Disallowance of job work expense without culpable evidence is unsustainable in law

United Foods Private Limited Vs ACIT (ITAT Delhi)

ITAT Delhi held that disallowance of job work expenses in absence of any culpable evidence, merely on the standalone base of non-compliance of summons served u/s 131 of the Income Tax Act, is unsustainable in law.

Facts- In the course of the scrutiny assessment, AO 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 AO. The notices u/s. 133(6) were issued by AO for verification purposes. The contractors however did not respond to the notice issued in respect of job work transactions. Consequently, AO 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.

Aggrieved, the assessee preferred appeal before the CIT(A). The CIT(A) endorsed the action of the Assessing Officer on the premise that the compliance of summons u/s. 131 has not been carried out by the job work service providers.

Aggrieved by the denial of relief in disregard to tangible evidences by the CIT(A), the assessee has preferred appeal before the Tribunal.

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