MOHAMMEDI Z. KANCHWALA,MUMBAI vs. ITO 15(3)(2)( ERSTWHILE), MUMBAI

This is an appeal filed by the assessee against the order of CIT(A)- 32, Mumbai dated 16/12/2015 for A.Y.2010-11 in the matter of order passed u/s.143(3).

First grievance of assessee relates to addition of Rs.18,07,279/- towards suppression of sales.

AO had made addition of Rs.26,86,051/- on account of suppression of sales. By the impugned order, CIT(A) reduced the addition to the extent of Rs.18,07,279/- by observing that AO had not given credit of work in Mohammedi Z Kanchwala progress of Rs.8,78,772/-. Assessee is in further appeal before us against addition of Rs.18,07,279/- so sustained by CIT(A).

At the outset, learned AR placed on record, the order of the Tribunal for the A.Y.2011-12 dated 04/04/2017 in assessee’s own case for the A.Y.2011-12 wherein under similar facts and circumstances addition was restricted to the extent of 12.79% of such suppressed sales. The precise observation of the Tribunal was as under:- “10. We have heard the rival contentions of both the parties. Looking to the facts and circumstances of the case, we find that during the course of hearing the Ld. A.R. specifically submitted that Suraj Estate Developers Pvt. Ltd. had to carry out the work but he has not carried out the work. Therefore, whatever amount was to be paid to him was shown as advance and the same has been shown as advance in the books of account. Therefore, entire advance cannot be treated as income of the assessee. Therefore, in the interest of justice and fair play, we confirm the GP at the rate of 12.79% on the amount of Rs.51,66,122/- on account of suppression of sales and AO is directed accordingly. In the result, appeal of the assessee is partly allowed.”

We had carefully gone through the order of the authorities below as well as the order of the Tribunal and found that exactly similar issue was considered by the Tribunal and addition was restricted to the extent of G.P. of 12.79% embedded in such advance. Respectfully following the order of the Tribunal, we direct the AO to restrict addition to the extent of G.P. of 12.79% on Rs.18,07,279/-. We direct accordingly.

Next grievance of assessee relates to disallowance u/s.40(a)(ia) towards tempo and labour charges. This issue is also covered by the order of the Tribunal in assessee’s own case for the A.Y.2009-10 dated Mohammedi Z Kanchwala 06/05/2016, wherein the matter was restored back to the file of the AO with the following direction. “7. The next issue relates to the addition made u/s 40(a)(ia) of the Act. The Ld A.R., by placing reliance on the decision dated 26-08-2015 rendered by Hon’ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township P Ltd (ITA No.160/2015), submitted that the proviso inserted by Finance Act, 2012 in sec. 40(a)(ia) is retrospective in nature and hence this addition requires fresh examination in the light of newly inserted provision. We find force in the said submission. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to examine the same afresh in the light of decision rendered by the Hon’ble Delhi High Court referred above and the newly inserted proviso to sec. 40(a)(ia) and take appropriate decision in accordance with the law.”