ITAT Jaipur Deletes ₹6.26 Cr. Addition u/s 68 on Sub-Contract Receipts – Double Taxation Avoided

Radhakishan Beniwal Vs DCIT (ITAT Jaipur)

ITAT Jaipur Deletes ₹6.26 Cr. Addition u/s 68 on Sub-Contract Receipts – Double Taxation Avoided

Background

• • Assessee, a civil contractor (AA Class, PWD registered), executed NHAI project work as an approved sub-contractor of Dineshchandra R. Agrawal Infracon Pvt. Ltd. (DRAIPL).
  • During reassessment, AO alleged that assessee was a beneficiary of bogus sub-contracts unearthed in DRAIPL search.
  • AO held that ₹6,26,68,011/- credited in assessee’s books was unexplained u/s 68, despite TDS being deducted u/s 194C & income shown in P&L.
  • CIT(A) partly allowed appeal but set aside matter to AO for verification, instead of deleting addition.

Assessee’s Arguments

• • All documents including sub-contract agreement, NHAI approval letters, bank statements, Form 26AS, audited accounts were furnished.
  • Receipts already reflected in P&L and taxed as business income → addition u/s 68 would amount to double taxation.
  • CIT(A) had no power to remand under s.251(1)(a) (except for best judgment cases u/s 144).
  • Relied on Smt. Harshila Chordia (Raj HC), Shree Sanand Textile (ITAT Ahd), Dewas Soya (ITAT Indore).

Tribunal’s Observations

On CIT(A) powers:

• • Post Finance Act 2001, CIT(A) cannot set aside/remand except in s.144 cases.
  • CIT(A) erred in directing AO to verify documents already on record.

On Section 68 addition:

• • Receipts were duly recorded as sales, subjected to TDS, & offered to tax.
  • Once income is taxed as turnover, addition u/s 68 on same sum is impermissible double taxation.
  • Section 68 applies only when credit is unexplained. Here, nature & source were fully explained with evidence.

Decision

• • ITAT held ₹6.26 Cr. addition under s.68 unsustainable.
  • Directed deletion of addition; ruled that CIT(A)’s remand exceeded jurisdiction.
  • Appeals of assessee allowed in full.

FULL TEXT OF THE ORDER OF ITAT JAIPUR