I.P. Constructions Private Limited Vs ACIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) in Delhi has deleted a tax addition of ₹3.92 crore against I.P. Constructions Private Limited, ruling that the Assessing Officer (AO) had made a fundamental arithmetic mistake. The addition was originally made for alleged suppressed revenue in a construction project for the assessment year 2017-18.
The case originated from an assessment under Section 143(3), where the AO had calculated the percentage of project completion as 90.73%. This calculation led to the significant addition to the company’s income. The ITAT, upon reviewing the figures cited in the assessment order itself, found a clear discrepancy. The documents showed that the expenses incurred on the project were ₹63.42 crore against an estimated total cost of ₹78.97 crore. A correct calculation of these figures, as pointed out by the tribunal, revealed the actual completion percentage to be 80.31%, not 90.73%.
The tribunal noted that the AO had mechanically rejected the company’s subsequent application for rectification under Section 154 without providing any reasoned explanation. The ITAT deemed this mechanical order to be illegal and set it aside, concluding that the addition of ₹3.92 crore was based on a flawed calculation and should therefore be deleted.
