SHREE GAURISHANKAR DEVELOPERS PVT LTD ,MUMBAI vs. ITO WARD 5(3)(2), MUMBAI

ITA 6956/MUM/2025Status: DisposedITAT Mumbai28 September 2026AY 2010-1111 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal considered the assessee's grounds of appeal regarding the invalidity of the assessment order and the disallowance of expenditure. For grounds 1 and 3, the Tribunal found no infirmity in the assessment order and dismissed these grounds due to the absence of cogent evidence. Regarding ground 3, concerning the disallowance of Rs. 1,41,88,378/-, the Tribunal noted the AO's detailed investigation and the CIT(A)'s in-depth deliberation. However, the Tribunal found merit in the assessee's contention that the Investigation Wing's report was never confronted. Following the principles of natural justice and fair play, the Tribunal held that any material used by the AO to draw adverse inferences must be duly confronted to the assessee. Therefore, the issue was remanded back to the AO with a direction to supply the incriminating materials relied upon, elicit the assessee's reply, and pass a fresh assessment order. The ground was allowed for statistical purposes.

What were the facts?

The assessee, Shree Gaurishankar Developers Pvt. Ltd., filed its return of income for Assessment Year 2010-11 declaring a total income of Rs. 4,08,220/-. The Assessing Officer (AO) selected the case for scrutiny. Information was received that the assessee had purchased a non-agricultural land and offered Short Term Capital Gain (STCG) of Rs. 4,41,622/-. In computing this STCG, the assessee reduced an amount of Rs. 1,41,88,378/- on account of fencing and other charges. The AO disallowed this amount, considering it a bogus expense claimed to reduce capital gains liability, and computed STCG at Rs. 1,46,30,000/-. The assessee appealed to the Commissioner of Income-tax (Appeals) [CIT(A)], who upheld the AO's disallowance. The present appeal is against the CIT(A)'s order.

What were the issues?

1. Whether the assessment order is void-ab-initio, illegal, and without jurisdiction, and whether natural justice was not followed, as argued by the assessee. 2. Whether the assessment proceedings initiated under section 143(3) of the Income-tax Act, 1961, are bad in law and liable to be quashed, as argued by the assessee. 3. Whether the disallowance of expenditure of Rs. 1,41,88,378/- is justified, as argued by the assessee. Assessee's Contentions: - The purchases were from identifiable suppliers whose details were furnished. - Payments were made by account payee cheques, establishing genuineness. - Suppliers disclosed corresponding sales in their returns. - There was no evidence to establish that cash withdrawn by suppliers was returned to the assessee. - Reliance on third-party statements was not justified; the burden was on the Revenue. - Expenditure was recorded in books, bills were subject to VAT, and PAN details were provided. - Assessment ought to have been framed under section 153C read with section 153A of the Act due to documents seized during a search. - The Investigation Wing's report was not shared with the assessee. - Alternatively, a part of the expenditure attributable to fencing/boundary wall may be allowed. Revenue's Contentions: - Independent enquiries through commission under section 131(1)(d) revealed that suppliers were non-existent at stated addresses and had no business activity. - Cheque payments were followed by immediate cash withdrawals, indicating an accommodation entry mechanism. - Assessee failed to produce evidence like delivery challans or site records. - Paper disclosure of sales by suppliers could not override the fact that no real transactions took place. - The statement of the Director of the purchaser company confirmed the land was undeveloped. - Photographs showed the land was open and undeveloped. - Third-party statements, corroborated by independent evidence, are admissible.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 131(1)(d),Section 153C,Section 153A

AI-generated summary — verify with the full judgment below

Before: HON’BLE JUSTICE (RETD.) C. V. BHADANG & SHRI PRABHASH SHANKAR

For Appellant: Shri Dhrunal Bhat, AR
For Respondent: Shri Rajgopal K. Parthsarthy, Sr. DR
Hearing: 02.09.2026Pronounced: 28.09.2026

PER PRABHASH SHANKAR [A.M.] :- The instant appeal emanating from the appellate order dated 29.08.2025 is preferred by the Assessee against the order passed by the Learned Commissioner of Income-tax, Appeal, CIT(A) 51, Mumbai [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 19.03.2013 for the Assessment Year [A.Y.] 2010-11. P a g e | 2 A.Y. 2010-11 Shree Gaurishankar Developers Pvt. Ltd.

2.

The grounds of appeal are as under:-

The order continues below.

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