M/S.U.S.REALITY PRIVATE LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX-10(3), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL
“F” BENCH MUMBAI

BEFORE SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER &
SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER
M/s. U. S. Reality Pvt.
Ltd.
115-116, J.K. Chambers,
Sector No. 17, Vashi, Navi
Mumbai-400 705

Vs.
DCIT-10(3),
452, Aaykar Bhavan,
M. K. Road, Mumbai-
400 020

PAN/GIR No. AAACU8241J
(Applicant)

(Respondent)

Assessee by Shri Madhur Agarwal, Ld. AR
Revenue by Shri Vivek Perampurna, Ld. DR

Date of Hearing
23.12.2025
Date of Pronouncement
29.12.2025

आदेश / ORDER

PER MAKARAND VASANT MAHADEOKAR, AM:

This appeal is filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals)-24, Mumbai
[hereinafter referred to as “CIT(A)”], dated 21.12.2017, for Assessment Year 2010–11, arising out of the assessment order passed by the Assessing Officer under section 143(3) of the 2
M/s. U. S. Reality Pvt. Ltd.

Income Tax Act, 1961[hereinafter referred to as “the Act”], dated
28.03.2013. 2. The brief facts of the case are that the assessee is a company engaged in the business of land acquisition, investment and contracting. For the assessment year under consideration, the assessee filed its original return of income on 25.06.2010, declaring a total income of Rs. 1,03,79,180/-and the same was initially processed under section 143(1) of the Act.
3. Thereafter, notice under section 143(2) was issued on 26.08.2011 and duly served. Upon change of incumbent, a fresh notice under section 143(2) was issued on 06.08.2012. Further notices under section 142(1) along with questionnaires calling for various details were issued on 06.08.2012, 19.12.2012 and 15.02.2013.While framing the assessment for A.Y. 2010–11, the Assessing Officer also relied upon impounded material and the Special Audit Report pertaining to A.Y. 2009–10. 4. After examination of the submissions of the assessee, the impounded material, the Special Audit Report and the books of account, the Assessing Officer recorded a categorical finding that the books of account were incomplete and incorrect, and that the explanations furnished by the assessee were not acceptable on several counts. Accordingly, invoking the provisions of section 145(3) of the Act, the Assessing Officer rejected the books of account and proceeded to complete the assessment in the 3
M/s. U. S. Reality Pvt. Ltd.

manner provided under section 144, after holding that adequate opportunity of being heard had been afforded to the assessee.
5. During the assessment proceedings, the Assessing Officer noticed that the assessee had credited Rs. 91,00,00,000/- to the Reserve and Surplus Account without routing the amount through the Profit and Loss Account. When called upon to explain, the assessee stated that the entry was passed on ill advice, represented liquidated damages, involved no actual receipt or payment, and was an incorrect book entry sought to be rectified through revised financial statements filed beyond the time limit. The Assessing Officer rejected the explanation, holding that the original audited financial statements filed with the return and the