TMI Blog2023 (1) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... et 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the assessed income of the Assessee. 4. Aggrieved, the assessee preferred appeal before the CIT(A). 4.1 The assessee filed documentary evidences in corroboration of claim of job work expenses and reiterated its claim before the CIT(A). The CIT(A) directed the AO to issue summons to the parties and make enquiries. Accordingly, summons under Section 131(1) were issued to the parties rendering job work services. As per the remand report from AO, it was observed by the Assessing Officer that despite service of summons on the parties, the parties did not turn up for substantiation of the jobwork services rendered to the assessee. The Assessing Officer thus re-asserted before CIT(A) that the non compliance of summons justifies the action of the Assessing Officer in denying the job work expenses. 4.2 The CIT(A) endorsed the action of the Assessing Officer on the premise that the compliance of summons under Section 131 has not been carried out by the job work service providers. 5. Aggrieved by the denial of relief in disregard to tangible evidences by the CIT(A), the assessee has preferred appeal before the Tribunal. 6. The ld. Counsel for the assessee canvassed wide rang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the Assessing Officer situated at the place of residence of the contractor for making requisite inquiries, if considered necessary. The action of the Assessing Officer issuing summons for personal attendance at Delhi is thus prima facie unjustified and outside the authority of law vested under Section 131 of the Act. The ld. counsel also contends that the factum of non attendance on issue of notice under Section 133(6) was not confronted to the assessee at the assessment stage. The requisite information including the IT returns of the contractors demonstrating the inclusion of receipt of job work income of exact amount was made available to the lower authorities. In appellate proceedings, the CIT(A) choose to direct the AO to exercise powers of Court vested under section 131 in substitution of Section 133(6) without showing as to how the documentary evidences filed smacks of any malafide. The AO while exercising powers under S. 131 failed to appreciate the constraints imposed by law in calling for personal attendance under Section 131 without observing the procedure laid down under CPC. The addition has been confirmed merely for non compliance of summons in total disregard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible documents already made available in this regard. It was thus contended that having regard to the peculiar circumstances, a fresh round of inquiry at this belated stage without any fault attributable to assessee would be a grossly futile exercise and would not serve any useful purpose. Remitting the matter back to the revenue for compliance of summons and that too without casting any aspersions on the documentary evidences would be dehors the ground realities and thus would possibly result in unjust treatment to the defunct assessee in such peculiar circumstances. (vii) To buttress its plea to shun second round of enquiry at the end of revenue in the peculiar circumstances where the assessee is altogether estopped prevented in dealing with and defend its interests, the Ld. counsel referred to a recent judgment of the Hon ble Supreme Court in Union of India vs. CITI Bank N.A. (2022) 141 taxman.com 409 (SC) wherein it was inter alia observed that such proceedings cannot be initiated in respect of transactions which took place long back. It was noted by the Hon ble Supreme Court that the records are unlikely to be preserved by a witness for such a long period to throw light o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned uncomplied with, by such contractors. In this regard, it is the case of the assessee that the payments to job work providers have been subjected to TDS provisions and the job work income is correspondingly reflected in the respective return of income filed by the contractors which is placed on record. Besides, the necessity of incurring expenses is also demonstrated circumstantially; viz. (i) acquisition of fixed assets and increase in Gross block by a nearly triple (ii) process activity translating in corresponding increase in turnover. Furthermore, the income tax return filed by the contractors establishes the identity of job work service providers with their addresses and therefore the onus on the assessee towards identification and genuineness of transaction is manifestly discharged by the overwhelming documentary evidences. A mere physical presence or otherwise of such service providers will not alter the factual matrix in the absence of any suspicious circumstance brought on record. The Assessee also contends that the authority issuing summons should judge the relevancy of documents or books of accounts before issuing summons for production of documents. There is no averm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose. The assessee asserts that on the face of speaking documents, it is difficult to visualize a different position emerging from such belated enquiry, if permitted, after lapse of considerable time and the closure of the business of the assessee. A reference was made to the judgment of the Hon ble Supreme Court in Union of India vs. CITI Bank N.A. (2022) 141 taxman.com 409 (SC) among others. 8.3 The reasons broadly condensed in the preceding paragraphs justifies the plea of the assessee. 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. 8.4 Shorn off the non-compliance of summons served under Section 131 of the Act, the 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 substa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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