Kireet Kedarnath Rai Vs DCIT (ITAT Mumbai)
Mumbai ITAT condoned a delay of 319 days in filing the appeal and proceeded to decide the matter on merits.
On merits, the Tribunal dealt with an adhoc addition of 1% of closing stock/work-in-progress (₹5,67,458) made by the AO and sustained by CIT(A) in the case of a civil contractor executing works for PWD, CPWD & AAI. The ITAT noted that the assessee had furnished complete job-wise details, running bills, and bank statements during assessment proceedings, and that the books of account were never rejected.
Holding that estimation of closing stock without rejecting books and without any rational basis is arbitrary, the Tribunal ruled that the AO cannot resort to adhoc additions merely on suspicion. Accordingly, the addition of ₹5,67,458 was deleted, and the appeal of the assessee was allowed in full.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal of the assessee was filed against the order of the National Faceless Appeal Centre(NFAC), Delhi [hereinafter, ‘Ld.CIT(A)] order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) for the Assessment Year 2018-19, date of order 18/07/2024. The impugned order was emanated from the order of the National e-Assessment Centre, Delhi (in short, ‘Ld.AO’) passed under section 143(3)r.w.s. 143(3A) and 143(3B) of the Act, date of order 29/01/2021.
