GOVINDAM BRJ INFRA PROJECTS PRIVATE LIMITED,JAIPUR vs. ACIT/DCIT CIR-6,JPR, JAIPUR

ITA 1115/JPR/2025Status: DisposedITAT Jaipur15 October 2025AY 2018-1925 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal decided to delete the trading addition sustained by the CIT(A) for AY 2018-19. The assessee, engaged in civil construction, declared a Net Profit (NP) of 4.26% on a turnover of Rs. 17,97,27,307/- for AY 2018-19, which was higher than the NP of 3.04% declared for the immediately preceding assessment year. The AO rejected the books of account under Section 145(3) due to alleged unreliability and estimated the business income by applying 8% of the turnover, resulting in an addition of Rs. 1,43,78,184/-. The CIT(A) confirmed the addition. The Tribunal noted that the AO, after rejecting the books, computed the income by considering the book results, making an ad-hoc addition of Rs. 91,05,710/- to the declared income, which was not in accordance with the Act. Since the NP declared for the current year was better than preceding years, even after a heavy increase in turnover, no trading addition was called for after rejection of books. Therefore, the trading addition was deleted. Consequently, the issue of rejection of books of account became academic. The Tribunal allowed both appeals of the assessee. Issues related to labour expenses, sundry creditors, penalty, and interest for AY 2017-18, and the violation of natural justice for AY 2018-19, were not explicitly decided as the primary addition was deleted, rendering them academic.

What were the facts?

The assessee, Govindam BRJ Projects Private Limited, filed appeals for assessment years 2017-18 and 2018-19 against orders of the CIT(A), NFAC, Delhi, dated March 24, 2025. The appeals were filed with a delay of 68 days. The assessee's grounds of appeal for AY 2017-18 included an ad-hoc disallowance of 10% of labour expenses, treating sundry creditors as unexplained cash credit, initiation of penalty proceedings, and charging of interest. For AY 2018-19, grounds included rejection of books of accounts under Section 145(3), estimation of income at 8% of turnover, violation of principles of natural justice due to a short notice period during the COVID-19 wave, and consequential interest and penalty proceedings. The Tribunal condoned the delay, citing the decision in Collector, Land Acquisition vs. Mst. Katiji.

What were the issues?

1. Whether, on the facts and in law, the learned AO and CIT(A) erred in making an ad-hoc disallowance of 10% of labour expenses of Rs. 9,71,272/- for AY 2017-18 without pointing out specific defects or conducting proper verification, making the disallowance arbitrary and not based on material evidence (Section 143(3))? 2. Whether, on the facts and in law, the learned AO and CIT(A) erred in treating sundry creditors of Rs. 18,24,000/- as unexplained cash credit for AY 2017-18 based on mere suspicion without establishing that the creditors are non-existent, and failing to discharge their burden of proof after the assessee provided primary details (Section 68)? 3. Whether, on the facts and in law, the learned AO erred in initiating penalty proceedings under Section 270A(1) r.w.s. 270A(9)(a) and Section 271AAC for AY 2017-18, which are premature and bad in law as the substantive additions are disputed (Section 270A, Section 271AAC)? 4. Whether, on the facts and in law, the learned AO and CIT(A) erred in charging interest under Section 234B and 234D for AY 2017-18, which are consequential and not sustainable if additions are deleted (Section 234B, Section 234D)? 5. Whether, on the facts and in law, the learned CIT(A) erred in upholding the rejection of books of accounts under Section 145(3) for AY 2018-19 when they were regularly maintained and audited under Section 44AB, and the AO failed to point out specific defects? 6. Whether, on the facts and in law, the learned CIT(A) erred in confirming the estimation of income at 8% of turnover and making an addition of Rs. 91,05,708/- for AY 2018-19 without considering the nature of infrastructure and road construction business and without comparable cases or industry standards (Section 145)? 7. Whether, on the facts and in law, the learned CIT(A) erred in dismissing the ground relating to violation of principles of natural justice for AY 2018-19, as the show cause notice allowed only 7 days during the peak of the COVID-19 pandemic, and the adjournment request was not considered (Section 143(3))? Assessee's Contentions: - Grounds 1 & 2 (AY 2017-18): Disallowance and cash credit additions were arbitrary, based on suspicion, and lacked material evidence. Penalty and interest were consequential and premature. - Grounds 1-8 (AY 2018-19): Books of accounts were regularly maintained and audited; rejection under Section 145(3) was mechanical. Estimation of income at 8% was arbitrary and not based on comparable cases or industry standards. Principles of natural justice were violated due to a short notice period during COVID-19. Interest and penalty proceedings were unsustainable. Revenue's Contentions: - The ld. DR relied on the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 145(3),Section 143(3),Section 250,Section 270A,Section 271AAC,Section 234B,Section 234D,Section 44AB,Section 144,Section 68,Section 264,Section 234A,Section 271A,Section 272A(1)(d)

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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR

Before: DR. S. SEETHALAKSHMI, JM & SHRI GAGAN GOYAL, AM

For Respondent: Shri Gaurav Awasthi, JCIT
Hearing: 11/09/2025Pronounced: 15/10/2025

PER: DR. S. SEETHALAKSHMI, J.M. These are two appeals filed by the assessee against two separate orders of ld. CIT (A), National Faceless Appeal Centre (NFAC) Delhi dated 24.03.2025 passed under section 250 of the I.T. Act, 1961, for the assessment years 2017-18 and 18-

19.2.

The assessee has raised the following grounds of appeal :- ITA No. 1114/JPR/2025 AY 2017-18 : "1

The order continues below.

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