ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE1, PATNA, PATNA vs. CHAMPION OMDEV CONSTRUCTION LIMITED, PATLIPUTRA, PATNA

ITA 547/PAT/2025Status: DisposedITAT Patna30 September 2026AY 2023-2415 pages
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What were the facts?

The appeals filed by Champion Omdev Construction Limited (the assessee) and the Revenue are against orders passed by the Commissioner of Income Tax (Appeals)-NFAC, Delhi, for Assessment Years (AY) 2017-18, 2023-24, and 2023-24. The assessee's appeals in ITA Nos. 155/PAT/2026 and 72/PAT/2026 were filed with delays of 65 and 38 days respectively, which were condoned by the Tribunal. For AY 2023-24, the Assessing Officer (AO) made an estimated disallowance of 20% of total expenditure amounting to ₹17,57,11,843/- due to non-compliance with TDS provisions under Section 194Q. The CIT(A) restricted this disallowance to 15%, sustaining an addition of ₹13,17,83,882/-. For AY 2017-18, an ad hoc disallowance of 8% of expenses was made.

What did the Tribunal hold?

The Tribunal held that for AY 2023-24, neither the AO nor the CIT(A) correctly applied the relevant TDS provisions. The AO's disallowance of 20% and the CIT(A)'s reduction to 15% were not in accordance with the statute. The Tribunal noted that Section 194Q applies to purchases exceeding ₹50 Lakh, and the AO considered the entire purchases. The disallowance for carriage inward and labour charges should be considered under Section 194C. The Tribunal set aside both the AO's and CIT(A)'s orders and remanded the issue to the AO for fresh assessment, directing the assessee to furnish party-wise transaction details and the AO to identify specific unvouched items if proposing disallowance under Section 37(1). For AY 2017-18, the Tribunal found the 8% disallowance excessive. While acknowledging that a disallowance was called for due to absence of vouchers for expenses like site expenses, business promotion, vehicle maintenance, guest house expenses, and other miscellaneous expenses, it reduced the disallowance from 8% to 6% with consequential relief, to which neither party objected. The grounds related to the correctness of the disallowance for AY 2023-24 and the reduction thereof were allowed for statistical purposes.

What were the issues?

1. Whether the CIT(A) erred in confirming the ad hoc disallowance of ₹8,20,030/- (8% of expenses) for AY 2017-18, and whether such ad hoc additions are permissible when books of account are not rejected by the AO, as argued by the assessee? 2. Whether the CIT(A) erred in confirming the ad hoc disallowance of ₹13,17,83,882/- (15% of expenses) for AY 2023-24, and whether ad hoc additions are permissible when books of account are not rejected, as argued by the assessee? 3. Whether the CIT(A) erred in reducing the disallowance made under Section 40(a)(ia) from 20% to 15% for AY 2023-24, despite the assessee's non-compliance with TDS provisions, as argued by the Revenue? 4. Whether the CIT(A) was empowered to substitute the AO's estimate without documentary evidence or establishing incorrectness in the AO's findings for AY 2023-24, as argued by the Revenue? Assessee's contentions: Ad hoc disallowances are not permissible if the books of account are not rejected by the AO. For AY 2023-24, the assessee participated in proceedings and furnished information, and the books were audited without defects pointed out by the AO. For AY 2017-18, the assessee relied on the decision in ITAT 389/PAT/2025 and Section 145(3). Revenue's contentions: The CIT(A) erred in reducing the disallowance under Section 40(a)(ia) from 20% to 15% for AY 2023-24 due to non-compliance with TDS provisions. The CIT(A) erred in granting relief without books, vouchers, or TDS records being produced. The CIT(A) was not empowered to substitute the AO's estimate without documentary evidence.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194Q,Section 194C,Section 37(1),Section 145(3),Section 250,Section 143(3),Section 144B

AI-generated summary — verify with the full judgment below

आयकर अपीलीय अधिकरण पटना ‘डीबी’ बेंच कोलकाता मे IN THE INCOME TAX APPELLATE TRIBUNAL PATNA ‘DB’ BENCH AT KOLKATA [Virtual Court] Before SHRI YOGESH KUMAR US, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No(s). 155/PAT/2026 Assessment Year(s) 2017-18 Champion Omdev Assistant Commissioner of Construction Limited Income Tax, Circle-1, Patna (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) स्र्थायी खाता संख्या/PAN: AADCC5582D ITA No(s). 72/PAT/2026 Assessment Year(s) 2023-24 Champion Omdev Assistant Commissioner of Construction Limited Income Tax, Circle-1, Patna (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) स्र्थायी खाता संख्या/PAN: AADCC5582D ITA No(s). 547/PAT/2025 Assessment Year(s) 2023-24 Assistant Commissioner of Champion Omdev Income Tax, Circle-1, Patna Road,

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