by Learned AO confirmed by Hon'ble CIT (A) be deleted. 3. On the facts & circumstances of the case, the Hon'ble CIT (A) erred in taxing INR 7,64,598 being retention money since such amount was already subject to tax in previous year and taxing again would lead to double taxation. Thus, the additions made by Learned AO confirmed by Hon'ble CIT (A) be deleted. 4. On the facts & circumstances of the case, the Hon'ble CIT (A) erred in taxing INR 36,37,465 being proceeds received from opening outstanding of last year, since such amount was already subject to tax in previous year and taxing again would lead to double taxation. Thus, the additions made by Learned AO confirmed by Hon'ble CIT (A) be deleted. 5. On the facts & circumstances of the case, the Hon'ble CIT (A) erred in taxing IN 56,90,950 being advance received from customer, since advance received was subject to tax in future years ie in FY 2018-19 and taxing again would lead to double taxation. Thus, the additions made by Learned AO confirmed by Hon'ble CIT (A) be deleted. 6. On the facts & circumstances of the case, the Hon'ble CIT (A) failed to take into consideration various documentary evidence furnished before the assessment proceedings. Thus, the additions made by Learned AO confirmed by Hon'ble CIT (A) be deleted. Without Prejudice, 7. On the facts & circumstances of the case, the Appellant prays that only the profit element could be subject tax and hence, the Appellant states that corresponding WIP cost to be allowed as deduction while computing the Income. Thus, the additions made by Learned AO confirmed by Hon'ble CIT (A) be amended to the said extent. 8. On the facts & circumstances of the case, the Appellant prays that where income is added in present year, future years return to be amended consequently no income to be offered to tax since Appellant has offered the entire income tax to during the lifecycle of the project. 9. On the facts & circumstances of the case, the Hon'ble CIT(A) has not given enough opportunity of being heard and passed the order without considering the video conferencing opportunity. Thus, the additions made by Learned AO confirmed by Hon'ble CIT (A) be amended to the said extent. 10. On the facts & circumstances of the case, The appellant prays that consequential levy of additional interest u/s 234B of the Act is not justified & be deleted.” Printed from counselvise.com ITA No.5039/Mum/2025 (A.Y. 2016-17) 3 3. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is a partnership firm and is engaged in the construction of real estate buildings based on contracts received from builders and developers. During the year under consideration, the assessee was involved in the construction of a building in Bhandup, Mumbai, for a developer, namely “Vital Developers Pvt. Ltd.”. The return filed by the assessee, for the year under consideration, declaring a total income of Rs . 6,42,560/- was selected for scrutiny in CASS, and statutory notices under section 143(2) and section 142(1) were issued and served on the assessee. During the assessment proceedings, it was observed that the turnover of the assessee as per Form 26AS was Rs.1,53,62,500/- and the assessee also claimed full TDS on the same. However, in its return of income, the assessee had shown a turnover less than that reflected in Form 26AS. Accordingly, the assessee was asked to show cause as to why the difference in income should not be added to its total income. The Assessing Officer (“AO”), vide order dated 29.12.2018 passed under section 143(3) of the Act, disagreed with the submissions of the assessee and made an addition of Rs.1,00,25,000/- being the difference between the amount as appearing in Form 26AS and the turnover declared by the assessee in its return of income. 4. In its appeal before the learned CIT(A), the assessee submitted that it was following the mercantile system of accounting and followed Accounting Standard - 7 issued by the ICAI during the year under consideration. The assessee submitted that during the year under consideration, it recognized an Printed from counselvise.com ITA No.5039/Mum/2025 (A.Y. 2016-17) 4 amount of Rs.53,50,000/- as income on the basis of the invoices raised during the year under consideration. It was further submitted that it received the total amount of Rs.1,54,43,013/- during the year under consideration from its customer, i.e., Vital Developers Pvt. Ltd. Explaining the difference of Rs.1,00,93,013/- between the amount received from the customer and the amount declared in the return of income, the assessee submitted that the same pertains to the income already offered to tax in earlier years, retention money received and advances received towards the project cost. The submission of the assessee explaining the aforesaid difference is as follows: - Sr. No. Particulars Amount A Amount received during the year (including TDS) Rs.1,54,43,013 B Less : Amount offered as income during the year Rs. 53,50,000 B=A- B Difference between amount received and income offered Rs. 1,00,93,013 D Opening debtors: Amount of income already offered to tax earlier Rs.36,37,465 F Proceeds received against retention money Rs.7,64,598 G Advance received Rs.56,90,950 H = C-D- F-G Balance Rs. 5. Thus, the assessee submitted that the amount of Rs.36,37,465/- pertains to the bill which was raised on 20.03.2015 and the income in respect of the same was offered to tax by it in the assessment year 2015-16. However, the customer recorded and paid the bill on 01.04.2015, i.e., assessment year 2016-17 and also withheld taxes in the assessment year 2016-17. Accordingly, the assessee submitted that the difference of Rs.36,37,465/- has already been offered to tax in the previous year. Further, Printed from counselvise.com ITA No.5039/Mum/2025 (A.Y. 2016-17) 5 as regards Rs.7,64,598/-, the assessee submitted that the same pertains to the retention money received from the customer, which is evident from the ledger account submitted during the assessment proceedings. Accordingly, the assessee claimed that Rs.7,64,598/- was also offered to tax in the previous year. As regards the balance sum of Rs.56,90,950/-, the assessee submitted that the same was received from the customer as an advance in relation to the project and therefore, is not taxable in the year under consideration. Further, the assessee submitted that the said advance of Rs.56,90,950/- was offered to tax subsequently in the Financial Year 2018- 19, and thus, the said income is added in the year under consideration, the same would result in double taxation. On a without prejudice basis, the assessee submitted that the AO has added the entire gross receipt without appreciating that only the income can be subject to tax after deducting any expenditure. 6. It is evident from the perusal of the impugned order that an opportunity for hearing through Video Conferencing was also provided to the assessee. However, no one appeared on behalf of the assessee, nor was any request for a fresh hearing made on behalf of the assessee. Accordingly, the learned CIT(A) considered the written submission filed by the assessee and upheld the addition made by the AO. Being aggrieved, the assessee is in appeal before us. 7. During the hearing, the learned Authorised Representative (“learned AR”) reiterated the submissions made by the assessee before the learned CIT(A). In order to justify non-appearance before the learned CIT(A) during Printed from counselvise.com ITA No.5039/Mum/2025 (A.Y. 2016-17) 6 the hearing through Video Conferencing, the learned AR placed on record the affidavit of the Chartered Accountant, who was representing the assessee’s case before the learned CIT(A). From the perusal of the aforesaid affidavit, we find that it is the plea of the deponent that on the date of hearing, he was travelling to a non-network zone and hence was unable to attend the Video Conferencing, and accordingly, he instructed his office assistant to request an adjournment. However, subsequently, it was learnt that the adjournment request could not be successfully submitted due to some technical glitches on the portal and on the same date, i.e., 17.06.2025, the learned CIT(A) passed the impugned order. 8. Having considered the submissions and perused the material available on record, we deem it appropriate to set aside the impugned order passed by the learned CIT(A) and restore the appeal to the file of the learned CIT(A), granting one more opportunity to the assessee to present its case on merits in the larger interest of justice. We order accordingly. Since the matter is restored to the file of the learned CIT(A) for consideration afresh, the assessee shall be at liberty to raise all its contentions against the addition made by the AO. Needless to mention, the learned CIT(A) can seek a remand report from the AO in respect of any fresh evidence being submitted by the assessee, as per law. Thus, the assessee is directed to appear before the Ld. CIT(A) on all dates of hearing as may be fixed without any default. As the matter is restored to the file of the learned CIT(A) for adjudication afresh, the other grievances raised by the assessee in the present appeal do not call for adjudication at Printed from counselvise.com ITA No.5039/Mum/2025 (A.Y. 2016-17) 7 this stage. Accordingly, the impugned order is set aside, and the grounds raised by the assessee are allowed for statistical purposes. 9. In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 07/11/2025 Sd/- Sd/- VIKRAM SINGH YADAV ACCOUNTANT MEMBER S Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 07/11/2025 Prabhat Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai Printed from counselvise.com "