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2018 (10) TMI 729 - AT - Income TaxAdditions towards outstanding liabilities - treating the liabilities as bogus - one party did not appear against notice issued u/s 131 - however written statement was submitted before AO - Held that:- Creditors had only stated before the ld AO that they are all small time labourers and workers and do not have that much income left with them. We find that they had deposed correctly that in as much as their income component in the entire services rendered to the assessee would be miniscule but the total transactions carried out through them for and on behalf of the assessee would be more. The assessee had engaged them for rendering of specific services . The assessee cannot be expected to know how those parties render the services i.e either on their own or through outsourced agencies. For the services rendered by those creditors, the assessee would make total payments to them. - Those parties in turn would pay the respective dues to the outsourced agencies such as truck owners and lorry drivers. By this process, the amounts that would be left with those creditors would only be commission income which would be miniscule. The entire modus operandi of these transactions were explained by those parties in the statement given on oath before the ld AO. The fact of these creditors rendering services to the assessee is not denied or disputed by those parties or by the revenue. All these parties except one party had appeared before the ld AO with their respective identity proofs and statement recorded on oath from them. The fact of reimbursement of expenses made by the assessee is not disputed by the revenue before us and hence the corresponding liability thereon cannot be disputed. None of those creditors had denied having rendered services to the assessee. - Additions deleted. - Decided in favor of assessee.
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