INCOME TAX OFFICER, MUMBAI vs. GLORIOUS CONSTRUCTION COMPANY PRIVATE LIMITED, MUMBAI

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ITA 6799/MUM/2026Status: DisposedITAT Mumbai23 September 2026AY 2020-216 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the matter required proper factual verification. Regarding grounds 1 and 2, the Tribunal noted that while additional evidence was produced and admitted under Rule 46A, the Assessing Officer had not examined it before substantial relief was granted. The Tribunal emphasized the need to verify the nature of receipts totaling ₹12,84,54,233/- from various sources (Section 194-IA, immovable property sales, GST returns) to check for duplication or overlapping. It also observed that the CIT(Appeals) doubted the reliability of reconstructed books but estimated income at 15% without referring to any comparable cases, past profit rates, or specific material. Consequently, grounds 1 and 2 were restored to the file of the CIT(Appeals) for de novo consideration. The CIT(Appeals) was directed to forward the additional evidence to the AO for a remand report, verify sale transactions, receipts, and potential duplication, consider the report, provide the assessee an opportunity to respond, and decide afresh, including the reliability of reconstructed books and the basis for estimation. Regarding ground 3, the Tribunal found that the CIT(Appeals) had already upheld the validity of reassessment proceedings, and there was no adverse finding to the Department on this issue. Thus, ground 3 was dismissed. Ground 4 was general and required no separate adjudication. The appeal of the Department was allowed for statistical purposes.

What were the facts?

The assessee, Glorious Construction Company Pvt Ltd., is engaged in construction and real estate development. For Assessment Year 2020-21, the Assessing Officer (AO) treated aggregate receipts of ₹12,84,54,233/-, derived from information under section 194-IA, sale of immovable property, and GST returns, as unexplained cash credit under section 68 read with section 115BBE. This was after the assessee failed to file its return or respond to notices during reassessment proceedings. The AO completed the assessment under section 147 read with section 144, assessing total income at ₹12,84,54,233/-. The assessee appealed to the CIT(Appeals), submitting seized records and additional evidence under Rule 46A. The CIT(Appeals) admitted the evidence, but the AO failed to submit a remand report. The CIT(Appeals) then estimated net profit at 15% of total sales, reducing the addition, and upheld reassessment proceedings.

What were the issues?

1. Whether, on the facts and in law, the Ld. CIT(Appeals) erred in sustaining the assessment by estimating net profit at 15% on total sales of ₹12,84,54,233/- on an ad-hoc basis without comparable cases, material evidence, or proper basis (Section 147/144). 2. Whether, on the facts and in law, the Ld. CIT(Appeals) erred in rejecting the assessee's books of account, audited financial statements, and reconstructed records without pointing out specific defects or discrepancies, and without appreciating that receipts represented business turnover and not unexplained cash credits under section 68 (Section 68). 3. Whether, on the facts and in law, the Ld. CIT(Appeals) erred in confirming the validity of reassessment proceedings initiated under sections 147/148 and assessment framed under section 144, without appreciating that sufficient opportunity of being heard was not provided due to seizure of records by the Economic Offence Wing and other unavoidable circumstances. Assessee's contentions (implied from grounds and facts): The assessee argued that its records were seized by the EOW, preventing production during assessment. The receipts were business turnover, not unexplained cash credits. The reassessment proceedings were invalid due to lack of opportunity. The CIT(Appeals) should have accepted its books and records. Revenue's contentions (implied from grounds): The revenue argued that the CIT(Appeals) erred in estimating profit at 15% ad-hoc without proper basis, and in admitting additional evidence without AO's verification. The rejection of books was justified. The reassessment proceedings were valid.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE,Section 144,Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI SIDDHARTHA NAUTIAL & SHRI PRABHASH SHANKAR

For Respondent: Shri Basavaraj Hiremath, CIT DR

आदेश / ORDER PER SHRI SIDDHARTHA NAUTIAL, JUDICIAL MEMBER :

This appeal is filed by the Assessee against the order of Ld. NATIONAL FACELESS APPEAL CENTRE / Ld. CIT (A) order dated 11-Mar-2026 for the Assessment Year 2020-21. The revenue has raised the following grounds of appeal:

i. Whether on the facts and in the circumstances of the case and in law the Ld. CIT Appeal erred in sustaining the assessment hy estimating net profit @15 percent on total sales of Rs. 128454233 on ad-hoc basis without any comparable cases material evidence OR proper basis for such estimation.

ii. Whether on the facts and in the circumstances of the case and in law the Ld. CIT Appeal erred in rejecting the books of account audited financial statements and reconstructed records submitted by the assessee without pointing out any specific defects OR discrepancies therein and without appreciating that the receipts represented business turnover and not unexplained cash credits under section 68 of the Act.

iii. Whether on the facts and in the circumstances of the case and in law the Ld. CIT Appeal erred in confirming the validity of reassessment proceedings initiated under section 147 0R 148 and 3 assessment framed under section 144 without appreciating that sufficient opportunity of being heard was not provided to the assessee due to seizure of records by the Economic Offence Wing EOW and other unavoidable circumstances.

iv. The appellant craves leave to add alter amend OR withdraw any of the above grounds at OR before the time of hearing.

2.

The brief facts of the case are that the assessee, Glorious Construction Company Private Limited, is engaged in the business of construction and real estate development. The assessment had arisen from information available with the Department showing sale consideration of ₹4,50,45,000/- reported under section 194-IA, sale of immovable property of ₹6,12,58,000/- and sales of ₹2,21,51,233/- reported in GSTR-1 and GSTR-3B. Since the assessee had neither filed its return of income nor responded to the notices issued during the reassessment proceedings, the Assessing Officer treated the aggregate amount of ₹12,84,54,233/- as unexplained cash credit under section 68 read with section 115BBE of the Act. For A.Y. 2020-21, the Assessing Officer completed the assessment under section 147 read with section 144 of the Act and assessed the total income at ₹12,84,54,233/-.

3.

The assessee carried the matter in appeal before the learned CIT(Appeals).

4.

During the appellate proceedings, the assessee filed party-wise details of sale of immovable properties, financial statements, Profit & Loss Account, audit report and other supporting documents. The assessee submitted that its books of account and other records had been seized by the Economic Offence Wing of the Government of Maharashtra and, therefore, the relevant documents could not be produced during the assessment proceedings. The learned CIT(Appeals) admitted these documents as additional evidence under Rule 46A and called for a remand report from the Assessing Officer. The remand report was initially required by 13.02.2026 and a reminder was thereafter issued on 19.02.2026 requiring the report by 26.02.2026. However, no remand report was submitted.

5.

The learned CIT(Appeals), therefore, proceeded to decide the appeal on the basis of the material available before him. He held that the amount of ₹12,84,54,233/- treated by the Assessing Officer as unexplained cash credit represented business receipts of the assessee and could not be taxed in its entirety under section 68 of the Act. At the same time, the learned CIT(Appeals) found that the reconstructed books of account and financial statements were not completely reliable. He therefore estimated the business income at 15% of the total sales of ₹12,84,54,233/-, resulting in income of ₹1,92,68,135/-. The addition under section 68 of the Act was accordingly substantially reduced.

6.

The learned CIT(Appeals) also upheld the validity of the reassessment proceedings under sections 147/148 of the Act and dismissed the grounds relating to levy of interest. The appeal of the assessee was accordingly partly allowed.

7.

The Department is in appeal before us against the order passed by the learned CIT(Appeals) allowing substantial relief to the assessee.

8.

We have considered the material available on record. The grievance of the Department in Ground Nos. 1 and 2 is, in substance, that the learned CIT(Appeals) granted relief on the basis of additional evidence and thereafter estimated the income at 15% of the total receipts without proper verification by the Assessing Officer.

9.

There is no dispute that important documents were produced during the appellate proceedings and were admitted as additional evidence under Rule 46A. The learned CIT(Appeals) also considered it necessary to call for a remand report. Though the Assessing Officer failed to furnish the report despite reminder, the fact remains that the additional documents were never examined by him before substantial relief was granted.

This is of importance because the receipts of ₹12,84,54,233/- had arisen 10. from different sources of information like section 194-IA data, sale of immovable property and GST returns. Before treating the entire amount as business turnover, it was necessary to for CIT(Appeals) to verify the nature of the receipts and whether there was any duplication or overlapping between the figures.

11.

We also find that while the learned CIT(Appeals) himself doubted the reliability of the reconstructed books and financial statements, he proceeded to estimate the income at 15% of the total sales. However, CIT(Appeals) did not refer to any comparable case, past profit rate of the assessee or other specific material for adopting the rate of 15%.

12.

In these circumstances, we are of the view that the matter requires proper factual verification. Accordingly, Ground Nos. 1 and 2 are restored to the file of the learned CIT(Appeals) for de-novo consideration. The learned CIT(Appeals) shall forward the additional evidence to the Assessing Officer and call for a remand report. The Assessing Officer shall verify the party-wise sale transactions, the receipts reflected under section 194-IA, the sale of immovable properties, the turnover reported in the GST returns and whether there is any duplication or overlapping in the figure of ₹12,84,54,233/-.

13.

The learned CIT(Appeals) shall thereafter consider the remand report, give the assessee an opportunity to respond to the same and decide the issues afresh in accordance with law. The CIT(Appeals) shall also examine the question regarding reliability of the reconstructed books and, if required, the appropriate basis for estimation of income.

14.

As regards Ground No. 3, we find that the learned CIT(Appeals) has already upheld the validity of the reassessment proceedings. There is therefore no finding adverse to the Department on this issue. Ground No. 3 is accordingly dismissed.

15.

Ground No. 4 is general in nature and requires no separate adjudication.

16.

In the result, the appeal of the Department is allowed for statistical purposes.

Order pronounced in the open court on 23.09.2026

Sd/- Sd/- PRABHASH SHANKAR SIDDHARTHA NAUTIYAL ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 23.09.2026 KRK, SPS Copy to:

1 Glorious Construction Company Pvt Ltd.,

ITO 2 Room No. 15, First Floor, Aayakar Bhawan, Mumbai – 400020.

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAIBENCH 5 GUARD FILE

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