This case involved Shiv Shakti Constructions, a firm engaged in government contracts, and the Assistant Commissioner of Income Tax (ACIT), Central Circle-11, Noida, focusing on the assessment year 2018-19. The primary issue under consideration was the accuracy of the financial accounts and the authenticity of the sundry creditors listed by Shiv Shakti Constructions. A significant volume of transactions and the complexities of government contract executions were examined in detail.
The case, numbered ITA 2557/DEL/2022, was heard by the Income Tax Appellate Tribunal, Delhi Bench ‘G’. The bench consisted of Judicial Member Shri Challa Nagendra Prasad and Accountant Member Shri Pradip Kumar Kedia. The dispute centered on the rejection of books of account by the tax authorities and the resultant tax implications for the company.
Several critical issues were discussed, including the rejection of books of account, the treatment of sundry creditors, and the adherence to the provisions of Section 40A(3) of the Income Tax Act. The tribunal scrutinized the legitimacy of the creditors and the purchases reported by the company. The ruling emphasized the need for proper documentation and verification of transactions to establish the genuineness of the business expenditures claimed by Shiv Shakti Constructions.
The tribunal’s decision provided clarity on the application of income tax laws to transactions involving government contracts. It highlighted the importance of maintaining transparent and verifiable accounts to avoid disputes with tax authorities. The case serves as a precedent for similar disputes and offers insights into the handling of tax assessments involving complex business transactions.
Date of Order: 2023-07-27
Income Tax Appraisal Tribunal Decision on Shiv Shakti Constructions vs. ACIT for AY 2018-19
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