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2023 (1) TMI 267 - AT - Income TaxDisallowance of towards claim of job work expenses - contractors did not respond to the notice issued in respect of job work transactions - AO draw adverse inference on the genuineness of expenses and disallowed job work expenses - As per DR mere production of documentary evidences in itself is not sufficient to exonerate the assessee of its burden of proof - HELD THAT:- The assessee has successfully demonstrated the incurring of job work expenses on the basis of clinching evidences, both direct and circumstantial. No adverse materials to controvert these tell-tale evidences are on record at present. Shorn off the non-compliance of summons served under Section 131 - Assessee has filed formidable evidences to identify the contractors as well as the factum of incurring job work expenses as demonstrated by the income tax returns of the service providers. TDS has been deducted on such expenses and reflected in the return of income of the contractors. The increase in turnover, addition of new line of business, i.e., processing of rice and substantial increase in the fixed asset are vital indicators of plausibility of the explanation offered by the assessee in this regard. In this factual matrix, in the absence of any culpable evidence in possession of revenue, the job work expenses deserves to allowed, on a standalone basis, as incurred in the ordinary course of business. Non-compliance of summons - Admittedly, the summons under Section 131 were duly served on the contractors but had remained unresponded. In this backdrop, the observations in S. Hastimal vs. CIT [1962 (12) TMI 60 - MADRAS HIGH COURT] are worth noting wherein an impetus was given on the difficulty on the part of any assessee to explain a transaction after a decade. Similar view has been recently expressed by the Hon’ble Supreme Court in CITI Bank case [2022 (8) TMI 1107 - SUPREME COURT] This apart, we are alive to the concern of the assessee that owing to closure of business and in the absence of any support service available at the end of the assessee, it is not positioned to defend its stand on outcome of such inquiries after such a long gap and will cause onerous burden on the assessee if such inquiries are continued even after a decade. Having regard to these ground realities read with overwhelming tangible documents suggesting the state of affairs to true, we are not inclined to engage the department in futile exercise by second round of proceedings and rake up a stale cause. Needless to say, the assessee is not required to demonstrate the bona fides to the hilt and no infallible proof is required to be furnished to the satisfaction of the Revenue in every case. In the totality of circumstances so weighed cumulatively, the plea of the Assessee deserves to be accepted in the peculiar facts of the case. The action of the CIT(A) is thus set aside and the addition/ disallowance on account job-work charges are reversed and cancelled - Appeal of the Assessee is allowed.
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