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

ITA 360/JPR/2025

AI Insights

The case revolves around the appeal by the Deputy Commissioner of Income Tax against the decision of the CIT(A) which had deleted the addition of Rs. 15,32,40,000 made by the Assessing Officer (AO) under section 68 of the Income Tax Act, 1961. The addition was initially made on the grounds that the assessee had received accommodation entries from Dinesh Chandra Agarwal Infracon Pvt. Ltd. in the form of bogus contract receipts. The assessee contested this by providing documentary evidence and explanations which were accepted by the CIT(A). The Tribunal, after examining the submissions and evidence, upheld the CIT(A)'s decision and dismissed the appeal by the revenue.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714195 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2017-2018
• Other Referred Cases: Dineshchandra R Infracon Private Limited vs. ACIT, Shyam Sunder Khandelwal vs. ACIT, Tirupati Construction Company vs. ITO, Hexaware Technologies Ltd. vs. ACIT, Kankanala Ravindra Reddy vs. The Income Tax Officer, Excel Commodity and Derivative Pvt. Ltd vs. Dy. CIT, Rajeshwari Birla vs. WTO, M.R. Shah Logistics (P.) Ltd. vs. Dy. CIT, PCIT vs. RMG Polyvinyl (I) Ltd., PCIT vs. Meenakshi Overseas (P.) Ltd., Laxmipat Singhania vs. CIT, Smt. Vasanthi Ramdas Pai vs. ACIT, Govinda Choudhury & Sons vs. ITO, M/s. M.R. Shah Logistics Pvt. Limited vs. ACIT, Sh. Navrattan Kothari vs. ACIT, Dineshchandra R. Agrawal Infracon Pvt. Ltd. vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALKA GAUTAM; V. C; STATING BELOW
• Assessee Lawyers: TARUN MITTAL
• Keywords: Set aside; Difference of opinion; Change of opinion; Opportunity of being heard; Reassessment proceedings; Tax effect; Reopening of assessment; Capital Gains; Principle of natural justice; TDS; Search and seizure; Accommodation entries; Earning of tax free income; Loose papers; Reason to believe; Double taxation relief; Opportunity of cross examination; Audi alteram partem; Tangible material; Borrowed satisfaction; Bogus
• Section: 147; 148; 143(3); 142(1); 263; 56; 132; 153A; 68; 139(5)

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ds le{k 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, Jaipur cuke Vs. Bharat Spun Pipe and Construction company 43, Industrial Area, Jhotwara, Jaipur. 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 Bharat Spun Pipe and Construction company 43, Industrial Area, Jhotwara, Jaipur. cuke Vs. Deputy Commissioner of Income Tax, 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 Printed from counselvise.com 2 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.” 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. Printed from counselvise.com 3 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.” 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. Printed from counselvise.com 4 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. 5. The brief fact as culled out from the records is that the assessee, M/s Bharat Spun Pipe and Construction Company, is a firm assessed as such, and filed its return of income for the assessment year 2017-18 on 08.01.2019, declaring income at Rs. 76,97,604/-. The case has been selected for scrutiny assessment proceedings under the issue as elaborated in the order u/s 148A(d) dated 30.07.2022. Thereafter, a notice u/s 148 was issued and duly served on the assessee on 30.07.2022 requiring the assessee to file ROI in the prescribed form within 30 days from the service of notice. A notice u/s 144B of the I.T. Act, 1961 dated 02.11.2022 intimating the assessee that the assessment proceedings in his case for AY under consideration has been selected for the purpose of faceless assessment/re-assessment. The case has been assigned to Assessment Unit for completion of assessment in faceless-manner in accordance with the procedure laid down in section 144B of the Act. In absence of any response from the assessee, notice u/s 142(1) was issued on 10.01.2023 calling for the details/information required in connection with the assessment proceedings. The assessee replied to those notices and submitted the details / information as called for. Printed from counselvise.com 5 ITA No. 360/JPR/2025 & 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 Printed from counselvise.com 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 Printed from counselvise.com 7 ITA No. 360/JPR/2025 & 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; Printed from counselvise.com 8 ITA No. 360/JPR/2025 & 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 ITA no 369/Ahd/2019 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. Printed from counselvise.com 9 ITA No. 360/JPR/2025 & 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. 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 (OSD), 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 Printed from counselvise.com 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 Printed from counselvise.com 11 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 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 Registrar of Firms. The firm is engaged in the trading and manufacturing of construction material like cement, sand, iron and steel, tiles etcalongwith activity of construction, repair, maintenance of roads, buildings and similar structures etc on independent as well as contract basis. Mr. Dinesh Chander Gupta (D C Gupta), a partner of the firm manages and looks after the affairs of the firm. The assessee firm e-filed its return of income u/s 139(1) of the Income Tax Act, 1961 (herein after referred to as “The Act”) on 30.10.2017 declaring total income of Rs. 76,97,600/- including contract income of Rs. 28,72,89,820/- for the year under consideration. The case of the assessee was selected under CASS and various details as sought by ld.AO were furnished before the ld.AO and ld.AO after thoroughly examining all the evidences furnished and explanations provided completed the assessment by passing an order u/s 143(3) of the Act thereby making an addition of Rs. 1,25,459 u/s 36(1)(va) of the Act. Thereafter, the case of the assessee was re-opened on the basis of information received from ACIT, Central Circle – (2)1, Ahmedabad during the course of search and seizure operation conducted on DRA Group of Ahmedabad wherein it was found that M/s Dineshchandra R Agrawal Infracon Private Limited (herein after referred to as “M/s DRAIPL”) has been generating 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 of Rs. 6,46,31,000/- from M/s DRAIPL during the year consideration which is liable to be added to the total income of the assessee. On receipt of the above information, ld.AO issued a notice u/s 148 of the Act on 21.04.2021 proposing to re-assess the income of the assessee. Subsequently, ld.AO issued notice u/s 148A(b) of the Act dated 28.05.2022 alleging that income from sub-contract from M/s DRAIPL is not included in the income tax return filed by the assessee firm. On receipt of notice, assessee filed a response dated 13.06.2022 wherein necessary explanation along with evidences were furnished before Ld.AO to establish that the income was included in the total income and due taxes has also being paid. Further, ld.AO passed an order u/s 148A(d) of the Act dated 30.07.2022 after recording satisfaction that income was properly disclosed in income tax return but had not provided any details of expenses incurred for such contract work and initiated the Printed from counselvise.com 12 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. re-assessment proceedings and also issued notice u/s 148 dated 30.07.2022. During the proceedings various details were sought by ld.AO which were duly complied by the assessee firm and necessary explanations and evidences were furnished before ld.AO and re-assessment proceedings were completed by passing an order u/s 147 of the Act dated 29.05.2023 assessing the total income at Rs. 16,08,53,729/- by making an addition of Rs. 15,32,40,000/- u/s 68 of the Act. Subsequently, appeal had been filed before ld. CIT(A) against the additions so made by ld.AO wherein ld. CIT(A) allowed the appeal of the assessee firm on merits and deleted the additions made by ld. AO. With above background, ground-wise submission is as under: Cross Objections Grounds of Appeal 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 Printed from counselvise.com 13 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. 8. Re-opening done on borrowed satisfaction 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 Printed from counselvise.com 14 ITA No. 360/JPR/2025 & 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 Printed from counselvise.com 15 ITA No. 360/JPR/2025 & 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 - Printed from counselvise.com 16 ITA No. 360/JPR/2025 & 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 ITA No. 425/JP/2017 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 ITA No. 204/2004 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. Printed from counselvise.com 17 ITA No. 360/JPR/2025 & 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.\" Printed from counselvise.com 18 ITA No. 360/JPR/2025 & 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 Printed from counselvise.com 19 ITA No. 360/JPR/2025 & 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 Printed from counselvise.com 20 ITA No. 360/JPR/2025 & 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. 6. However as per information the assessee has received sub contract from DRAIPL. Further as per enquiry conducted during search proceedings, DRAPIL is suppressing its income by booking bogus sub contract expense and the assessee is one of the sub-contractor of the company. The assessee has not provided any detail of expenses incurred in relation to the sub contract work undertaken by the assessee. In absence of supporting documentary evidence, it is not established that the work was actually executed by the assessee. This issue can only be verified during assessment proceedings since at this juncture it is not possible to reasonably state that transaction between DRAIPL and the assessee is genuine beyond doubt. Thus amount of Rs 15,32,40,000/- received as sub contract receipts from DRAIPL remains unexplained and has escaped assessment within the meaning of provisions of Section 147 of the Act.” In this regard, it is submitted that notice issued u/s 148 dated 21.04.2021 by ld.AO does not hold good in law as according to the provisions of Section 148A of the Act (as inserted by Finance Act 2021 and applicable from 01.04.2021), the assessing officer shall before issuing notice u/s 148, conduct an enquiry with prior approval of specified authority and provide an opportunity of being heard to assessee by issuing a notice u/s 148A(b) of the Act along with the material on which reliance has been placed by assessing officer to propose the re- assessment. The relevant extract of section 148A is as below: 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; Printed from counselvise.com 21 ITA No. 360/JPR/2025 & 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. Printed from counselvise.com 22 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. 17. The reliance placed by the counsel for the respondent on the decisions of Bhagchand Dinga and Ram Kishore Kadal (supra) is of no avail. The writ petitions were filed in those cases after passing of the reassessment order or just a day before when it was passed and the petitioner participated in proceedings. In the present case, the challenge to the initiation of proceedings was subjudice before this Court and during the pendency, the order under Section 147 of the Act was passed. 18. In view of the above discussion, the impugned order dated 26.07.2022 is quashed, resultantly, the consequential proceedings. The matter is remitted back to respondent to proceed with notice under Section 148-A(b) in accordance with law. 19. The writ petition is allowed. On the basis of the above judgement by the Hon’ble High Court of Rajasthan, it is observed that notice issued u/s 148 prior to issue of show cause notice u/s 148A(b) is not in accordance with the provisions of section 148A of the Act. It is further submitted that even if the re-assessment proceedings as initiated by ld.AO according to the old provisions of sec 148 and then in compliance of judgement of Hon’ble Supreme Court in case of Union vs. Ashish Agarwal, re-assessment proceedings as per the provisions of sec 148A are initiated, then prior to initiation of re-assessment proceedings as per 148A, ld.AO should has dropped the earlier proceedings initiated whereas the same were dropped much later vide order dated 17.01.2023. Hence the order passed consequent to these notices deserves to be quashed. Furthermore, in notice issued u/s 148A(b) of the Act, ld.AO has alleged that assessee firm is one of the beneficiaries who has carried out bogus transaction with M/s DRAIPL and not offered the income for taxation. Subsequently, order u/s 148A(d) of the Act was passed by ld.AO observing that contract income of Rs. 15,32,40,000/- has being properly declared and due taxes has also been paid but as details pertaining to expenses were not provided, which were never requested from assessee firm to furnish before ld.AO, ld.AO passed an order to initiate re- assessment proceedings. In this regard, it is submitted that assessee firm is sub- contractor who was assigned a work for construction of ROB & RE wall (90+733) of Two laning Landu-Nimbi Jodha-Degna-Merta city section road in length of 139.90 km under NHDP-IV on lump sum basis amounting to Rs. 15,45,00,000/- through work order dated 03.02.2015 (APB 88-89) from M/s DRAIPL. During the year under consideration, assessee firm has received Rs. 15,32,40,000/- from M/s DRAIPL as contract receipt which was also declared in the total receipt of assessee firm as explained by assessee vide its reply dated 13.06.2022 (APB 63- 65)and also furnished the necessary evidences to support the claim of the assessee firm. Thus, if the income which was alleged to have been escaped has been properly accounted for and the same is acknowledged by ld.AO as well then even as per ld. AO, there is no escapement of income, as the receipt has been duly shown in books of account, and the ld.AO should have dropped the initiation Printed from counselvise.com 23 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. of re-assessment proceedings. However in its order u/s 148A(d), the ld.AO has taken up an entirely new issue that though the receipt/income is disclosed by assessee but evidence of corresponding expenditure of work were not submitted. It is submitted that reasons now sought to be taken up by ld.AO vide order u/s 148A(d) is quite different from what was earlier communicated to assessee vide notice u/s 148A(b). Moreover no opportunity being provided to assessee to explain about the altogether new reasons and thereby order u/s 148A(d) so passed and consequent notice u/s 148 is bad in law and deserves to be quashed. In support of assessee’s above claim, reliance is placed on below judgements: 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.” Printed from counselvise.com 24 ITA No. 360/JPR/2025 & 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.” 4. Hon’ble High Court of Calcutta in the case of Excel Commodity and Derivative Pvt. Ltd vide appeal no. APOT/132/2022 & IA No.GA/1/2022 dated 29.08.2022 held as under: “…….the information has been lightly used which resulted in issuance of notice. As pointed out earlier, the assessee had submitted the explanation to the notice Printed from counselvise.com 25 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. along with documents in support of their claim. The assessing officer has given up the said allegation which formed the basis of the notice and proceeded on a fresh ground for alleging that the transaction with some other company was an accommodation entry. Therefore, on that score also the order dated 7th April, 2022 is liable to be set aside in its entirety without giving any opportunity to reopen the matter on a different issue.” Further, the claim of the assessee is supported by the judgement of Hon’ble High Court of Calcutta in the case of Rajeshwari Birla v. WTO (1979) 119ITR 629, 656(Cal.) wherein it was held by Hon’ble Court that revenue’s practice of shifting of stand was deprecated and the case was decided against the revenue because of the arbitrary and excessive use of power and jurisdiction. Without prejudice to above, it is further submitted that while passing order u/s 148A(d), AO has to decide whether it is a fit case for issue of notice u/s 148 or not i.e. whether there is escapement of income or not. However, in the instant case it is quite clear from the order of ld.AO u/s 148A(d) that ld.AO is himself not sure, as to whether there is really an escapement of income, as he has himself stated that income/receipt is shown by assessee and corresponding expenditure for this contract work can only be verified during assessment proceedings. There are ample decisions where courts have held that 148 proceedings cannot be initiated for the purpose of verification or roving inquiries. There has to be reasons to form the belief that income has escaped assessment. Thus the notice u/s 148 so issued without formation of belief as of escapement of income is bad in law and deserves to be quashed. In this regards reliance is placed on the following judicial pronouncements: 1. Hon’ble High Court of Karnataka, Bengaluru in the case of Smt. Vasanthi Ramdas Pai vide WP No. 8797/2022 & C/W WP NO.8815/2022 dated 12.02.2024 held as under: Section 148 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for (Validity of notice) - Whether Assessing Officer should have information as defined in Explanation 1 to section 148 that suggests escapement of income and only thereafter, provisions of section 148 can be invoked - Held, yes - Assessee, alongwith his wife, had sold shares acquired in MISPL and Quess Corp. Ltd. - Assessing Officer had issued notices under section 148A(b) on two premises: (i) that assessees were allotted shares in Quess Corp Ltd. as a consequence of demerger arrangements and same was taxable in terms of section 56(2)(x)(c); and (ii) that assessees having sold shares of Quess Corp before March 2018 ought to have offered same to tax - Thereafter, an order under section 148A(d) was passed and a notice under section 148 was issued - It was noticed that reasons given in notices merely mentioned that information was received in line with risk management strategy but did not disclose what kind of content information it was - While notice did not state anything more, annexure to notice talks of section 56 and long-term capital gains (LTCG) versus short-term Printed from counselvise.com 26 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. capital gains (STCG) - Further, it was observed that Assessing Officer in order passed under section 148A(d) had stated that assessee had not disclosed transactions in question for impugned assessment year, was falsified by second sentence which stated that assessee had claimed exempt income as LTCG from sale of shares - Whether since issuing notices was based on disclosure in existing return of income filed by assessee but on incorrect premise of non-disclosure and there was no new information whatsoever that came into his domain suggestive of escapement of income, impugned notice under section 148A(b) and passing order under section 148A(d) were liable to be voided - Held, yes [Paras F(a), F(b) and I(ii)] [In favour of assessee] 2. Ram Singh 306 ITR 343 (Rajasthan) Reassessment – Income escaping assessment – Income believed to have escaped investment explained by assessee – Tribunal rightly holding reassessment proceedings initiated on non-existing facts and invalid – Income Tax Act, 1961, ss. 147, 148. Thus, in the name of exercising the power under section 147, ld.AO cannot institute a roving enquiry with the object of fishing out materials as has been held in case Govinda Choudhury & Sons v. ITO 91977) 109 ITR 370. Furthermore, according to judgements in the case of Smt. Kantamani Venkata Satyavathi v. ITO (1967) 64 ITR 516, 521(AP); Madhya Pradesh Industries Ltd. v. ITO (1965) 57 ITR 637 (SC); Bhimraj Panna Lal v. CIT, (1957) 32 ITR 289 (Pat); M. Varadarajulu v. ITO, (1974) 97 ITR 476 (Mad.); Siesta Steel Construction Pvt. Ltd. v. K.K. Shikare, (1985) 154 ITR 547 (Bom.) and ChunnilalSurajmal v. CIT, (1986) 160 ITR 141 (Pat.), it is submitted that a roving enquiry in to the whole question as to has the expenditures actually being incurred in relation to the sub- contracting income with a hope that it might land the ld.AO somewhere wherefrom he can find out that income chargeable to tax has escaped assessment for the relevant assessment year is not permitted u/s 147 of the Act. Also the notice issued u/s 148 of the Income Tax Act, 1961 dated 30.07.2022 is bad in law for the reason that the said notice has been issued without a DIN. In this regard, from the perusal of the notice issued u/s 148 dated 30.07.2022 (APB 113), it can be observed that the said notice is issued without the Document Identification Number (DIN) as has been mandated by the CBDT vide its circular no. 19/2019 dated 14.08.2019. The relevant extract of the notice of re-produced below for your ease: “2. In order to prevent such instances and to maintain proper audit trail of all communication, the Board in exercise of power under section 119 of the Income- tax Act, 1961 (herein after referred to as \"the Act\"), has decided that no communication shall be issued by any income tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc. to the assessee or any other person, on or after the 1st day of October, 2019 unless a Printed from counselvise.com 27 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. computer-generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of' such communication. 1. ………… 2. Any communication which is not in conformity with Para-2 and Para- 3 above, shall be treated as invalid and shall be deemed to have never been issued.” 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. Printed from counselvise.com 28 ITA No. 360/JPR/2025 & 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.” Printed from counselvise.com 29 ITA No. 360/JPR/2025 & 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 ITA Nos. 3284/Del/2019 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. 10. Placing reliance on the decisions of Hon’ble jurisdictional Delhi High Court in the case of Pr. CIT Vs. Meenakshi Overseas (P) Ltd. 395 ITR 677, G&G Pharma 384 ITR 147, Subh Infrastructure 398 ITR 198 and Pr. CIT Vs. RMC Polyvinyl (I) Ltd. 396 ITR 5 wherein the Delhi High Court has held that observations of the Investigation Wing should not be treated as conclusions without the AO independently verifying the same , in the absence of which the Hon’ble Court held that the reopening of assessment was bad in law. 11. Hence, we hold that the proceedings u/s 148 of the I.T. Act are void ab initio and are liable to be quashed.” In case of PCIT vs. RMG Polyvinyl (I) Ltd [2017] reported in 83 taxmann.com 348 (Delhi) it is held by Hon’ble Delhi High court that where information was received from investigation wing that assessee was beneficiary of accommodation entries but no further inquiry was undertaken by Assessing Officer, said information could not be said to be tangible material per se and, thus, reassessment on said basis was not justified. In case of PCIT vs. Meenakshi Overseas (P.) Ltd. [2017] 82 taxmann.com 300 (Delhi) it is held by the Hon‘ble Delhi High court that where reassessment was resorted to on basis of information from DIT(Investigation) that assessee had received accommodation entry and there was no independent application of mind by Assessing Officer to tangible material and reasons failed to demonstrate link between tangible material and formation of reason to believe that income had escaped assessment, reassessment was not justified. In the circumstances it is submitted 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 case of some third party and no independent inquiry whatsoever was carried out by ld.AO before Printed from counselvise.com 30 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. 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. Departmental Ground of Appeal 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 Printed from counselvise.com 31 ITA No. 360/JPR/2025 & 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 Printed from counselvise.com 32 ITA No. 360/JPR/2025 & 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 Printed from counselvise.com 33 ITA No. 360/JPR/2025 & 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 Printed from counselvise.com Purchase Ledger 34 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. Printed from counselvise.com Direct Expense Ledger 35 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. Direct Expense Ledger & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. Printed from counselvise.com Purchase Invoice Direct Expense Invoice 36 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. Direct Expense Invoice & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. Printed from counselvise.com From the perusal of above it can be concluded that assessee firm had provided all the necessary explanations and evidences as was requested by 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 considering all the evidences. 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 of contract received from DRAIPL. Further, as stated that ld. 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 from DRAIPL. However, ld. AO has not given the credit of even such e incurred to the tune of Rs. 96,53,722/ i.e. Rs. 15,32,40,000/-. Thus, the addition made being baseless, unproved and 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 the case of Sh. Deepak Jain vs. ITO, Jaipur on 23.03.2023: 37 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. From the perusal of above it can be concluded that assessee firm had provided all the necessary explanations and evidences 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. and ld. CIT(A) has rightly deleted the addition made by ld. AO considering all the evidences. 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 of contract received from DRAIPL. Further, as stated that ld. AO has observed that 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 from DRAIPL. However, ld. AO has not given the credit of even such e incurred to the tune of Rs. 96,53,722/- and proceeded to the add the total receipts . Thus, the addition made being baseless, unproved and unverified deserves to be hold bad in law and deserves to be deleted and be held Hon’ble Income Tax Appellate Tribunal, Jaipur Bench, Jaipur held as under in the case of Sh. Deepak Jain vs. ITO, Jaipur vide ITA no. 196/JP/2021 decided & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. From the perusal of above it can be concluded that assessee firm had provided all 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. and ld. CIT(A) has rightly deleted the addition made by ld. AO after 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 AO has observed that 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 from DRAIPL. However, ld. AO has not given the credit of even such expenses and proceeded to the add the total receipts . Thus, the addition made being baseless, unproved and unverified deserves to be hold bad in law and deserves to be deleted and be held held as under in vide ITA no. 196/JP/2021 decided Printed from counselvise.com 38 ITA No. 360/JPR/2025 & 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). Printed from counselvise.com 39 ITA No. 360/JPR/2025 & 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. 22. The above captioned appeals are disposed of in the aforementioned terms.” Hon’ble Supreme Court in the case of Laxmipat Singhania v. CIT AIR 1969 SC 501, held that unless otherwise expressly provided, income cannot be taxed twice; and that it is not open to the Income Tax Officer, if income has accrued to the assessee and is liable to be included in the total income of a particular year, to ignore the accrual and thereafter to tax it as an income of another year on the basis of receipt. Hon’ble Gujrat High Court in the case of M.R. Shah Logistics (P.) Ltd. v. Dy. CIT 2018 SCC OnLine Guj 4850/[2018] 97taxmann.com 211/258 Taxman 103 (Guj.), held that once a company disclosed the unaccounted cash amount in the Income Declaration Scheme, 2016 and paid tax thereon, upon utilization of the same towards investment in share capital of the assessee company through various companies, the same could not be again subjected to tax in the hands of the appellant assessee. Hon’ble Gujrat High Court in the case of B. Nanji Enterprise Ltd. v. Dy. CIT 2017 (8) TMI 189/[2017] 84 taxmann.com 155/249Taxman 599 (Guj.), has held as under: Printed from counselvise.com 40 ITA No. 360/JPR/2025 & 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 ITA No. 369/Ahd/2019, 414/Ahd/2018, 1150/Ahd/2019, 415/Ahd/2019, 309/Ahd/2020 and 594/Ahd/2020 wherein ITA No. 1150/Ahd/2019 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: Printed from counselvise.com 41 ITA No. 360/JPR/2025 & 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 ITA No. 1150/Ahd/2019 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. Printed from counselvise.com 42 ITA No. 360/JPR/2025 & 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 :- S. No. PARTICULARS PAGE NOS. 1. Copy of Acknowledgement filed u/s 139(1) of the Income Tax Act, 1961. 1 2. Copy of Acknowledgement along with Income tax return form filed u/s 139(5) of the Income Tax Act, 1961. 2-54 3. Copy of Acknowledgement along with computation filed u/s 148 of the Income tax Act, 1961 55-58 4. Copy of notice dated 21.04.2021 issued u/s 148 of the Income Tax Act 1961. 59 5. Copy of notice dated 28.05.2022 issued u/s 148A(b) of the Income Tax Act 1961. 60-62 6. Copy of reply dated 13.06.2022 in response to notice dated issued u/s 148A(b) of the Income Tax Act 1961. 63-65 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 Printed from counselvise.com 43 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. S. No. PARTICULARS PAGE NOS. h. Copy of Letter to Partner Mr. Dinesh Chander Gupta providing enclosures such as Power of Attorney etc. 94 i. Copy of Exemption Certificate issued to M/s DRAIPL 95 j. Copy of letter from North-Western Railway granting permission for work to M/s DRAIPL 96 k. Copy of Testing Invoices and Testing Reports 97-105 l. Details of original work allotted to Principal M/s DRAIPL 106 7. Copy of order dated 30.07.2022 passed u/s 148A(d) of the Income Tax Act, 1961 107-111 8. Copy of Intimation issued informing issue of notice u/s 148 of the Income Tax Act, 1961 112 9. Copy of notice dated 30.07.2022 issued u/s 148 of the Income Tax Act, 1961 113 10. Copy of show cause notice issued dated 12.06.2023 of the Income Tax Act, 1961 114-125 11. 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 expenses invoicesalong with their ledgers 126-131 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 Printed from counselvise.com 44 ITA No. 360/JPR/2025 & 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 Printed from counselvise.com 45 ITA No. 360/JPR/2025 & 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 Printed from counselvise.com 46 ITA No. 360/JPR/2025 & 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 ITA no 369/Ahd/2019 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 Printed from counselvise.com 47 ITA No. 360/JPR/2025 & 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 Printed from counselvise.com 48 ITA No. 360/JPR/2025 & 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. 12. Now coming to the cross objection filed by the assessee the bench noted that the assessee has challenged the finding of the ld. CIT(A) on the ground that the ld. CIT(A) did not adjudicate the ground of the assessee about 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. The assessee also challenged that the ld. CIT(A) should have considered the prayer of the assessee to cross-examine the person whose statements were relied upon for making addition was Printed from counselvise.com 49 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. ever given to the assesses, which is a violation of the principles of natural justice. 13. On this ground the ld. DR submitted that the proceedingwere carried out in accordance with the law and thereby she stands by the action done by the ld. AO. 14. On the other hand, ld. AR of the assessee placed reliance on the detailed written submission filed by him. 15. We have heard the rival contention perused the material placed on record and the orders of the lower authorities disputed before us. Vide ground no. 1 to 1.3 the assessee challenged the 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 re-opened the case of the assessee. Before going into the disputeit would be appropriate to considered the following facts presented before us; 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 Printed from counselvise.com 50 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. 7. Notice u/s 148 dated 30.07.2022 issued without DIN 8. Re-opening done on borrowed satisfaction Record reveals that in the case of the assessee assessment u/s 143(3) of the Act was already completed 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 going through all the evidences furnished completed the assessment after making an addition of Rs. 1,25,459/- u/s 36(1)(va) of the Act. 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 Printed from counselvise.com 51 ITA No. 360/JPR/2025 & 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 Printed from counselvise.com 52 ITA No. 360/JPR/2025 & 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 Printed from counselvise.com 53 ITA No. 360/JPR/2025 & 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. 24. In the case where search or requisition is made, the AO under section 153A mandatorily is required to issue notices to the assessee for filing of income-tax return for the relevant preceding years. The AO assumes jurisdiction to assess/reassess 'total income' by passing separate order for each assessment. 25. In cases of the person other than on whom search was conducted but material belonging or relating such person was seized or requisition, the AO has to proceed under section 153C. The two pre-requisites are that the AO dealing with the assessee on whom search was conducted or requisition made, being satisfied that seized material belongs or relates to other assessee shall hand over it to AO having jurisdiction of such assessee. Thereafter, the satisfaction of AO receiving the seized material that the material handed over has a bearing for determination of total income of such other person for the relevant preceding years. On fulfillment of twin conditions the AO shall proceed in accordance with the provisions of section 153A. 26. Special procedure is prescribed under section 153A to 153D for assessment in cases of search and requisition. There cannot be a quibble with the proposition that the special provision shall prevail over the general provision. To say it differently the provisions of section 153A to 153D have prevalence over the regular provisions for assessment or reassessment under section 143 & 147/148. 27. Section 153A and 153C starts with non-obstante clause. The procedure for assessment/reassessment in section 153A, 153C in cases of search or requisition has an overriding effect to the regular provisions for assessment or reassessment under sections 139, 147, 148, 149, 151 & 153. 28. The language of explanation 2 to new section 148 is akin to section 153A and section 153C. Corollary being that after seizing of operational period of section 153A to 153D, the cases being dealt thereunder were circumscribed in the scope of newly substituted section 148. 29. The Department has not set up a case that for initiating proceedings under section 148 it had material other than the material seized during the search of Manihar Group. The contention was that though the material with regard to unaccounted loan advanced by the petitioner was received, the earning of interest on unaccounted loan was derivation of the AO from the material received. The Printed from counselvise.com 54 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. submission is that the derived conclusion cannot be acted upon under section 153C. The submission lacks merit and shall defeat the concept of single assessment order for each of relevant preceding years for assessing 'total income' in case of incriminating material found during search or requisition. 30. The argument that by enactment of section 153A to 153D has not eclipsed section 148 does not enhance the case of respondent to initiate the proceedings under section 148. On fulfillment of two conditions for invoking section 153C the proceeding in accordance with section 153A are to be initiated. The operating field of and section 153A to 153D and section 148 are different. Applicability of section 153C in cases where the seized material related to or belonged to person other than on whom search is conducted or requisition made does not render section 148 otiose. Section 148 shall continue to apply to the regular proceedings and also in cases where no incriminating material is seized during the search or requisition. 31. The other aspect of the matter is that under section 153A and 153C, 'the total income' is to be assessed. The total income includes returned income (if any), undisclosed income unearthed during the search or requisitioning and information possessed from the other sources. For Illustration:- An assessee had returned income of Rs.100, undisclosed income of Rs.200 is unearthed during search and there is information from annual information statement of non-disclosure of income of Rs.150/-. The AO under section 153A and 153C shall pass order dealing with income of Rs.100+Rs.200+Rs.150, the total income being Rs.450/-. In cases where there is no unearthing of undisclosed income of Rs.200/-, the department can resort to proceeding under section 147/148. 32. The argument that section 153C can be invoked in case there is incriminating material for all the relevant preceding years and otherwise section 148 is to be resorted to, is misplaced. On satisfaction of the twin condition for proceedings under section 153C, the AO has to proceed in accordance with section 153A. Notice is to be issued for filing of the returns for relevant preceding years and thereupon proceed to assessee or reassessee the 'total income'. It is not obligatory on the AO to make assessment for all the years, the earlier orders passed may be accepted. But once there is incriminating material seized or requisitioned belonging or relatable to the person other than on whom search was conducted, section 153C is to be resorted to. 33. Before concluding, it would be fair to deal with the case law cited by both the parties. 34. Reliance of respondents on decision of M/s. M.R. Shah Logistics Pvt. Limited (supra) is of no avail. The issue of interplay of provisions of section 147/148 vis-a-vis section 153C in the case of seized material relating or belonging to the person other than on whom the search was conducted or requisition made was not the issue before the Supreme Court. 35. The Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (supra) while dealing with the provisions of section 153A held that in case of absence of incriminating material seized during the search, the department is not remediless for reassessing the unabated assessment on the basis of material received from the other sources and can proceed under section 148. The decision does not Printed from counselvise.com 55 ITA No. 360/JPR/2025 & CO No. 19/JPR/2025 Bharat Spun Pipe and Construction Co., Jaipur. support the contentions raised that section 148 is rendered redundant if section 153C is to be resorted to in the facts of the present case. 36. The Single Bench of this Court in the case of Vijay Kumar Mehta (supra) held that if the Department has chosen not to proceed under section 153C, no right is created to the petitioner for getting the notice under section 148 quashed. Moreover, learned Single Judge was not having the benefit of the decision of the Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (supra). The appeal against the order was dismissed having rendered infructuous in view of the subsequent developments that the assessment order was passed. 37. The decision of the Madras High Court in the case of Saloni Prakash Kumar (supra) is of no help to the respondents. The High Court held that section 153C does not preclude issuance of notice under section 148. The field of applicability of two sections was not the issue before the Court. 38. The petitioner relied upon the decision of the Karnataka High Court in the case of Sri Dinakara Suvarna (supra). It would be relevant to quote Para-10: 10. Admittedly no proceedings were initiated under section 153C of the Act. Thus, there is patent non-application of mind. It is relevant to note that the author of the diary Smt. Soumya Shetty had passed away prior to the date of search. It was argued on behalf of the Revenue that Shri. Ashok Kumar Chowta had offered tax on lump-sum income. 39. Further reliance was placed upon the decision of the Bombay High Court in the case of M/s. Aditi Constructions (supra). The para-9 is quoted:- \"9. We find that the jurisdictional conditions for invoking section 147-148 are not satisfied as there is no failure to disclose material facts fully and truly. It is not in dispute that by the letter dated 11th September 2015 (Exhibit H) the Petitioner have submitted all the particulars along with supporting documents to the Respondent No.1. Hence the reasons to believe and a presumption based on the statement of Shri Bhanwarlal Jain (a third party) in the course of a search, that the loans of the entities were bogus or accommodation entries was clearly dispelled. Moreover, the specific provisions of S. 153C would prevail over the general provisions of section 147 in the case of search on 3rd party.\" 40. In view of above discussion the notices issued under section 148 and the impugned orders are quashed. However, the respondents shall be at liberty to proceed against the petitioners in accordance with law. 41. The first ground of challenge to initiation of proceedings under section 148 is being accepted and there is no need to dilate upon other grounds raised 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.” Printed from counselvise.com 56 ITA No. 360/JPR/2025 & 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 ITA no. 360/JPR/2025 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. Sd/- Sd/- ¼Mk0 ,l- lhrky{eh½ ¼ jkBkSM+ deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@JudcialMember ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 06/08/2025 *Santosh vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- DCIT, Circle-1, Jaipur. 2. izR;FkhZ@ The Respondent- Bharat Spun Pipe and Construction Company, Jaipur. 3. vk;dj vk;qDr@ Theld CIT 4. vk;dj vk;qDr ¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 360/JPR/2025& CO No. 19/JPR2025) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar Printed from counselvise.com "