Shriwin Construction Vs Assessment Unit (Madras High Court)
The petitioner, engaged in civil and structural works contracts, filed its AY 2024-25 return under Section 139(1) of the Income Tax Act, 1961, declaring total income of ₹12.50 lakh. During scrutiny, the Assessing Officer noticed a difference between receipts reported in Form 26AS and income offered for taxation. The petitioner stated that the difference represented advances received for under-construction projects.
The petitioner submitted that such advances should not be treated as income until completion of the projects. Alternatively, it contended that related expenditure should be considered before determining taxable income. The petitioner stated that its disclosed profit was about 7.6% and offered to remit ₹6.13 lakh as a condition for remand, representing tax if 10% profit were attributed to the differential receipts of ₹2,04,31,471.
The Madras High Court noted that the assessment order had treated the entire difference of ₹2,04,31,471 between the profit and loss account and Form 26AS as undisclosed income. This resulted in a net tax liability of ₹75,76,373 and total demand of ₹90,74,690. The Court observed prima facie that expenditure relating to the differential amount reflected in Form 26AS had not been considered.
Accordingly, subject to the petitioner remitting ₹6.13 lakh within 30 days, the Court set aside the impugned assessment order and remanded the matter to the Assessment Unit for reconsideration. The petitioner was to receive a reasonable opportunity, including a video-conference hearing, and be permitted to file its profit and loss account. A fresh order was directed to be issued within three months from remittance of the amount. The writ petition was disposed of with no order as to costs.
