TaxTMI 
TaxTMI 
2023 (1) TMI 267
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....ssment, the Assessing Officer inter alia made inquiries on the job work expenses incurred by the assessee amounting to Rs.3,02,39,330/. The name and addresses of all contractors rendering the services to the assessee were provided to the Assessing Officer. The notices under Section 133(6) were issued by the Assessing Officer for verification purposes. The contractors however did not respond to the notice issued in respect of job work transactions. Consequently, the Assessing Officer draw adverse inference on the genuineness of expenses and disallowed job work expenses of Rs.3,02,39,330/- while computing 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 t....
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....ndance by contractors at Delhi in pursuance of the summons served cannot per se be faulted to the prejudice of the assessee who has no control over the suppliers. Making reference to the provisions of the CPC governing exercise of powers under S. 131(1) of the Act, the ld. Counsel contends that asking third parties for personal attendance to vouch the transactions who are situated in distant places nearly 1200 kms away cannot be ordered in a casual & nonchalant manner. The ld. Counsel submits that the right course available to the Assessing Officer located in Delhi was to issue commission 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 wo....
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....nsaction by any person after such long gap as echoed by the Hon'ble Supreme Court in several judgments. The underlying documentary evidences supported by bank transactions are in any case available to assert the correctness of transaction recorded. (b) The business of the assessee has come to a grinding halt way back in 2016 and assets & records of the assessee ultimately were taken over by lender bank in its command in exercise of powers conferred under SARFAESI Act,2002 and therefore, the assessee is left with no wherewithal to defend its position in any other way except the tangible 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 shu....
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....e acquired during the year, as shown in the fixed asset schedule to achieve the requirement of processing/manufacturing activity. The assessee claims to have incurred job work expenses of Rs.3.02 crore which amounts to 1.28 % of the turnover. The payment towards job work charges were paid mainly to four job work contractors situated in Gandhidham, Gujarat. The Assessing Officer and CIT(A) has rejected the job work expenses claimed by the assessee on the ground that notice issued under Section 133(6) and thereafter summons issued under Section 131 to the contractors have remained 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 establishe....
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.... points out that the business operations of the assessee is closed in the subsequent years and the money lent by the banks to the assessee were declared as non performing assets (NPA) in September 2016 by the Punjab National Bank. Hence, all the assets were securitized on behalf of the bank under SARFAESI Act 2002 and thereafter mostly auctioned to realize the dues. The company is not doing business anymore and is rendered without any staff, financial records and other support and backup. Hence, a fresh round of inquiry on demonstrable facts will not serve any useful purpose. 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 ....