AADI PROCON PRIVATE LIMITED,NAVRANPURA vs. INCOME TAX OFFICE WARD 1(1)(1), AHMEDABAD, AMBAWADI

ITA 1403/AHD/2025Status: DisposedITAT Chandigarh24 September 2026AY 2016-1713 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the Assessing Officer had sufficient justification to question the reliability of the disclosed sale consideration and reject the books of account under Section 145 of the Act. This was based on cumulative circumstances including substantial variation in sale rates, discrepancies between financial statements and party-wise sales, issues with booking advances and purchasers, the disclosed sale rate being lower than the average inventory rate, a prior year loss, and higher profitability of a sister concern. However, the Tribunal found that the AO's estimation of sale consideration at Rs. 21,03,80,000 was not adequately supported. The estimation of profit margins (20% and 5%) lacked a clear working or comparable market evidence. The assessee was also not given an opportunity to explain the average inventory cost or the AO's estimation methodology. Therefore, the issue of suppressed sale consideration and consequential profit was restored to the AO for fresh examination. The AO was directed to provide an opportunity to the assessee, examine unit-wise transactions, cost records, sale deeds, and other relevant material to determine suppressed consideration based on cogent material and a reasonable methodology, considering individual unit characteristics. The CIT(A)'s order was set aside.

What were the facts?

The assessee, Aadi Procon Private Limited, filed its return for AY 2016-17 declaring an income of Rs. 12,52,520. The case was selected for limited scrutiny concerning sales turnover. The assessee, following the project completion method, sold commercial units in the Ratna High Street project. The Assessing Officer (AO) observed significant variations in the per square foot selling rates for units on the same floor. The AO initially proposed to re-calculate sales based on the highest rate per floor, leading to a proposed difference of Rs. 6,49,35,802. The assessee explained that rates vary due to location, payment terms, bargaining, etc. The AO rejected the books of account due to discrepancies between audited financials and party-wise sales, and variations in booking advances and purchasers. The AO estimated suppressed sales at Rs. 3,69,21,300, leading to an addition and assessment at Rs. 3,81,73,820. The CIT(A) dismissed the assessee's appeal.

What were the issues?

1. Whether the addition of Rs. 3,69,21,300 on account of suppressed sales, confirmed by the CIT(A), is justified, considering the assessee's explanations and documentary evidence regarding variances in sale prices? The assessee argued that detailed justifications were provided, and the addition is illegal and unlawful. The revenue contended that the AO's findings were based on material on record. 2. Whether the CIT(A) erred in confirming the addition of Rs. 3,69,21,300 without considering that sale considerations were equal to or higher than the prevailing Jantri rates, and in the absence of contrary evidence from the AO? The assessee argued that sale deeds reflect the actual consideration received, and the addition is unsustainable. The revenue argued that the AO had sufficient grounds to doubt the disclosed sale consideration. 3. Whether the CIT(A) erred in upholding the rejection of the assessee's books of account and the consequent addition of Rs. 3,69,21,300? The assessee contended that the rejection was without basis, justification, or an opportunity to be heard. The revenue supported the AO's decision to reject the books due to discrepancies.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 145

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Sulabh Padshah, AR
For Respondent: Shri Hrishikesh Hemant Patki, SR-DR
Hearing: 28.07.2026Pronounced: 24.09.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the Assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 08.05.2025 for the Assessment Year (A.Y.) 2016-17 in the proceeding u/s 143(3) of the Income Tax Act [hereinafter referred as “The Act”].

2.

The brief facts of the case are that the assessee had filed its return of income for A.Y. 2016-17 on 11.10.2016 declaring total income of Rs. 12,52,520/-. The case was selected for limited scrutiny under CASS to Aadi Procon Private Limited Vs ITO, AY- 2016-17 2 examine the sales turnover and the income disclosed th

The order continues below.

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