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

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR

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BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 360/JPR/2025
fu/kZkj.k o"kZ@Assessment Year : 2017-18

Deputy
Commissioner of Income Tax,
Circle-1,
LFkk;hys[kk la-@thvkbZvkjla-@PAN/GIR No.: AABFB4917G vihykFkhZ@Appellant izR;FkhZ@Respondent

CO No. 19/JPR/2025
(Arising out of ITA No. 360/JPR/2025) fu/kZkj.k o"kZ@AssessmentYear : 2017-18
Circle-1,
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

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ITA No. 360/JPR/2025 & 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.
3. Revenue has preferred appeal on the following grounds: -
“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.”

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ITA No. 360/JPR/2025 & 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.”

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Bharat Spun Pipe and Construction Co., Jaipur.

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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 6
ITA No. 360/JPR/2025 & CO No. 19/JPR/2025
Bharat Spun Pipe and Construction Co., Jaipur.

grounds so raised by the assessee the relevant finding of the ld.
CIT(A)is reiterated here in below:-
“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

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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;

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Bharat Spun Pipe and Construction Co., Jaipur.

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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.
8. The ld. AR of the assessee though not given any thingso as to counter the finding of the ld. CIT(A) which is based on the merits of the dispute and after considering the various documents to prove that the assessee has undertaken the work and therefore, the addition is not warranted. However, the ld. DR relied upon the detailed note put up before the ld. Chief Commissioner of Income
Tax (O ), holding charge of PCIT-1, Jaipur also wherein the reasons for filling the present appeal were advanced which reads as follows;
“The decision of Ld. CIT(A) is not acceptable on merit.
In the Initial CSR, the AO has stated that the decision of the Ld.CIT(A) is acceptable. The AO's observation was that the CIT(A) has allowed the appeal by holding that the assessee submitted documentary proof of work executed by it.
The Ld.CIT(A) had also based his decision, drawing support from the fact that the addition of bogus expenses in the hands of the principal contractor M/s
Dineshchandra R Agrawal Infracon Pvt. Ltd. is deleted by ITAT, Ahmedabad.
On enquiry by the AO, it has been ascertained that an appeal in High Court has been preferred by the department against the decision of ITAT, Ahmedabad in the case of Dineshchandra R Agrawal Infracon Pvt. Ltd.
It is humbly submitted that the 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 10
ITA No. 360/JPR/2025 & CO No. 19/JPR/2025
Bharat Spun Pipe and Construction Co., Jaipur.

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.
It is humbly submitted that even through the tax effect in this case is above the monetary limit prescribed by CBDT, this is not a case where the departmental appeal to ITAT would find judicial favour, on the basis offact finding mention in the assessment order and appellate order.
It is not in doubt that the receipts of Rs.15,32,40,000/- shown by the assessee in its P&L A/c pertains to sub-contract work done by the assessee, and as such does not fall in the category of receipts which could make the assessee liable for addition u/s 68. There could have been a possibility that there was a connivance of the assessee with the principal contractor, and some portion of the receipts might have been passed off to the assessee for adjustment of expenses and lowering of tax liability, but that case has not been made out in the assessment order.
It is further submitted that looking to the facts that as the matter of bogus expenses in the hands of the principal contractor is still pending in Gujarat High Court, and the tax effect in this case is exceeding the monetary limits specified by CBDT for filing appeal before the ITAT, appeal to ITAT is considered.
Based on above facts, order of the Ld. CIT(A) is not acceptable on merits, the tax effect involved in the case is Rs.11,83,77,900/- which is more than the limit prescribed by the Board's Circular No.09/2024 dated 17.09.2024 for filing appeal before the Hon'ble ITAT. In view of the above facts and circumstances appeal is authorized before the Hon'ble ITAT Bench Jaipur in this case.

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.
9. Per contra, ld. AR appearing on behalf of the assessee supported the detailed order of the ld. CIT(A). The ld. AR of the assessee in support of the finding of the ld. CIT(A) and to support

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Bharat Spun Pipe and Construction Co., Jaipur.

the grounds of cross objection filed a common submission which reads as under :
“Brief Profile
The assessee is a partnership firm duly evidenced by a deed of partnership which is registered with the