MADHAV STRUCTURAL ENGINEERING P. LTD,MUMBAI vs. DCIT 8(2), MUMBAI

We heard the parties and perused the record. The assessee is engaged in the business of civil construction related to Infrastructure Projects such as construction of new roads, improvement of existing roads, laying of pipelines for water supply and sewege disposal etc.

For the year under consideration, the assessee filed a return of income declaring a loss of Rs.4.83 crores. Since the assessee did not respond to the notices issued by the AO, the AO completed the assessment to the best of his judgment by determining the total income of the assessee as NIL, meaning thereby, the AO disallowed the entire amount of loss declared by the assessee.

In the appellate proceedings, the ld.CIT(A) noticed that the assessee has continued to incur losses in the subsequent years also and accordingly took the view that the adjudication of the appeal of the assessee would be an academic exercise. Accordingly, he dismissed the appeal filed by the assessee.

The contention of the assessee is that it had won a contract from Maharashtra State Road Development Corporation (MSRDC) for improvement of certain existing roads. Since the assessee got such a kind of big contract for the first time, it had invested a sum of Rs.2.00 crores in purchasing machinery and it also availed a loan of Rs.4.00 crores from banks. However, due to certain operational difficulties, the assessee could not complete the contract in time and the work already executed was also found to be below the accepted standards. Hence, MSRDC terminated the work order and the assessee had to pursue the matter with them. Since the termination of the contract resulted in huge loss to the assessee, the ld.AR submitted that the assessee could not co-operate with the AO, since it was involved in litigation with MSRDC. Accordingly, the ld. AR prayed that the assessee should be provided one more opportunity to produce all the details before the AO.

The ld. DR did not object to the plea raised by the ld.AR.

Having heard the rival contentions, we are of the view that there was a reasonable cause for the assessee in not co-operating with the AO. Further, we have also noticed that the ld.CIT(A) has not adjudicated the issue on merits. Under these set of facts, we are of the view that all the issues require fresh examination at the end of the AO. Accordingly, we set aside the order of ld.CIT(A) and restore all the issue to the file of the AO for considering them afresh. The assessee is also directed to extend full cooperation to the assessing officer by providing all the information and explanations that may be called for by him.

In the result, the appeal filed by the assessee is treated as allowed for statistical purpose. Pronounced accordingly on 3rd Feb, 2016. घोषणध खुरे न्मधमधरम भें ददनधंकः 3rd Feb, 2016 को की गई । (PAWAN SINGH) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER भुंफई Mumbai: 3rd Feb, 2016. व.नन.स./ SRL , Sr. PS आदेश की प्रतिलऱपप अग्रेपिि/Copy of the Order forwarded to : अऩीरधथी / The Appellant 1. प्रत्मथी / The Respondent. 2. आमकय आमुक्त(अऩीर) / The CIT(A)- concerned 3. आमकय आमुक्त / CIT concerned 4. ववबधगीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भुंफई /

DR, ITAT, Mumbai concerned गधर्ा पधईर / Guard file. 6. 4 आदेशधनुसधय/ BY ORDER,सहधमक ऩंजीकधय (Asstt.