S.K. BUILDERS AND DEVELOPERS LLP,KOLKATA vs. ITO, WARD 40(1),, KOLKATA

Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Commissioner of Income Tax Appeal, National Faceless Appeal Centre (NFAC), Delhi, (hereinafter referred to as the “Ld. CIT(A) NFAC”] dated 11.12.2025 for the AY 2020-2021.

i) Taxable receipts from other sources shown in Schedule TDS 2 is higher than the receipts shown in ITR ii) High liabilities as compared to low income/receipts iii) Purchase value of proper less than the value as per stamp authority. 4. Thereafter statutory notices u/s 143(2) and 142(1) of the IT Act, 1961 along with questionnaires were issued to the assessee and the assessee duly replied to all the said notices. The assessee is a limited liability partnership firm and is a builder , developer and job work contractor of Government for the last more than four years. The assessee is deriving income from business ,house property and other sources. The AO on examination of balance sheet for the impugned assessment year noted that the assessee has shown advances from parties/customers of Rs.17,94,02,522/- and Sundry creditors of Rs. 31,12,665/- under the head Trade Payable in the Balance Sheet as on 31.03.2020. The A.O. issued notice u/s 142(1) of the IT Act, 1961 dated 22.08.2022 asking the assessee to submit the details regarding advances receipts from customers in the particular format mentioned in the said notice. In response to the same the assessee submitted its response on time. Thereafter a show cause notice dated 31.08.2022 with proposed addition of Rs. 17,94,02,522/- was issued to the assessee and the assessee failed to respond to the said notice. The AO thereafter stated that in the absence of explanation and documentary

i) Commissioner of Income Tax-IV vs. Shivalik Buildwell (P) Ltd in [2013] 40 taxmann.com 219 (Guj HC); ii) Commissioner of Income Tax vs. Montage Enterprises (P) Ltd in [2018] 100 taxmann.com 100 (SC); and 8. Ld. AR also relied on the decision of the Hon’ble Supreme Court in the case of Radhasoami Satsang v. CIT, (1992) 193 ITR 321 (SC), to cement his arguments that where a factual conclusion has been reached on one aspect, a contrary position on identical facts without material change is unsustainable in law.

"Assessee was a builder and developer - He received certain amount as advance from different parties-Assessing Officer added said amount to assessee's taxable income -Tribunal set aside addition made by Assessing Officer holding that assessee being a developer of project, profit in its case would arise only on transfer of title of property and, therefore, receipt of any advance or booking amount could not be treated as trading receipt of year under consideration - Whether on facts, impugned order passed by Tribunal deleting addition was to be upheld 15. Same ratio has been relied on the case of Principal Commissioner of Income Tax vs. Montage Enterprises (P) Ltd in [2018] 100 taxmann.com 100 (SC) wherein it is held that "Section 68, of the Income-tax Act, 1961- Cash credit (Trade advance)- In course of assessment, Assessing Officer made additions to assessee's income under section 68 in respect of trade advances - Commissioner (Appeals) and Tribunal deleted said addition finding that trade advances received by assessee were adjusted against sales made in subsequent years - High Court upheld order passed by Tribunal - Whether, on facts, SLP filed against decision of High Court was to be dismissed". We observe that in the above during the course of assessment, the AO made addition to the assessee’s income u/s.68 of

"Double taxation not permissible, again, it is not denied that the assessee had already offered to tax the income earned from the project "Aashirwad Gokul by following project completion method in subsequent assessment year 2018-19. Copies of the audited financial annual statement of accounts have been duly submitted before the Assessing Officer and otherwise also they were available with the Assessing Officer along with uploaded filed along with ROI for assessment year 2018-19. The advances received from the customers in the preceding years including current year, were all credited in A/c "advances from customers against project" and were later on adjusted in the sales in assessment year2018-19. In support of this contention and for better appreciation, at a glance chart showing the details

"We have gone through the relevant provisions but there seems to be no such provision in the I.T. Act wherein a specific provision has been made by the legislature for including such an income by an assessee from lottery ticket. In the absence of any such provision, the assessee in the present case cannot be subjected to double taxation. Furthermore, a taxing Statute should not be interpreted in such a manner that its effect will be to cast a burden twice over for the payment of tax on the taxpayer unless the language of the Statute is so compelling that the court has no alternative than to accept it. In a case of reasonable doubt, the construction must beneficial to the taxpayer is to be adopted. So, it is clear enough that the income in the present case is taxable only under one law. By virtue of clause (k) to Article 371F of the Constitution which starts with a non-obstante clause, it would be clear that only the Sikkim Regulations on Income- tax would be applicable in the present case. Therefore, the income cannot be brought to tax any further by applying the rates of the Act." 19. We also find merit in the contention of the ld. AR that the AO had accepted sales shown in the profit and Loss Account and made addition of "Advances from Parties" of Rs. 17,94,02,554/- which is totally unsustainable in law. Therefore, any pick and choose method of rejecting certain entries from the books of account while accepting other, without an appropriate justification is not permissible under the Act and the same is arbitrary and may lead to an incomplete, unreasonable and erroneous computation of income of an assessee. The case of the assessee finds support from the decision of the Hon'ble Delhi High Court in the case of Principal Commissioner of

"The series of judgments referred to clearly allude to the settled position of law that the books of account have to be necessarily rejected before the Assessing Officer proceeds to the best judgment assessment upon fulfilment of conditions mentioned in the Act. The underlying rationale behind such an action is to meet the standards of correct computation of accounts for the purpose of a more transparent and precise assessment of income. Therefore, any pick and choose method of rejecting certain entries from the books of account while accepting other, without an appropriate justification, is arbitrary and may lead to an incomplete, unreasonable and erroneous computation of income of an assessee. [Para 241" 20. Consequently, considering the facts of the case in the light of aforesaid decisions, we are of the view that the addition made by the AO and as sustained by the ld. CIT(A) in respect of advances received by the assessee from the customers treating the same as unexplained u/s.68 of the Act is completely wrong and unsustainable in law. Thus, we set aside the order of the ld. CIT(A) and direct the AO to delete the addition so made.

Order pronounced in the open court on 18.05.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 18.05.2026

Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata