V RAJ BUILDCON,BHIWANDI vs. INCOME TAX OFFICER, KALYAN

PER SANDEEP GOSAIN, JM: The present appeal has been filed by the assessee challenging the impugned order dated 22.01.2026 passed u/s 250 of the Income Tax Act, 1961 ('the Act'), by the CIT(A) for the assessment year 2020-21. The following grounds raised by assessee are reproduced below:- i. That on the facts and circumstances of the case, the learned CIT(A) erred in law and on facts in upholding the addition of 2 ₹11,31,453 made by the Assessing Officer under Section 69C of the Income-tax Act, 1961 ii. That the learned CIT(A) erred in dismissing the appellant's explanation and documentary evidence which clearly established the genuineness of purchases and source of expenditure. iii. That the learned CIT(A) erred in confirming the addition without appreciating that all construction expenses were recorded in regular books of account, supported by valid bills/invoices, agreements, and payment made through banking channels, hence not unexplained expenditure under Section 69C. iv. That the learned CIT(A) failed to consider that reliance on third-party statement which was later retracted is not a valid basis to disbelieve the appellant's books and documents. v. That the learned CIT(A) erred in law by not conducting or directing independent verification and by merely depending upon suspicion and surmises. vi. That the learned CIT(A) erred in law and on facts in dismissing the appeal without appreciating that Section 69C is not invocable where source is satisfactorily explained and transactions are genuine. vii. That the order of learned CIT(A) is bad in law, arbitrary, and without any legal basis and therefore deserves to be quashed and set aside. viii. The Appellant craves leave to add, amend, or alter any ground at or before the hearing of this appeal.

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4 bogus invoices/bills on behalf of the parties with respect to sub-contract work given to them. Therefore, on these basis, and as a result of investigation conducted, the AO was of the view that since the assessee had made transactions with SCPL, thus, additions of Rs.11,31,453/- was made which was also upheld by Ld. CIT(A) whereas on the contrary, Ld. AR specifically submitted that the assessee is a firm, engaged in the business of Builders & Developers and was developing an SRA project where it had hired services of SCPL for RCC related works. It was further submitted that status of the assessee is not that of sub-contractor.

5 person of SCPL, it was recorded under Section 132(4) of the Act, in which it nowhere mentions the name of the assessee for providing any bogus billing and even no incriminating material was found during the course of search, suggesting any co-relation between the assessee or SCPL. Even otherwise, no such incriminating material, if any, found during the search was ever shared with the assessee and even no opportunity to cross-examine the persons whose statements were believed by the AO during the assessment proceedings, were provided to the assessee. Therefore, while relying upon the decision of Hon’ble Supreme Court in the case of Andaman Timber Industries vs. CIT 281 CTR 241 wherein it was held that reliance on the statements of the third party to tax assessee mandates that the assessee be allowed to cross examine that individual. Even in the case of DCIT vs. Cable Corporation of India Ltd., wherein Coordinate Bench of ITAT rejected disallowance of bogus expenses which were made solely on the basis of statement of a third party.

6 considering these facts and while relying on the decision as referred above, I direct the AO to delete the additions made under Section 69C of the Income Tax Act.

उि/सहायक िंजीकार ( Asst.