DEPUTY COMMISSIONER OF INCOME TAX , JAIPUR vs. BHARAT SPUN PIPE AND CONSTRUCTION COMPANY, JAIPUR

fu/kZkj.k o"kZ@Assessment Year : 2017-18 Deputy Commissioner of cuke Bharat Spun Pipe and Construction Vs. Income Tax, company Circle-1, 43, Industrial Area, Jhotwara, Jaipur. Jaipur LFkk;hys[kk la-@thvkbZvkjla-@PAN/GIR No.: AABFB4917G vihykFkhZ@Appellant izR;FkhZ@Respondent CO No. 19/JPR/2025 (Arising out of fu/kZkj.k o"kZ@AssessmentYear : 2017-18 cuke Bharat Spun Pipe and Deputy Commissioner of Income Tax, Vs. Construction company Circle-1, Jaipur 43, Industrial Area, Jhotwara, Jaipur. LFkk;hys[kk la-@thvkbZvkjla-@PAN/GIR No.: AABFB4917G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby :Shri Tarun Mittal, C.A. jktLo dh vksjls@Revenue by: Ms. Alka Gautam, (CIT) (V.C.) lquokbZ dh rkjh[k@Date of Hearing :15/07/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 06/08/2025 vkns'k@ORDER CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by the Revenue and the Cross Objection filed by the assessee, which is arising out of the order of the National Faceless Appeal Centre, Delhi [ for short CIT(A) ] dated 08.01.2025 for the assessment year 2017-18, which in turn arise from the order dated 29.05.2023 passed under section 147 read with section 144B of the Income Tax Act,1961 [ for short “Act” ] by the Assessment Unit, Income Tax Department.

2. Since the issue is involved in the Revenue’s appeal and cross objection of the assessee are interconnected, we dispose of this by this consolidated order.

1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition of Rs. 15,32,40,000/- made by AO(NAFAC) ignoring the fact that the assessee has taken accommodation entry from Dinesh Chandra Agarwal Infracon Pvt. Ltd. in the form of bogus contract receipt and the assessee has failed to provide proper details of expenses incurred.”

4. Whereas the assessee against that of appeal of the revenue filed the cross objection raising therein the following grounds:-

“1. On the facts and in the circumstances of the case and in law, Id. AO has grossly erred in passing an order u/s 147 of the Income Tax Act, 1961 arbitrary. Therefore Appellant prays that the order passed in bad in law.

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. On the facts and in the circumstances of the case, Id. AO has grossly erred in passing the order even though the initiation of the proceedings u/s 148 based on the entries stated to have been found noted in the loose papers seized from the possession of third party for which specific procedure u/s 153C has been provided under the Act, therefore, entire proceedings as initiated and completed u/s 148 deserves to be held bad in law and consequent order passed be quashed. That the Id. CIT(A) has failed to consider that no opportunity of being heard or cross-examination of any person whose statements were relied upon for making addition was ever given to the assesses, which is a violation of the principles of natural justice. That the impugned assessment order is liable to be quashed as the proceedings have been conducted in a mechanical, summary and predetermined manner without application of mind.

2. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal.”

4.1 Apropos to the above cross objection filed by the assessee the bench noted that the cross objection filed by the assessee is delayed was delayed by 2 days. For which the assessee filed a prayer to condone the delay vide condonation petition dated 28.04.2025 placed on record. Since the ld. DR did not controvert the facts cited in that application and looking to the reasons advanced in the condonation petition the bench is of the considered view that the assessee was prevented with sufficient cause and thereby the delay of 2 days in filling this cross objection is condoned.

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur.

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. Record reveals that the assessee accounted contract income of Rs.15,32,40,000/- as sub-contract income fromM/s Dineshchandra R- Agrawal Infracon Pvt. Ltd., which remains unexplained and has escaped assessment on account of accommodation entries in the hands of the assessee and thereby there cannot be any expenditure incurred against this income. Hence, total amount of sub-contract income is to be considered as Income in the hands of the assessee. In the assessment proceeding ld. AO noted that the details of direct expenses furnished wherein copies of bills have been furnished for expenditure incurred, it is not verifiable, as to whether the said work has actually been carried out or not. As it was revealed in the search action u/s. 132 of the Act in the caseof DRA group wherein revenue noticed that M/s. Dineshchandra R-Agrawal Infracon Pvt. Ltd., advanced bogus sub contract income of Rs. 15,32,40,000/- and the same was considered as accommodation entry in the hands of the assessee and accordingly a sum of Rs. 15,32,40,000/- was considered as income of the assessee as per provision of section 68 of the Act.

6. Feeling dissatisfied with the above order of the ld. AO, the assessee filed an appeal before the ld. CIT(A). Apropos to the “4. Decision; Grounds of appeal no 1 to 5 and ground no 15 are against the addition of Rs.15,32,40,000 under section 68 by treating the contract income from M/s DRAIPL as bogus. During the course of search proceedings in the case of M/s.DRAIPL it was found that DRAIPL has been generating unaccounted money by booking bogus sub-contract expenses and purchases. DRAIPL was awarded a Project of Two laningLadna-Nimbi Jodha-Degana- Merta City section road in length of 140 km under NUDP-IV from National Highway Authority of India. The construction of ROB & Re wall was sub-contracted to the assessee firm vide a work order dated 03.02.2015 and power of attorney dated 01.06.2015. During the year under consideration, assessee firm received Rs.15,32,40,000/- from DRAIPL as payments for the above contract work. These payments were received through bank after deduction of TDS. The appellant had accounted these receipts in the total turnover as per audited Pnl. account and paid tax on profits thereon. All details of expenditures and bills were submitted during assessment proceedings. However, the assessing officer stated that it is not verifiable from the details of direct expenses and copies of bills whether the said expenditure was actually incurred against the contract of DRAIPL. The AO concluded that no expenditures have been incurred to perform work on the above mentioned contract and proceeded to make an addition of Rs. 15,32,40,000 u/s 68 of the Act. 4.1 The assessing officer has not doubted the receipt of Rs.15,32,40,000 as sub-contracting income from M/s DRAIPL. The appellant had offered source of credits along with documentary evidences in the shape of Work Order, ITR and ledger accounts. There was no doubt regarding identity of Main contractor and actual execution of project by DRAIPL as the contract was awarded by National Highways Authority of India (NHAI). The suspicion is whether the work was actually executed by the appellant. The appellant submitted a letter dated 23.04.2015 from Dy Chief Engineer, North Western Railway to Asst. Divisional Engineer wherein it is apparent that the assessee Bharat Spun Pipe And Construction Company was granted Permissionfor work in Railway Boundary in connection with "Construction of Two lane ROB at Chainage CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. 90+ 733 at Degana LC No.51-C at Km. 477/9-477/10". The appellant also submitted a test report of this project showing NHAI as the client, DRAIPL as the contractor and the appellant as the sub-contractor; CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. 4.2 From the perusal of above documents furnished during assessment proceedings it can be concluded that appellant had provided necessary explanations and evidences regarding the genuineness of the subcontract. It is also seen that the Income Tax Appellate Tribunal, Ahmedabad in the case of M/s.Dineshchandra R Infracon PrivateLimited vide order passed in and 414/Ahd/2018relevant to AY 2016-17 has deleted the bogus expenses to the tune of Rs. 16,98,19,305/- added by the jurisdictional AO. From the perusal of the above order, it is evident that the additions regarding bogus sub-contract expenses in the case of DRAIPL which were the only basis for reopening the case of assessee, stood deleted by the jurisdictional ITAT, Ahmedabad. Further, the sub-contract receipt of Rs.15,32,40,000/- was declared in the return of income filed by the assessee and due taxes were paid. Hence, based on the order of jurisdictional ITAT on the main case, facts and circumstances, it can be concluded that addition of sub- contracting income from M/s DRAIPL of Rs.15,32,40,000/- to the income of assessee firm was unwarranted and deserves to be deleted. As a result grounds 1 to 5 and ground no 15 are allowed.”

7. Aggrieved from the above finding of the ld. CIT(A) the revenue preferred the present appeal challenging the decision of the ld. CIT(A) while deleting the addition of Rs. 15,32,40,000/- as not accommodation entry even though there was detailed finding of the ld. AO on the issue. Whereas the assessee challenged the order of the ld. CIT(A) on the legal ground by filling the cross objection the appeal so filed by the revenue.

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. Before us both the parties supported the orders of the lower authorities as favourable to them so far as the merits of the dispute is concerned.

Based on the above submission ld. DR submitted that the appeal of the revenue be allowed as the revenue challenged the decision of ITAT in the case of principal contract before the Hon’ble Gujarat High Court and the decision is pending in that matter.

no. 1 to 1.3: Under these grounds of appeal

, assessee firm has collectively challenged the legality of the order passed by ld. AO and action of the Ld.AO in reopening the assessment u/s 147 of the Act without recording any subjective belief regarding escapement of income and solely on the basis of information received. As the aforementioned grounds of appeal challenges the legality of proceedings, hence for the sake of convenience, these grounds are elaborated first. Further the legality of the order passed is challenged on various grounds which for the sake of convenience are listed below: S. No. Grounds 1. Mere change of opinion as order u/s 143(3) already passed.

2. Order passed u/s 147 instead of 153C

3. Order passed by JAO instead of FAO

4. Proceedings u/s 148 as per old provisions not dropped before initiated proceedings u/s 148A as per new provisions

5. Different ground of re-opening taken in notice u/s 148A(b) and in order passed u/s 148A(d)

6. Re-assessment proceedings initiated for roving enquires and for further verification

7. Notice u/s 148 dated 30.07.2022 issued without DIN At the outset, as submitted above, it is reiterated that assessment u/s 143(3) of the Act was already completed by ld. AO vide order dated 15.12.2019 wherein complete set of book of accounts along with service tax returns and other requisite documents were furnished before the ld. AO and ld. AO after thoroughly examining the evidences furnished completed the assessment after making an addition of Rs. 1,25,459/- u/s 36(1)(va) of the Act. In this regard, it is submitted that as during the course of assessment proceedings u/s 143(3), the ld. AO had made verification and after proper examination of the facts has completed the assessment just by making an addition u/s 36(1)(va), thus the re-opening of the assessment by alleging the receipts from M/s DRAIPL as bogus, for which the information had already been supplied and available on record in the assessment proceedings u/s 143(3) is nothing but reconsideration of the accepted fact and tantamount to change of opinion on the same facts.

In other words, no new material was brought on record for reopening the case, rather merely relying upon the information from ACIT Central Circle – 2(1), Ahmedabad, that too on the basis of search conducted in the case of a third party reopening was made. Thus, reopening amounts to mere change of opinion. It is further submitted that the information as stated to have been supplied from the ACIT Central Circle – 2(1), Ahmedabad could not be held as sufficient material for reopening the assessment, as submitted above, since the ld. AO at the time of completion of the assessment u/s 143(3) has already been applied his mind and made additions only pertaining to employees contribution towards PF & ESI u/s 36(1)(va), thus the present allegation is nothing but change of opinion for which 148 could not be resorted to. Further, assessee has challenged the action of ld.AO in reopening the assessment u/s 147 on the basis of documents found during the course ofthird party search, which was conducted prior to 01/04/2021 and for which a specific mechanism was provided u/s 153C of the Income tax Act. In this regard, at the outset kind attention of your goodself is invited to the reasons recorded in notice issued u/s 148A(b) of the Act (APB 60-62) Relevant extract of which are reproduced for the sake of convenience: “1. In this connection, it is stated that information regarding suspicious transaction carried out by the assessee is available with the department for FY 2016-17 relevant to AY 2017-18. The information was received from the ACIT, Central Circle-2(1), Ahmedabad wherein it has been mentioned that search and seizure operation was carried out on DRA Group of Ahmedabad. Shri Dineshchandra R. Agrawal of DRA Group runs the business in the name of CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. “Dineshchandra R Agrawal Infracon Pvt. Ltd.” which is a company in Ahmedabad, providing Engineering, Procurement, Construction (EPC) services in different sectors across Gujarat. Further, it was gathered that the company M/s Dineshchandra R Agrawal Infracon Pvt. Ltd. has generated unaccounted money by way of booking bogus sub-contract expenses and purchases.The assessee is one of the beneficiaries who has carried out bogus transaction of Rs. 6,46,31,000/- from M/s Dineshchandra R Agrawal Infracon Pvt. Ltd. during the considered year which is liable to be added to the total income of the assessee.”

From perusal of above, it is evident that the case of the assessee was reopened solely on the basis of alleged information received by the ld. Assessing officer from the ACIT, Central Circle-2(1), Ahmedabad, which was collected during the course of search and seizure action carried out in case of DRA Group of Ahmedabad. On the basis of such information ld.AO formed belief that during the course of search and seizure action in case of DRA Group of Ahmedabad, it was observed that Shri Dineshchandra R. Agrawal of DRA Group runs the business in the name of “Dineshchandra R Agrawal Infracon Pvt. Ltd.” which has generated unaccounted money by way of booking bogus sub-contract expenses and purchases and assessee is one of the beneficiaries who has carried out bogus transaction with M/s DRAIPL to the extent of Rs. 6,46,31,000/- in the relevant assessment year and accordingly reached to the satisfaction that income to this extent has escaped assessment. From perusal of above, it is crystal clear that information, based on which notice u/s 148 is issued in the case of assessee, was found during the course of search in case of a third person. Thus in such scenario, the proper course of action is that instead of invoking the provisions of section 148 of the Act, ld.AO should have invoked the provisions of u/s 153C of the Act. At this juncture, kind attention of your goodself is invited to section 153C, which reads as under: 153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,— (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. person [and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A] From perusal of above, it is evident that legislation has clearly provided that if any documents found during search, pertain to a person other than the person searched, such documents shall be handed over to the Assessing officer having jurisdiction over such third person, who shall complete assessment in accordance with section 153C of the Act. In support of submission made above, reliance is placed on decision of The Jurisdictional High Court, in the case of Sh. Shyam Sunder Khandelwal Vs. ACIT, Jaipur (D.B.Civil Writ Petition No. 18363/2019) vs ACIT & others dated 19.03.2024 has decided the issue as under: Section 153C, read with sections 148 and 153C, of the Income-tax Act, 1961 - Search and seizure - Assessment of any other person (Section 153C vis-a-vis section 148) - Assessment year 2014-15 - Whether on satisfaction of twin condition for proceedings under section 153C, Assessing Officer has to proceed in accordance with section 153A, however, it is not obligatory on Assessing Officer to make assessment for all years - Held, yes - Whether provisions of sections 153A to 153D have prevalence over the regular provisions for assessment or reassessment under sections 143 & 147/148 - Held, yes - Whether once there is incriminating material seized or requisitioned belonging or relatable to person other than on whom search was conducted, section 153C is to be resorted to - Held, yes - Whether provisions of sections 153A to 153D have prevalence over regular provisions for assessment or reassessment under sections 148 & 147/148 - Held, yes - Whether therefore, where basis for initiation of section 148 proceedings in case of assessee was material seized relating to or belonging to assessee during search conducted on ‘M’ Group, notices issued under section 148 and impugned orders rejecting objections filed to issuance of notice were to be quashed and set aside - Held, yes [Paras 30, 32 and 40] [In favour of assessee] Further The Hon’ble Jurisdictional High Court, very recently in the case of Tirupati Construction Company Vs. ITO (D.B. Civil Writ Petition No. 17651 & 17523/2022) dated 21.03.2024 has decided the issue as under: Section 148A, read with sections 147, 148, 153A and 153C, of the Income-tax Act, 1961 - Income escaping assessment - Conducting inquiry, providing opportunity before issue of notice under section 148 (Scope of provision) - Assessment years 2016-17 and 2017-18 - Assessing Officer issued on assessee a notice under section 148A(b) seeking to reopen assessment for assessment year 2016-17 - CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. Assessee in response filed a reply raising serious objection to maintainability of proceedings on ground that entire basis for reassessment was incriminating material and information collected during search carried out in year 2016 and prior to 31-3-2021 in premises of another assessee and nothing more and, therefore, no proceedings for reassessment could be drawn under section 148A - Assessing Officer did not find merit in reply of assessee and passed an order under section 148A(d) - Whether since entire basis for reopening assessment was nothing but material and information collected during search conducted in year 2016 in premises of another assessee, only legally permissible course of action was one provided under section 153C and not under section 148 - Held, yes - Whether impugned order passed under section 148A(d) deserved to be set aside - Held, yes [Paras 14, 16 and 17] [In favour of assessee] The Hon’ble ITAT Jaipur bench in the identical case in in the case of Sh. Navrattan Kothari Vs. ACIT, Jaipur vide order dt. 13.12.2017 has held as under: “….Therefore, in conjoint reading of provisions of section 153A, 153C and 147/148 of the Act as well as a consistent view taken by this Tribunal in a series of decision cited (supra) we hold that the assessment or reassessment of income of the person other than search persons based on seized material can be only be made u/s 153C r.w.s. 153A and the provisions of section 147/148 of the Act are not applicable in such cases. No contrary decision has been brought to our notice. Accordingly, we hold that initiation of proceedings u/s 147/148 by the AO to reassess the income is illegal being without jurisdiction and consequently the reassessment order passed u/s 147 r.w.s. 143(3) is also illegal and void ab initio and is liable to be quashed.” Further reliance is placed on the following case laws: - Ashok Kumar Batwani Talwandi dated 10.01.2017 (Raj.) - 140 TTJ 249 ITO vs. Arum Kumar Kapoor (ITAT, Amritsar Bench) - 64 taxmann.com 159 G. Koteswara Rao v/s DCIT (ITAT, Visakhapatnam) - Rajat Shubra Chatterji vs. ACIT in ITA no. 2403/Del/2015 (ITAT, Delhi) - Prakash Chand Kothari in ITA No. 1190/JP/2019 (ITAT, Jaipur) It is thus submitted that the consequent re-assessment order passed u/s 147 is without jurisdiction and deserves to be quashed. Further, the validity of the order passed u/s 148A(d) of the Act and subsequent notice issued u/s 148 was also challenged as they both were issued by ld. JAO, which is against the specific provisions of Faceless Scheme of Assessment.

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. In this regard, at the outset, provisions of section 151A, which provide for procedure of “Faceless Assessment of Income escaping assessment” are reproduced as under: Faceless assessment of income escaping assessment. 151A. (1) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of assessment, reassessment or re-computation under section 147 or issuance of notice under section 148 or conducting of enquiries or issuance of show-cause notice or passing of order under section 148A or sanction for issue of such notice under section 151, so as to impart greater efficiency, transparency and accountability by— (a) Eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible; (b) Optimizing utilization of the resources through economies of scale and functional specialization; (c) Introducing a team-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction.

Further in exercise of the powers conferred by sub-sections (1) of section 151A of the Act, CBDT issued a notification dated 29th March, 2022 [Notification No. 18/2022/F. No. 370142/16/2022-TPL] and formulated a Scheme, which provides as under: "In this Scheme, unless the context otherwise requires,- (a) "Act" means the Income-tax Act, 1961 (43 of 1961); (b) "automated allocation" means an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources." Further, Para 3 of the said notification provides that: "For the purpose of this Scheme,- (a) assessment, reassessment or recomputation under section 147 of the Act, (b) issuance of notice under section 148 of the Act, shall be through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in section 148 of the Act for issuance of notice, and in a faceless manner, to the extent provided in section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee."

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. From perusal of above, it is evident that both section 151A and notification issued by CBDT specifically provide for issuance of notice u/s 148 as well as completion of re-assessment proceedings through automated allocation in a faceless manner, to the extent provided in section 144B with reference to making assessment or reassessment of total income or loss of assessee. Whereas, in the present case, both the order u/s 148A(d) of the Act and consequential notice under Section 148 of the Act dated 30.07.2022 were issued by the JAO (i.e. local jurisdictional officer) and not in the prescribed faceless manner. It is thus submitted that reassessment proceedings so completed are not accordance with law and void-ab-initio. In support of above, reliance is placed on the order of Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd. is reproduced as under: Section 148, read with section 148A, of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for (Jurisdiction to issue reopening notice) - Assessment years 2013-14 to 2015-16 - Whether there is no question of concurrent jurisdiction of JAO and FAO for issuance of reopening notice under section 148 or even for passing assessment or reassessment order and it is only FAO which could issue notice under section 148 and not JAO - Held, yes [Paras 35 and 36] [In favour of assessee] Without prejudice to above and alternatively, it is further submitted that even if the order issued u/s 148A(d) of the Act is considered to be valid even otherwise being issued by JAO, notice issued by JAO u/s 148 of the Act will remain to be invalid according to the above stated provisions of law and schemes and thus the proceedings completed u/s 147 of the Act will be void-ab-initio. In this regard also, reliance is placed on Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd. which was held as under: “(viii) The argument of the Revenue in paragraph 5.1 of the Office Memorandum that the Section and Scheme have left it to the administration to device and modify procedures with time while remaining confined to the principles laid down in the said Section and Scheme, is without appreciating that one of the main principles laid down in the Scheme is that the notice under Section 148 of the Act is required to be issued through automated allocation and in a faceless manner. There is no leeway given on the said aspect and, therefore, there is no question of the administration to device and modify procedures with respect to the issuance of notice.” Reliance is also placed on the order of the Hon’ble High Court of Telangana passed in the case of Kankanala Ravindra Reddy vs The Income Tax Officer dated 14 September, 2023 in Writ Petition No. 25903 of 2023, wherein Hon’ble Telangana High Court held as under: Section 148A, read with sections 144B, 148 and 151A, of the Income-Tax Act, 1961 - Income escaping assessment - Conducting inquiry, providing opportunity CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. before issue of notice (Faceless assessment) - Assessment year 2016-17 - For relevant assessment year, jurisdictional Assessing Officer issued a notice under section 148A(b) upon assessee - He passed a further order under section 148A(d) and issued a notice under section 148 - Assessee contended that reassessment should be done in a faceless manner, rather than being assessed by jurisdictional officer as was provided under section 144B and in accordance with scheme enacted by Central Government under section 151A – Whether after introduction of 'Faceless Jurisdiction of Income-tax Authorities Scheme, 2022' and 'e- Assessment of Income Escaping Assessment Scheme, 2022' it became mandatory for revenue to conduct/initiate proceedings pertaining to reassessment under sections 147, 148 and 148A in a faceless manner - Held, yes - Whether since in instant case impugned proceedings under section 148A as well as consequential notice under section 148 were issued by local jurisdictional officer and not in prescribed faceless manner, thus, department proceeded under unamended procedure of law which was in contravention to statute i.e. Finance Act, 2021, and thus, impugned reassessment proceedings were to be quashed - Held, yes [Para 13] [In favour of assessee] Furthermore, as the case of the assessee firm was re-opened solely relying on the so-called information received from the ACIT, Central Circle – 2(1), Ahmedabad, according to which M/s DRAIPL has been generating unaccounted money by way of booking bogus sub-contract expenses and purchases and assessee firm is one of the beneficiaries who has carried out bogus transaction of Rs. 6,46,31,000/- with M/s DRAIPL during the year under consideration which is liable to be added to the total income of the assessee and alleging that the same has not included in the total income declared in income tax return and consequently not offered for taxation. On the basis of above information as received from ACIT, Central Circle – 2(1), Ahmedabad, ld.AO issued a notice u/s 148 of the Act dated 21.04.2021 (APB 59) to re-assess the total income of the assessee firm. Further, ld.AO also issued a notice u/s 148A(b) of the Act dated 28.05.2022 (APB 60-62) wherein ld.AO alleged that the sub-contract income from M/s DRAIPL has not been offered for taxation and offered to re-assess the total income of the assessee firm. The relevant para of the notice is as below for your ready reference - “2. On going through return of income filed by you for AY 2017-18, it is noticed that income from above transaction/above income has not been included in your ITR. Therefore, it is established that same is not offered for tax and due tax has not been paid.”

On receipt of the notice from ld.AO, assessee firm filed its reply dated 13.06.2022 (APB 63-65) wherein assessee firm provided the necessary explanations along with evidences to prove the contract receipt has been included in the total receipt declared and on consequent income due taxes has also been paid. Ld.AO, after considering the reply filed by the assessee firm, observed as under and passed an order u/s 148A(d) of the Act dated 30.07.2022 (APB 107-111) and alsoissued a CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. notice u/s 148 of the Act dated 30.07.2022 (APB 112) again requiring assessee firm to file return of income u/s 148. “5. The aforesaid reply furnished by the assessee has been considered and found to be unacceptable. As per information the assessee has received sub contract from M/s Dineshchandra R Agarwal Infracon Pvt Ltd during the year. Further as per investigation wing findings the said company had advanced bogus sub contracts during the year to evade tax payment. The assessee in this regard has contended that the assessee had received work order from M/s Dineshchandra R Agarwal Infracon Pvt Ltd for construction of ROB and Re-wall. The assessee is engaged in the work of civil contractor for past many years. The assessee booked contract income of Rs 15,32,40,000/- during the year which has been offered for taxation. Copy of relevant ledger account has been provided by the assessee.

148A. The Assessing Officer shall, before issuing any notice under section 148, — (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. (b) provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show- cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires: On perusal of the above, it is evident that ld.AO has grossly erred in issuing the notice u/s 148 dated 21.04.2021 without first providing an opportunity of being heard to assessee firm by issuing a show cause notice u/s 148A(b) of the Act. To support the claim of the assessee firm, reliance is placed on below judgements: Hon’ble High Court of Rajasthan, Jaipur Bench in the case of M/s R.K. Buildcreations Private Limited Vs. The Income Tax Officer, Ward 1(2), Jaipur vide D.B. Civil Writ Petition no. 14414/2022 dated 08.02.2024 held as under: “16. Before parting in all fairness, the contention raised by the counsel for the respondent on alternative remedy needs to be considered. There cannot be quibble with the proposition that if an Act mandates, a particular thing to be done in the manner, it has to be done in that way. The provisions of Section 148A of the Act and the guidelines issued by the CBDTprovidesfor passing a speaking order after considering the reply and the material on record. The impugned order is not in consonance with the procedure prescribed and issue goes to the root of the jurisdiction for initiating the proceedings under Section 148 of the Act. The case falls within the exception to the self-imposed restriction of not entertaining the writ where alternative remedy is available. Reference be made to Whirlpool Corporation Vs. Registrar of Trade Marks, (1998) SCC 1 wherein the Supreme Court provided at least three contingencies where the writ petition can be entertained in spite of alternative remedy. (i) Where it is a case of enforcement of fundamental rights, (ii) Where it is the case of violation of principle of natural justice and lastly, (iii) Where the proceedings are without jurisdiction or vires are challenged.

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur.

1. 1. Hon’ble High Court of Delhi, New Delhi in the case of Genpact Luxembourg S.A.R.L vide Writ Petition no. W.P.(C) 7784/2022 dated 08.08.2024 held as under: “12. ……….Undisputedly, the petitioner had offered the interest income to tax in terms of the provisions contained in Section 194LD of the Act. The ultimate order under Section 148A(d), however, alleges that the remittance in fact, constituted dividend and which was liable to be taxed in terms of Section 115-O of the Act. 13 ……..

14. As is plainly evident from a reading of that provision, DDT is liable to be paid by the company which declares, distributes or pays the same. The petitioner herein was merely the recipient of the interest income and it was thus, clearly not the entity which had either declared or paid the dividend. Viewed in that context, even if the payment were to be assumed to be dividend, the liability to pay tax thereon could have only been foisted upon the company which had declared, distributed or paid the same. That in the facts of the present case and even if the allegation laid by the respondents were to be accepted would have been GIPL.

15. We also note that the issues emanating from the order of the CIT (IT) under Section 263 of the Act presently forms subject matter of challenge in Commissioner of Income Tax (International Taxation)-2 Vs. Genpact Consulting Singapore Pte Ltd. (Earlier known as Headstrong Consulting Pte. Ltd.). While issues relating to the merits and the validity of the view taken by the CIT (IT) would have to be examined in that pending appeal, the same would clearly not sustain the action for reassessment which is impugned herein.

16. We accordingly allow the instant writ petition and quash the impugned notice under Section 148A(b) dated 11 March 2022, impugned order under Section 148A(d) dated 29 March 2022 and the consequential notice issued under Section 148 dated 30 March 2022.

17. We leave it open to the respondents to adopt such other measures as may be otherwise permissible in law.”

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur.

2. Hon’ble High Court of Delhi, New Delhi in the case of Banyan Real Estate Fund Mauritius vide W.P.(C) 10485/2023, CM APPL. 40640/2023 (Direction) & CM APPL. 40642/2023 dated 05.08.2024 held as under: “23. When tested on the aforesaid principles, it becomes manifest that foundational material alone would be relevant for the purposes of evaluating whether reassessment powers were justifiably invoked. Revenue cannot take a fresh ground while passing order under Section 148A(d) of the Act. We are clearly of the view that notice and the reasons given, therefore do not conform to the principles of natural justice as the assessee did not get a proper and adequate opportunity to reply to the allegations.

24. For the above reasons, we hold that the reasons recorded for issuance of notice under Section 148 cannot be sustained. Accordingly, the impugned notices issued under Section 148A(b) dated 22.03.2023, order dated 26.04.2023 passed under Section 148A(d) and consequential notice under Section 148 of the Act dated 26.04.2023 issued by the respondent for the Assessment Year 2019-20 are quashed.”

3. Hon’ble High Court of Delhi, New Delhi in the case of Tosca Master vide W.P.(C) 10507/2023 & CM APPL. 40707/2023 dated 09.08.2024 held as under: “31. When tested on the aforesaid principles, it becomes manifest that the impugned action is rendered wholly untenable. While the original SCN had proceeded on the basis that the petitioner was a non-filer and the subject income constituting remittances made to a foreign entity, it was clearly established that a return had in fact been filed and duly acknowledged. The petitioner had not made any remittances to third parties. In fact it had earned revenue from the sale of shares which were claimed exempt from taxation by virtue of Article 13(4) of the DTAA. Once the aforesaid explanation was proffered, the AO then proceeded to hold that the petitioner was not entitled to treaty benefits, a charge which was not even laid in the original SCN or which could be said to have constituted the basis for the formation of opinion that reassessment was warranted. In fact the petitioner was not even made aware of the view which the AO was inclined to take in this regard. The AO then sought to salvage the reopening by requiring the petitioner to furnish further particulars with respect to the allotment of shares in terms of the Scheme of Arrangement. Suffice it to note that the original SCN not only failed to refer to this Scheme, a reading thereof leaves us with the definite impression that the AO was perhaps not even aware of those developments. We are thus constrained to hold that the impugned action when tested in light of the above and the legal principles which stand enunciated in respect of the authority to reassess cannot sustain.”

Thuson the basis of above, it can be concluded that the notice so issued by the ld.AO without allocating a DIN is not in accordance with law and hence invalid. Further, issuance of an intimation letter with a DIN on the same date as notice u/s 148 is issued informing that notice u/s 148 is issued shall not take place of the notice u/s 148 without a DIN. In support of above, reliance is placed on the order of the Hon’ble High Court of Bombay in Writ Petition No. 1778 of 2023 in the case of Hexaware Technologies Ltd. Vs. ACIT, Circle 15(1)(2), Mumbai and Others dated 03.05.2024, headnote of which is as below: Section 148, read with section 148A, of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for (Notice without DIN) - Assessment years 2013-14 to 2015-16 - Assessee, engaged in information technology consulting, software development and business process services, filed its return of income - Same was accepted and assessment was completed under section 143(3) - Subsequently, Assessing Officer issued a reopening notice under section 148 on several grounds - Whether since impugned reopening notice issued under section 148 was issued without a DIN, same was invalid and bad in law - Held, yes [Para 31] [In favour of assessee] In the circumstances it is submitted that since there was no independent application of mind by ld.AO while recording the satisfaction of escapement of income before issue of notice u/s 148 and he simply proceeded on borrowed satisfaction reached by some other officials without verifying the same, therefore, the entire proceedings initiated u/s 147 deserve to be held bad in law. It is further submitted that the validity of initiation of reassessment proceedings has to be judged with regard to the material available with the assessing officer and that too by framing the opinion strictly based on the documents and information in possession, that certain income has escaped assessment and not in a mechanical manner, which has been done in the case in hand. Thus, re-opening of the case based on the borrowed satisfaction on the information provided by some other official without carrying out independent verification of the information with reference to return of income and financial affairs of the assessee and without recording his own independent satisfaction on the basis of such independent verification deserves to be held illegal.

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. In this regard further reliance is placed on judgement of Hon'ble High Court in the case of CIT Vs. Atul Jain (Delhi) reported in 299 ITR 383 where in Hon'ble High Court has dismissed the appeal of Revenue by stating below reasons:- Lookedat in the light of the decisions placed before us and the law laid down therein, it is necessary to appreciate the information available with the Assessing Officer in the present case. The only information is that the assessed had taken a bogus entry of capital gains by paying cash along with some premium for taking a cheque of that amount. The information does not indicate the source of the capital gains (which in this case are shares). We do not know which shares have been transacted and with whom has the transaction taken place. There are absolutely no details available and the information supplied is extremely scanty and vague. In so far as the basis for the reasons is concerned, even this is absent. The Assessing Officer did not verify the correctness of the information received by him but merely accepted the truth of the vague information in a mechanical manner. The Assessing Officer has not even recorded his satisfaction about the correctness or otherwise of the information or his satisfaction that a case has been made out for issuing a notice under Section 148 of the Act. Read in this light, what has been recorded by the Assessing Officer as his "reasons to believe" is nothing more than a report given by him to the Commissioner of Income Tax. As held by the Supreme Court in Chhugamal Rajpal, the submission of a report is not the same as recording of reasons to believe for issuing a notice. The Assessing Officer has clearly substituted form for substance and, therefore, the action of the Respondent falls foul of the law laid down by the Supreme Court in ChhugamalRajpal which is clearly applicable to the facts of these appeals. Further Hon'ble Gujarat High Court in the case of Seth Brothers Vs. CIT reported in 169 CTR 519 has laid down following principles for re-opening of the assessment u/s 148 of the Income Tax Act, 1961: (Reproduced in 28 TW 57,79) "11 (a) There must be material for belief • Circumstances must exist and cannot be deemed to exist for arriving at anopinion. • Reason to believe must be honest and not based on suspicion, gossip, rumour or conjuncture. • Reasons referred must disclose the process of reasoning by which he holds `reasons to believe' and change of opinion does not confer jurisdiction to reassess. • There must be nexus between material and belief. • The reasons referred must show application of mind by the assessing officer.”

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. The Hon’ble ITAT, Delhi in the case of Uma Strips Ltd. vs DCIT in vide orders dt. 11.05.2022held as under: 9. From the above, we find that there is no live link presented by the AO between the material available with him i.e. the report of the investigation and to reason to belief that the assessee has tried to evade the assessment for the particular year in question. Simply stating and doubting that the assessee is involved in obtaining accommodation entries without providing proof, reason, information to back-up the claim cannot be considered as a valid reason to issue notice u/s 148 of the I.T. Act. There is no independent application of mind that could be deciphered from the reasons recorded. There is no reference to examination of the returns filed and whether the entries taken or on account of bogus capital, a balance sheet item or on account of bogus sales or purchases on account of revenue account. As per the record and the reasons recorded, no enquiries have been conducted by the Assessing Officer to come to a conclusion or reasons to belief with regard to evasion of tax which has escaped assessment.

No. 1: Under this ground of appeal

, the department has challenged the actions of ld. CIT(A) in deleting the addition of Rs.15,32,40,000/-, made by ld.AO u/s 68. Brief facts of the case, as narrated above, are that a search and seizure operation was conducted on DRA Group of Ahmedabad. Amongst which Sh. Dineshchandra R. Agrawal, a member of the group, runs a business in the name of M/s Dineshchandra R Agrawal Infracon Pvt. Ltd. (M/s DRAIPL) which is a company in Ahmedabad, providing Engineering, Procurement, Construction (EPC) services in different sectors across Gujarat. During the course of search proceedings in that case, it was observed by ACIT, Central Circle – 1, Ahmedabad that M/s DRAIPL has been generating unaccounted money by booking bogus sub-contract expenses and purchases. Further M/s. DRAIPL was awarded a Project of Two laningLadnu-Nimbi Jodha-Degana- Merta City section road in length of 140 km under NHDP-IV from National Highway Authority of India on 31.07.2013 for a total project cost of Rs. 378.46 Crores (APB 106). The construction of ROB & Re wall (90+733) was sub-contracted to the assessee firm vide a work order dated 03.02.2015 (APB 88-89) and power of attorney dated 01.06.2015 (APB 90-91) which was delivered to the assessee firm on lump-sum basis amounting to Rs. 15,45,00,000/-. It is further submitted that for such construction of ROB & RE Wall, a temporary pathway was required by assessee for plying of vehicles near track within Railway Boundary, for which permission was sought vide letter dated 23.04.2015 (APB 96). During the year under consideration, assessee firm received Rs. 15,32,40,000/- from M/s DRAIPL on various occasion (APB 67) which were received as progressive payment for the above contract work which were alleged to be bogus by observing that no expenditures have been incurred to perform work on the above mentioned contract and proceeded to make an addition of Rs. 15,32,40,000/- u/s 68 of the Act. In the matter, at the outset it is submitted that the addition so made by ld.AO u/s 68 of the Act is not correct as to disallow a sum credited in the books to accounts of assessee u/s 68 of the Act, ld.AO shall record satisfaction as to the source and nature of the sum credited in the books of accounts of assessee either no proper explanation was provided by assessee or explanation provided was not CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. satisfactory. The relevant portion of section 68 of the Act is re-produced below for your ease.

68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year: From perusal of above, it is evident that assessing officer can make addition u/s 68 only under two circumstances, i.e.: (i) Appellant does not offer any explanation about nature and source of such credit or (ii) Explanation offered by Appellant is not upto the satisfaction of Ld.AO.

In the case in hands, the nature and source of the addition made i.e. of Rs. 15,32,40,000/- by ld.AO is already known to ld.AO as is evident from the very initial notice issued by ld.AO i.e. notice u/s 148A(b) dated 28.05.2022. It was already in the knowledge of the ld.AO that the nature of income of Rs. 6,46,31,000/- is sub-contracting income and it is received from M/s DRAIPL for carrying out the project sub-contracted by them then additions made u/s 68 cannot hold good in law. Further with regard to the second condition above, whenever Appellant provides explanation, before rejecting the same ld.AO has to record dissatisfaction as to why the explanation furnished by Appellant is not acceptable. In the instant case, Appellant has not only offered explanation regarding nature and source of credits but also substantiated the same with documentary evidences in the shape of Work Order, ITR and ledger accounts of contract income earned and of M/s DRAIPL (APB 88-89, 1-58, 66 and 67) along with ledgers of purchases, direct expenses and indirect expenses incurred towards the project [submitted before ld. CIT(A) at page 627 to 761 of paper book before submitted before ld. CIT(A)] which were not at all doubted by ld.AO but all such vital evidences have been ignored solely on the basis of borrowed information received from ACIT, Central Circle-2(1), Ahmedabad. Ld.AO further erred in ignoring the fact the Assessee has already discharged his initial onus laid down u/s 68 of Income Tax Act, 1961 by proving all the three ingredients of credit entry in books of accounts which are Identity, Genuineness and Capacity. The identity of the contractor (M/s DRAIPL) stood proven as their assessment was completed by the ACIT, Central Circle-2(1), Ahmedabad. Moreover, information of project (part of which was sub contracted to assessee) as downloaded from the official website of Govt. of India, www.infrastructureindia.gov.in(APB 106) which clearly shows that the Project of Two laning of Ladnu-Nimbi Jodha-Degna-Merta City section road in length of 140 CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. km under NHDP-IV was allocated to M/s DRAIPL on 31.07.2013 with total Project cost being Rs. 378.46 crores and project being completed on 07.10.2019. It is thus submitted that there is no doubt regarding identity of Main contractor M/s DRAIPL and actual execution of project by M/s DRAIPL as the contract was awarded by National Highways Authority of India (NHAI), which would not sanction any single payment unless work is completed strictly in accordance with terms of the project. With regards to genuineness of the execution of sub contract by assessee, copy of work order (APB 88-89) has been submittedwhichdepicts that assessee was awarded sub contract in respect of construction of ROB and RE Wall (90+733) in respect of project of “Two laning of Ladnu-Nimbi Jodha-Degna-Merta City section road in length of 140 km under NHDP-IV” awarded to main contractor by National Highways Authority of India. Project was awarded to assessee on lumpsum basis and it was clearly mentioned in the work order that execution of work was to be done as per drawing approved by NHAI/ Railways. Kind attention of your goodself is invited to the point 6 of the “Terms and Conditions” of the Work order wherein it is mentioned that proper Material Testing Certificates along with Test report done in the initial phase of the project will have to be provided by assessee firm. Hence in compliance of the same, assessee firm had carried the testing of the raw material and also furnished the test reports of the same before the ld.AO (APB 97- 105). Similarly, at serial no.7, it is provided that payment shall be made only after satisfaction of NHAI/THEME (IE) for the work executed, which also proves that execution of work by assessee cannot be denied. At this juncture, kind attention of your goodself is invited to letter dated 23.04.2015 (APB 96) by North Western Railway wherein it is apparent that assessee has been granted Permission for work in Railway Boundary in connection with “Construction of Two lane ROB at Chainage 90+ 733 at Degana LC No.51-C at Km. 477/9-477/10”. It is thus submitted that if ld.AO had any doubt regarding actual execution of work by assessee, he could have made direct enquiries from Asstt. Divisional Engineer, North Western Railway, who has granted permission to construct temporary pathway within Railway Boundary for execution of contract awarded to assessee by M/s DRAIPL. However, instead of making necessary enquiries to ascertain if work was actually executed by assessee or not, ld.AO solely relied upon the information received, which absolutely arbitrary and unjustified. It is further submitted that the assessee firm had also furnished before the ld.AO a copy of ledger of the subcontract income showcasing the receipt of income from M/s DRAIPL (APB 67). Your goodself would appreciate that once execution of work is proven beyond doubt, there can be no doubt regarding incurrence of expenses for the same as it is impossible to complete the project without any expenses. It is submitted that apart from sub contract received from DRAIPL, assesse has worked on other projects of similar nature also and nature of expenses incurred for such projects are also similar. It is just that assessee has not maintained separate books of accounts for different projects and therefore it was not possible to furnish details of expenses. Your goodself would appreciate that assessee is not required to maintain separate books of accounts for different CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. projects more particularly when assessee has duly offered income earned on such projects for taxation. It is submitted that wherever assessee claims any sort of exemption/deduction in respect of income from particular infrastructure project (e.g. 80IA,80IB etc.), legislature specifically provides for maintaining separate books of accounts, so that respective revenues and expenses can be identified and there is no shifting of expenses from tax free source to taxable source of income. It is thus submitted that addition of entire sub contract receipts from DRAIPL is absolutely arbitrary and against the principle of taxation and was rightly deleted by ld. CIT(A). Furthermore, with regard to the expenditure incurred on the construction of the project, ld.AO has alleged that “From the details of direct expenses furnished wherein copies of bills have been furnished for expenditure incurred, it is not verifiable, if the said expenditure has been incurred against the contract of M/s Dinesh Chandra Agarwal Infracon Pvt. Ltd.; From the details of direct expenses furnished wherein copies of bills have been furnished for expenditure incurred, it is not verifiable, if the said expenditure has been incurred against the contract of M/s Dinesh Chandra Agarwal Infracon Pvt. Ltd.; Copies of Purchase invoices furnished are not providing proper details of goods purchased and where these goods are being delivered. Hence it is not verifiable, if the materials purchased relate to the contract of M/s Dinesh Chandra Agarwal Infracon Pvt. Ltd. Only sale invoices of M/s Maruthi Rub Plast Pvt. Ltd., are mentioning the details of the above contract, however, these expenditure has already been accounted by the assessee against the contract money received against the contract with the said company;”. In this regard, it is submitted that assessee vide its reply dated 16.05.2023 has furnished before the ld.AO and vide his submission dated 16.11.2024 before ld. CIT(A), the ledger accounts of the purchase, direct expenses and indirect expenses incurred by assessee for the construction on site wherein name of the site “Degana” was mentioned in narrations of the entries along with invoices in the name of assessee firm [same can be furnished before the Hon’ble Court as and when requested] and the physical verification by third party i.e. NHAI and Indian Railways in respect to the works executed as was required according to the terms and conditions of the contract. We are enclosing a screenshot of the reply filed by the assessee enclosing the ledgers and invoices along with screenshot of ledger entries reflecting “Degana” as site name in narration and invoice with same site name are enclosed below for your ease: Reply Purchase Ledger Direct Expense Ledger Direct Expense Ledger Purchase Invoice Direct Expense Invoice Direct Expense Invoice From the perusal of above it can be concluded that assessee firm had provided all From the perusal of above it can be concluded that assessee firm had provided all From the perusal of above it can be concluded that assessee firm had provided all the necessary explanations and evidences as was requested by the necessary explanations and evidences as was requested by ld.AO proving the ld.AO proving the genuineness of the transaction incurred and ld.AO, ignoring all the explanations genuineness of the transaction incurred and ld.AO, ignoring all the explanations genuineness of the transaction incurred and ld.AO, ignoring all the explanations and evidences furnished by assessee firm, proceeded to make an addition of Rs. and evidences furnished by assessee firm, proceeded to make an addition of Rs. and evidences furnished by assessee firm, proceeded to make an addition of Rs. 15,32,40,000/- and ld. CIT(A) has rightly deleted the addition made by ld. AO and ld. CIT(A) has rightly deleted the addition made by ld. AO after and ld. CIT(A) has rightly deleted the addition made by ld. AO considering all the evidences. considering all the evidences. As stated above, ld.AO has basically not considered the submission of assessee As stated above, ld.AO has basically not considered the submission of assessee As stated above, ld.AO has basically not considered the submission of assessee by observing that no expenses were incurred by assessee towards the execution by observing that no expenses were incurred by assessee towards the execution by observing that no expenses were incurred by assessee towards the execution of contract received from DRAIPL. Further, as stated that ld. of contract received from DRAIPL. Further, as stated that ld. AO has observed that AO has observed that the invoices from M/s Maruti Rub Plast Pvt. Ltd. contain the details of the project the invoices from M/s Maruti Rub Plast Pvt. Ltd. contain the details of the project the invoices from M/s Maruti Rub Plast Pvt. Ltd. contain the details of the project and thus was satisfied with the expenses being incurred for the purpose of project and thus was satisfied with the expenses being incurred for the purpose of project and thus was satisfied with the expenses being incurred for the purpose of project from DRAIPL. However, ld. AO has not given the credit of even such e from DRAIPL. However, ld. AO has not given the credit of even such expenses from DRAIPL. However, ld. AO has not given the credit of even such e incurred to the tune of Rs. 96,53,722/ incurred to the tune of Rs. 96,53,722/- and proceeded to the add the total receipts and proceeded to the add the total receipts i.e. Rs. 15,32,40,000/-. Thus, the addition made being baseless, unproved and . Thus, the addition made being baseless, unproved and . Thus, the addition made being baseless, unproved and unverified deserves to be hold bad in law and deserves to be deleted and be held unverified deserves to be hold bad in law and deserves to be deleted and be held unverified deserves to be hold bad in law and deserves to be deleted and be held as bad in law.

Hon’ble Income Tax Appellate Tribunal, Jaipur Bench, Jaipur Hon’ble Income Tax Appellate Tribunal, Jaipur Bench, Jaipur held as under in held as under in the case of Sh. Deepak Jain vs. ITO, Jaipur the case of Sh. Deepak Jain vs. ITO, Jaipur vide decided vide decided on 23.03.2023:

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. “10. …….The ld. AR of the assessee demonstrated before us that he has discharged primary onus casted upon him and has proved the performance of the work and the same is supported by the tangible evidence placed on record. The records so produced was not disputed but also not tested for its correctness and in the absence of these exercise the documents placed on record cannot be placed a side and the decision be made merely based on some information on which there is no basis discussed or confronted to the assessee. As regards the allegation of work that is disputed by the revenue considering that the same are bogus in nature cannot be considered so because the assessee has demonstrated before us with the work order issued by M/s. Dineshchandra R. Agarwal Infracon Private Limited wherein the address of the work is mentioned as "Painting Runway Airfoce Station, Nal Site Bikaner" and work at "Runway resurfacing project AT Nal AF station Bikaner". Both these work were required to be carried out at the Nation pride military organization and the entry and attention are strictly monitored and therefore, there is no reason to be believe that though M/s. Dineshchandra R. Agarwal Infracon Private Limited may be indulged in booking for some bogus expenditure but in this case the primary material does not suggest soand in spite of the relevant material placed by the assessee the revenue did not prove that the work has not been carried out. Based on these observation we are of the considered view that the allegation made by the revenue is general in nature and the addition of the whole of the receipt is not warranted.” It is further submitted that in the instant case also, no independent enquiries have been conducted, though no discrepancy has been found out by ld.AO in documentary evidences furnished by the assessee, and thus this decision is squarely applicable to the case of assessee and it is thus prayed that addition made in the case of assessee deserves to be deleted. It is further submitted that assessment was completed without providing assessee with opportunity to cross-examine the person at whose premises search was conducted and documents were found suggesting booking of bogus sub contract expenses and purchases. It is submitted that Right to cross examine flows from the principle of natural justice and therefore an evidence/document/statement of third party cannot be relied upon until the opportunity of cross examination is given to the party, against whom such evidence/document/ statements are being used. The principles of natural justice are an inalienable part of the Income-tax law as provided under various provisions of the Act, including, audi alteram partem, i.e., no man should be condemned unheard. This principle is based on the right to a fair trial and which requires that the Assessing Officer cannot gather material or evidence at the back of the assessee and use it unilaterally. Evidence has to be tested on cross examination. Failure to afford opportunity to the assessee to cross- examine a third party whose evidence is sought to be utilized would make the assessment void as held in the cases of KishinchandChellaram v. CIT [1980] 4 Taxman 29 (SC), Sona Electric Co. v. CIT [1984] 19 Taxman 160 (Delhi), Nathu Ram Prem Chand v. CIT [1963] 49 ITR 561 (All).

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. Hence it is humbly submitted that the additions made by ld.AO are mere whims and fancies and without application of mind and therefore deserves to be deleted. Further ld.AO has acknowledged that the income of Rs. 15,32,40,000/- has been properly declared in the return of income filed by the assessee but still ld.AO proceeded to make an addition of the same on account alleging it to being bogus. In this regard, it is submitted that as the income is already declared in the return of income and due taxes has also been paid then making an addition of same income in the total income of the assessee firm will tantamount to double taxation on single income which has no standing in law. In support of this, reliance is placed on following judgements: Hon’ble High Court of Delhi, New Delhi held in the case of PCIT, Central-1 v. Surya Agrotech Infrastructure Limited vide ITA 927/2019 decided on 06.09.2023 as under: “21. In view of aforesaid, the irresistible conclusion is that since the undisclosed income which is subject matter of the present dispute had already been taxed in the hands of the flagship company Surya Food &Agro Ltd., it cannot be again subjected to tax in the hands of the respondents/assessee companies in the form of application of the said income as their share capital. Accordingly, the question as framed above is answered against the appellant/revenue and in favour of the respondent/assessee.

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. "7. It is this judgment the assessee has challenged in the present appeal. From the material on record, it can be seen that the sum of Rs.74 lakhs was offered to tax by Bhikhubhai N. Padsala in his settlement application. Such application has been granted by the Settlement Commission by passing order of settlement. By very statutory scheme of provisions, acceptance of such income in the hands of Bhikhubhai N. Padsala would have to be preceded by payment to tax. We have therefore proceeded on the basis that the Settlement Commission accepted the said sum as income of Bhikhubhai N. Padsala and the department has already received the tax and interest on such income. That being the position, it would not be possible for the department to tax the same income once again in the hands of the present assessee. This would be for multiple reasons. Firstly, there is nothing on record to suggest that before the Settlement Commission, the declaration of BhikhubhaiN.Padsala in this respect was opposed by the Revenue. Secondly, the Settlement Commission having accepted such settlement, with or without the opposition by the Revenue, finality of the conclusions of the Settlement Commission would attached in terms of section 245I of the Act. Thirdly, the department concedes that the order of Settlement Commission has not been challenged further. Under the circumstances, allowing the department’s appeal, levying tax on the same amount from the assessee would be wholly impermissible. In fact, it also would be opposed to the observations of the Assessing Officer and those of the Tribunal that under no circumstances, the same income would be subjected to tax twice" Thus, on the case and in the circumstances, it can be concluded that making an addition of sub-contracting income from M/s DRAIPL of Rs. 15,32,40,000/- to the income of assessee firm is tantamount to double taxation and hence the additions so made by ld.AOdeserves to be deleted. Without prejudice to the submission made above, it is submitted that Hon’ble Income Tax Appellate Tribunal, Ahmedabad in the case of M/s Dineshchandra R Infracon Private Limited relevant to AY 2016-17 & 2017-18 has deleted the bogus expenses as alleged by the jurisdictional AO vide its cumulative order passed vide 414/Ahd/2018, 1150/Ahd/2019, 415/Ahd/2019, 309/Ahd/2020 and 594/Ahd/2020 wherein being relevant to quantum additions made relevant to AY 2017-18 dated 10.08.2022. The Hon’ble Income Tax Appellate Tribunal, Ahmedabad, while deciding the appeal under ITA No. 369/Ahd/2019 relevant to A.Y. 2016-17 observed as under: Issue: “10.6 Now coming to the facts of the present case, the AO has estimated the income @ 8% and 5.5% of gross receipt against the project executed by the assessee and by the subcontractor respectively on adhoc basis.” Conclusion:

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. “10.11 In view of the above and after considering the facts in totality, we uphold the rejection of the books of accounts made by the authorities below but with the direction not to enhance the profit declared by the assessee in the return of income on the reasoning that the rate of profit declared by the assessee is reasonable and commensurate with the rate of profit declared by the assessee in the earlier years. Hence the ground of appeal of the assessee is allowed whereas ground of appeal raised by the Revenue is dismissed.” Thereafter, while disposing the appeal under relevant to year under consideration i.e. 2017-18, the Hon’ble bench observed as under: “16 At the outset we note that the issues raised by the assessee in its grounds of appeal for the AY 2017-18 are identical to the issues raised by the assessee in IT(SS) No. 369/Ahd/2019 for the assessment year 2016-17. Therefore, the findings given in the IT(SS) No. 369/Ahd/2019 shall also be applicable for the year under consideration i.e. AY 2017-18. The appeal of the assessee for the assessment 2016-17 has been decided by us vide paragraph Nos. 10-11 of this order in favour the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2016-17 shall also be applied for the year under consideration i.e. AY 2017-18. Hence, the grounds of appeal filed by the assessee is hereby allowed. In the result appeal of the assessee is hereby allowed.” Thus, from the perusal of the above order, it is evident that the additions so made alleging the booking bogus expenses in order to decrease their profits in the case of M/s DRAIPL stood deleted by Hon’ble ITAT, Ahmedabad. In view of the above judgement and considering the observation of the ld. AO in the Assessment Order for the year under consideration wherein the only basis of reopening the case of assessee is the search conducted in the case of M/s DRAIPL wherein department has taken a view that the relevant entity has accounted for certain expenses which are bogus and as a consequence the information has been shared on the PAN of relevant persons in whose name such expense has been booked and accordingly the ld. AO considering the observation of the department has concluded the assessment in the case of assessee considering that amount as “bogus sub contract work”. However since the Hon’ble ITAT has considered the expense as not bogus therefore the observation has to be considered while deciding the issue under consideration. Further at the cost of repetition, in view of the submission made above, it can be concluded that assessee firm had provided all the necessary explanations and evidences in the shape of expense invoices and ledgers, work order, allotment letter, testing reports and various other documents as was requested by ld.AO proving the genuineness of the transaction incurred and ld.AO, ignoring all the explanations and evidences furnished by assessee firm, proceeded to make an addition of Rs. 15,32,40,000/- and ld. CIT(A) has rightly deleted the addition made by ld. AO after considering all the evidences.

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. In the circumstances, it is submitted that the addition so made deserves to be deleted” 10. In support of the contention raised in the written submission the ld. AR of the assessee also filed a detailed paper book containing the various evidence , records and decision in the form of paper book and the index of the said paper book reads as under :-

PAGE S. No. PARTICULARS NOS. Copy of Acknowledgement filed u/s 139(1) of the Income Tax Act, 1961. 1 1. Copy of Acknowledgement along with Income tax return form filed u/s 139(5) of the 2-54 2. Income Tax Act, 1961. Copy of Acknowledgement along with computation filed u/s 148 of the Income tax Act, 55-58 3. 1961 Copy of notice dated 21.04.2021 issued u/s 148 of the Income Tax Act 1961. 59 4. Copy of notice dated 28.05.2022 issued u/s 148A(b) of the Income Tax Act 1961. 60-62 5. Copy of reply dated 13.06.2022 in response to notice dated issued u/s 148A(b) of the 63-65 6. Income Tax Act 1961. a. Copy of Ledger account of Contract Income 66 b. Copy of Ledger account of M/s DRAIPL 67 c. Copy of Audited Financial Statements for AY 2017-18 68-86 d. Copy of extract of Annexure denoting total Contract receipts of assessee Firm 87 e. Copy of Work Order from M/s DRAIPL 88-89 f. Copy of Power of attorney from M/s DRAIPL 90-91 g. Copy of Meeting Reminder from M/s DRAIPL 92-93 CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. PAGE S. No. PARTICULARS NOS. Copy of Letter to Partner Mr. Dinesh Chander Gupta providing enclosures such as h. 94 Power of Attorney etc. i. Copy of Exemption Certificate issued to M/s DRAIPL 95 Copy of letter from North-Western Railway granting permission for work to M/s j. 96 DRAIPL k. Copy of Testing Invoices and Testing Reports 97-105 l. Details of original work allotted to Principal M/s DRAIPL 106 Copy of order dated 30.07.2022 passed u/s 148A(d) of the Income Tax Act, 1961 107-111 7. Copy of Intimation issued informing issue of notice u/s 148 of the Income Tax Act, 1961 112 8. Copy of notice dated 30.07.2022 issued u/s 148 of the Income Tax Act, 1961 113 9. Copy of show cause notice issued dated 12.06.2023 of the Income Tax Act, 1961 114-125 10. Copy of reply dated 16.05.2023 filed in response to SCN dated 12.06.2023 along with bank statements, bills of supplies from M/s DRAIPL, Purchase Invoices with ledger and 126-131 11. expenses invoicesalong with their ledgers 12. Copy of Written Submission filed before Ld. CIT(A)-4 dated 16.11.2024. 132-162

11. We have heard the rival contentionperused the material placed on record and the orders of the lower authorities disputed before us. The bench noted the revenue assailed the appeal on the ground that the ld. CIT(A) has erred in deleting the addition of Rs. 15,32,40,000/- made by AO(NAFAC) ignoring the fact that the assessee has taken accommodation entry from M/s. Dinesh Chandra Agarwal Infracon CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. Pvt. Ltd. in the form of bogus contract receipt and the assessee has failed to provide proper details of expenses incurred. The bench noted that the assessee in support of the appeal so filed before the ld. CIT(A) has placed on record all the relevant details and the ld. CIT(A) after considering the facts presented before him allowed the appeal of the assessee. The bench noted that the ld. AO made the addition of Rs.15,32,40,000 under section 68 by treating the contract income from M/s DRAIPL as bogus. During the course of search proceedings in the case of M/s. DRAIPL it was found that DRAIPL has been generating unaccounted money by booking bogus sub-contract expenses and purchases. DRAIPL was awarded a Project of Two laningLadna-Nimbi Jodha-Degana- Merta City section road in length of 140 km under NUDP-IV from National Highway Authority of India. The construction of ROB & Re wall was sub-contracted to the assessee firm vide a work order dated 03.02.2015 and power of attorney dated 01.06.2015. During the year under consideration, assessee firm received Rs.15,32,40,000/- from DRAIPL as payments for the above contract work. These payments were received through bank after deduction of TDS. The appellant had accounted these receipts in the total CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. turnover as per audited Profit and loss account and paid tax arising on account income derived from that work. The bench also noted from the order of the ld. CIT(A) wherein the ld. CIT(A) has considered the fact that all the details of expenditures and bills were submitted during assessment proceedings. However, the assessing officer stated that it is not verifiable from the details of direct expenses and copies of bills whether the said expenditure was actually incurred against the contract of DRAIPL. The AO concluded that no expenditure has been incurred to perform work on the above mentioned contract and proceeded to make an addition of Rs. 15,32,40,000 u/s 68 of the Act and that too without allowing the expenditure claimed. Record reveals that the assessing officer has not doubted the receipt of Rs.15,32,40,000 as sub-contracting income from M/s DRAIPL but was considered as accommodative transaction. The appellant had offered source of credits along with documentary evidences in the shape of Work Order, ITR and ledger accounts. There was no doubt regarding identity of Main contractor and actual execution of project by DRAIPL as the contract was awarded by National Highways Authority of India (NHAI). The suspicion is CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. whether the work was actually executed by the appellant. The appellant submitted a letter dated 23.04.2015 from Dy Chief Engineer, North Western Railway to Asst. Divisional Engineer wherein it is apparent that the assessee Bharat Spun Pipe And Construction Company was granted Permission for work in Railway Boundary in connection with "Construction of Two lane ROB at Chainage 90+ 733 at Degana LC No.51-C at Km. 477/9- 477/10". The appellant also submitted a test report of this project showing NHAI as the client, DRAIPL as the contractor and the appellant as the sub-contractor. All these documents so placed on record there is no reason disbelieve that the work has not been done as the documentary evidence itself speaks that the assessee submitted all the necessary explanations and evidences regarding the genuineness of the subcontract. The bench also noted that the co-ordinate bench of ITAT, Ahmedabad in the case of M/s.Dineshchandra R Infracon Private Limited vide order passed in and 414/Ahd/2018 relevant to AY 2016-17 has deleted the bogus expenses to the tune of Rs. 16,98,19,305/- added by the jurisdictional AO. From the perusal of the above order, it is evident CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. that the additions regarding bogus sub-contract expenses in the case of DRAIPL which were the only basis for reopening the case of assessee, stood deleted by ITAT, Ahmedabad. Further, the sub- contract receipt of Rs.15,32,40,000/- was declared in the return of income filed by the assessee and due taxes were paid on the income arising in the hands of the assessee which is supported by the bills, vouchers and books of account maintained in the regular course of business which are audited by an independent Charted Accountant as per provision of section 44AB of the Act. Thus, considering the plethora of evidence we do not find any infirmity in the order of the ld. CIT(A). Even otherwise revenue in support of the appeal so filed did not placed on record anything contra establishing any infirmity in the order of the ld. CIT(A). Even the ld. CIT(A) in note prepared before the ld. PCIT wherein he admits that; “decision of Ld. CIT(A) is based on sound footing. The fact that the assessee has provided documents in support of sub-contract work executed by it on behalf of the principal contractor and submitted that the receipts of Rs.15,32,40,000/- is against the work done, sufficiently proves that the Ld. CIT(A)'s order is proper. The Ld. CIT(A) has also cited and reproduced documents issued by Railway Authorities and a testing lab in support of the assessee's claim.”

Merely against the order of the ITAT in the case of principal contractor wherein the revenue has challenged that decision CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. directing to delete the claim of expenditure the consequential income for which the ld. AO in the report submitted after the decision of the CIT(A) categorically record the finding that on the fact of the case decision of the ld. CIT(A) is accepted and merely that order of the ITAT Ahmedabad bench the revenue preferred an appeal before the Hon’ble Gujarat High Court the appeal of the revenue did not deserve to be considered and thereby dismissed.

Thus, it was not a case of the revenue that the assessment was conducted without verifying the receipt and that of the connected expenditure incurred by the assessee. Even the ld. AO after making due application of mind made the addition as required u/s 36(1)(va) of the Act. Thus, re-opening the case alleging the receipts from M/s DRAIPL as bogus, for which the information had already been supplied and available on record in the assessment proceedings u/s 143(3) is nothing but reconsideration of the accepted fact and tantamount to change of opinion on the same set of facts and there is no new material brought on record for reopening the case, rather merely relying upon the information from ACIT Central Circle – 2(1), Ahmedabad, that too on the basis of search CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. conducted in the case of a third party reopening was made. Thus, reopening amounts to mere change of opinion and is not allowed.

Even otherwise the reasons recorded shows that the assessment of the assessee was again taken up was solely on the basis of the of alleged information received by the ld. Assessing officer from the ACIT, Central Circle-2(1), Ahmedabad, which was collected during the course of search and seizure action carried out in case of DRA Group of Ahmedabad. On the basis of such information ld.AO formed belief that during the course of search and seizure action in case of DRA Group of Ahmedabad, it was observed that Shri Dineshchandra R. Agrawal of DRA Group runs the business in the name of “Dineshchandra R Agrawal Infracon Pvt. Ltd.” which has generated unaccounted money by way of booking bogus sub- contract expenses and purchases and assessee is one of the beneficiaries who has carried out bogus transaction with M/s DRAIPL to the extent of Rs. 6,46,31,000/- in the relevant assessment year and accordingly reached to the satisfaction that income to this extent has escaped assessment. Record also reveals that in the instant case also, it is evident that the ld.AO has simply proceeded with the information received from the some other officials, gathered by them in the course of inquiries conducted in the CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. case of some third party and no independent inquiry whatsoever was carried out by ld.AO before reaching to the conclusion that income has escaped assessment in the case of assessee which was also accepted by ld.AO vide order passed u/s 148A(d) that contract receipt/income has been properly declared and the taxes has also been paid. Hence, in substance it can be observed that there is no income which has escaped assessment and thus, it is submitted that since there was no independent application of mind by ld.AO while recording the satisfaction of escapement of income before issue of notice u/s 148 and he simply proceeded on borrowed satisfaction reached by some other officials without verifying the same, therefore, the entire proceedings initiated u/s 148 deserves to be held bad in law.Be that it may so in such a scenario, the proper course of action is that instead of invoking the provisions of section 148 of the Act, ld.AO should have invoked the provisions of u/s 153C of the Act. Because it was an intention of the legislature that if any documents found during search, pertain to a person other than the person searched, such documents shall be handed over to the Assessing officer having jurisdiction over such third person, who shall complete assessment in accordance with section 153C of the Act. On this aspect of the matter we get support ofour from the decision our High Court in the case of Shri. Shyam Sunder Khandelwal CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. Vs. ACIT, Jaipur (D.B.Civil Writ Petition No. 18363/2019) vs ACIT & others dated 19.03.2024 has decided the issue as under: “CONCLUSION:- 23. The reasons supplied in case in hand for initiation of proceedings under section 147/148 are based on the incriminating material and documents including Pen Drives seized during the search carried out of the Manihar Group and the statements recorded during proceedings. From the information received the AO noticed that the loan advanced and interest earned thereon were unaccounted. In other words the basis for initiation of section 148 proceedings is the material seized relating to or belonging to the petitioner, during the search conducted of Manihar Group.

for challenging the notice issued under section 148 of the Act.

42. It would be appropriate to mention that during the pendency of the writ petitions there was interim protection in favour of the petitioners.

43. The writ petitions are allowed accordingly.”

CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. Based on the above discussion and respectfully following the decision cited by the assessee we considered the grounds of cross objection raised by the assessee and thereby the same are allowed. In the result the appeal of the revenue in stands dismissed and that of the cross objection of the assessee in CO/19/JPR/2025 stands allowed. Order pronounced in the open court on 06/08/2025.