आयकर अपीलीय अिधकरण, इंदौर (cid:586)ायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI B.M. BIYANI, ACCOUNTANT MEMBER AND SHRI PARESH M JOSHI, JUDICIAL MEMBER ITA No.170/Ind/2025 (Assessment Year : 2017-18)

Riddhi Siddhi Realty, बनाम/ Income Tax Officer

39 Shardhanand Marg, Vs. 4(1), Indore Indore (PAN:AALFR4212J)

(Assessee/Appellant) (Revenue/Respondent)

Assessee by Shri Ram Gilda, AR Revenue by Shri Ashish Porwal, DR Date of Hearing 30.09.2025 Date of Pronouncement 06.10.2025 आदेश / O R D E R Per Paresh M Joshi, J.M:

This is an appeal filed by the assessee Under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as the “Act” for sake of brevity) before this Tribunal. The assessee is aggrieved by the order bearing Number ITBA/APL/S/250/2024- 25/1072525205(1) dated 24.01.2025 passed by the Ld. CIT(A) u/s 250 of the Act which is hereinafter referred to as the “Impugned order”. The relevant Assessment Year is 2017-18 and the corresponding previous year period is from 01.04.2016 to 31.03.2017.

2. FACTUAL MATRIX 2.1 That as and by way of an intimation order u/s 143(3) of the Act, dated 21.12.2019, the assessee’s total income exigible to tax was computed at Rs.37,990/-. In para 8 of the aforesaid order following is recorded:-

“8. Therefore considering the above facts remaining amount of Rs.7,61,540/-(Rs.10,04,045/ Rs. 2,42,505/-)claimed by the assessee in P& L A/c for the F.Y.2016-17 hereby disallowed since these amount assessee paid in F.Y.2015-16.so an amount of Rs.7,61,540/- added to the total income of the assessee. Penalty proceeding u/s 270A of the Income Tax Act are initiated for under-reporting of Income by assessee.

9. Subject to the above remarks and on the basis of data made available on records, total income is determined as under:

Income as per return of income:- (-)Rs,7,23,551/-

Add:

(i) As discussed above Rs. 7,61,540/-

Assessee Income Rs 37,990/-

10. Assessed u/s 143(3) of the I.T. Act 1961 and Give credit for prepaid taxes, if any, after due verification. Charge Interest u/s 234-A/B/C and/or D of the Act, as the case may be. Issue demand notice and challan accordingly. I.T.N.S. 150 forms part I.T. Act”.

That the aforesaid assessment order dated 21.12.2019 is hereinafter referred to as the “impugned assessment order”.

2.2 That the assessee being aggrieved by the “impugned intimation order” prefers the first appeal u/s 246A of the Act before the Ld. CIT(A) who by the “impugned order” has dismissed the 1st appeal of the assessee on the grounds and reasons stated therein. The core grounds and reasons for the dismissal of the first appeal of the assessee was as under:-

“However, after a detailed examination of the facts and circumstances, the following observations are made:

i) Principle of Matching Income and Expenditure:

The principle of matching income and expenditure requires that an expenditure related to a particular financial year must be accounted for in the same year to ensure a true and fair representation of financial statements. Failure to adhere to this principle results in a distortion of taxable income for the relevant year. In the present case, the payment to contractors pertained to A.Y. 2016-17 but was neither claimed as an expense in that year nor recorded in the profit and loss account. The appellant's argument that the tax effect remains unchanged because of losses in both years is irrelevant, as income-tax law does not permit carrying forward expenditure or retroactively adjusting expenses in a subsequent year without a valid statutory mechanism.

It is also noted that the assessment for A.Y. 2016-17 was completed under scrutiny and the same has attained finality. Apparently no action permissible under Income Tax Act, 1961 was taken to correct this error while bar due to limitation was not activated. The Income Tax Act does not provide for the shifting of expenses from one assessment year to another based on convenience or error.

ii) Relevance of Losses in Both Years:

The ap