Shivam Builders Private Limited Vs DCIT (ITAT Ahmedabad)
Summary: The Ahmedabad Bench of the Income Tax Appellate Tribunal dismissed the appeal filed by Shivam Builders Private Limited for Assessment Year 2015-16 and upheld the assessment made by the Assessing Officer.
The assessee had declared a loss of Rs.3,29,55,888/- on turnover of Rs.5,40,25,457/-, resulting in a negative net profit rate of approximately 61%, as against a net profit of Rs.26,21,429/- on turnover of Rs.1,47,09,632/- in the preceding year. The case was selected for complete scrutiny and the Assessing Officer called for several details relating to the assessee’s construction projects, work-in-progress, purchases, expenses and supporting documents.
The assessee challenged the jurisdiction of the DCIT to issue notice under section 143(2), relying upon CBDT Instruction No. 01/2011 and contending that the threshold of Rs.30 lakh was not crossed because the assessee had returned a loss. The Tribunal rejected this objection. Relying upon the principle recognised by the Supreme Court in UCO Bank v. CIT and Keshavji Ravji & Co. v. CIT, and particularly upon CIT v. Harprasad & Co. P. Ltd. and CIT v. Gold Coin Health Food Pvt. Ltd., the Tribunal held that income under the Income-tax Act includes loss.
Accordingly, the jurisdictional threshold under Instruction No. 01/2011 applied to the disclosed loss as well, and the notice issued by the DCIT was held valid.
