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2026 Supreme(Online)(ITAT) 8064
INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
Anubhav Sharma, Judicial Member, Manish Agarwal, Accountant Member
Apace Developers Pvt.Ltd. – Appellant
Versus
ITO – Respondent
ITA No.204/Del/2025 [Assessment Year : 2016-17] | ITA No.856/Del/2025 [Assessment Year : 2016-17]
For the Appellants/Petitioners: Akhilesh Kumar, Govind Agarwal
For the Respondents: Jitender Singh
Under S.68, assessee discharges onus by proving identity, genuineness, and creditworthiness of mobilization advances; no addition if evidenced despite fund utilization.
Headnote:Under the Income Tax Act, 1961, particularly sections 68, 143(3), and 250, the assessee company engaged in civil contracting filed return declaring income of Rs.12,73,060/- for AY 2016-17, selected for scrutiny with additions made to assess income at Rs.15,05,69,686/-. CIT(A) partly allowed appeal. Tribunal found assessee discharged onus under S.68 by proving identity, genuineness, and creditworthiness of mobilization advances via confirmations, bank statements, and agreements, despite immediate transfers or timing issues. Issues framed around additions u/s 68 for unexplained advances, disallowance of WIP expenses, TDS credit, turnover discrepancies with VAT returns, and application of percentage completion method. Ratio: For S.68 addition, only identity, transaction genuineness, and lender creditworthiness required; utilization not relevant if evidenced, as held in precedents; advances adjusted later against running bills upheld deletion of additions. WIP expenses remanded for verification; turnover difference justified by accounting methods; TDS credit deferred to adjustment year. Assessee's appeal partly allowed (S.68 additions deleted, TDS credit directed, WIP remanded); Revenue's appeal dismissed.
| Table of Content |
|---|
| 1. background of cross appeals against cit(a) order. (Para 2 , 3 , 4 , 5) |
| 2. wip expenses remanded for verification and carry forward. (Para 6 , 7 , 8 , 9 , 10) |
| 3. s.68 addition deleted; mobilization advance genuineness proved. (Para 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18) |
| 4. tds credit on advances deferred to adjustment year. (Para 19 , 20) |
| 5. turnover-vat difference upheld under percentage completion. (Para 22 , 23 , 24 , 25) |
| 6. other s.68 advances upheld deleted; onus discharged. (Para 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33) |
ORDER PER MANISH AGARWAL, AM :
The captioned cross appeals are filed by the assessee and the Revenue against the order of Commissioner of Income Tax (Appeals) National Faceless Appeals Centre (NFAC), New Delhi [“ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (the Act) dated 18.12.2024 arising out of the assessment order passed u/s 143(3) of the Act dated 31.12.2018 for Assessment year 2016-17.
2. Brief facts of the case are that assessee is a company, engaged in the business of civil contractor and e-filed its return of income on 12.05.2017, declaring total income at Rs.12,73,060/-. The case of the assessee was selected for scrutiny under CASS and notice u/s 143(2) was issued on 20.08.2018 followed by notices u/s 142(1) of the Act along with questionnaires from time to time. In response, the assessee filed the replies and after considering the replies filed by the assessee, the assessment order was passed by making various additions / disallowances and the total income of the assessee stood assessed at Rs. 15,05,69,686/-.
3. Against the said order, the assessee filed an appeal before the ld. CIT(A) who partly allowed the appeal of the assessee.
4. Aggrieved by the said order, both the assessee and the revenue have filed the appeals before the Tribunal by taking various grounds of appeal.
5. First, we take assessee’s appeal in ITA No. 204/Del/2025.
ITA No. 204/Del/2025 [Assessment Year 2016-17] (Assessee’s Appeal)
6. The Ground of appeal No.1 is general in nature, needs no adjudication.
7. The Ground of appeal Nos. 2 & 3 are with respect to action of Ld. CIT(A) in not allowing the carried forward of expenses of Rs. 1,32,34,888/- forming part of the work in progress to next year though the assessee has accepted capitalization of the same into the work in progress.
8. Before us, ld. AR for the assessee submits that during thecourse of assessment proceedings, due to the ill health of one of theDirectors, the relevant details could not be filed however, in remandproceedings, all the details were filed and it was admitted by theassessee that the expenses are not required to be allowed as revenueexpenditure since no income was offered on the project on which theywere incurred. The assessee claimed that the project was completedless than 25%, therefore, no revenue was recognized, in terms of theguidance note issued by the Institute of Chartered Accountants ofIndia. Ld. AR submits that since these expenses are forming part ofthe work in progress and therefore, the same deserves to be carriedforward to next year. However, the ld. CIT(A) though had acceptedassessee’s claim of not allowing the same as revenue expenditure buthad not allowed the same to be carried forward to next year. Herequested that the same be allowed to be carried forward to next year.
9. On the other hand, Ld. CIT DR submits that the assessee hasfailed to file the details before the year with respect to the expensesclaimed, therefore, the same remained unverified on the part of theAssessing Officer. He thus, requested that the action of the lowerauthorities in not allowing carried forward of the said expensedeserves to be uphold.
10. Heard the parties and perused the material available on record. In the instant case, the assessee has failed to produce bills and vouchers of the expenses claimed on the project on which though no income was offered as the project has not completed up to 25%. However, since these expenses are forming part of
