INCOME TAX ACT, 1961

Section 69C

Income from undisclosed sources - Addition undr section 69C - Job work charges alleged as bogus -

Assessee private limited company engaged in business of agricultural equipments incurred jobs work expenses. AO held the expenses as bogus or fictitious in nature on the ground that job worker had not sufficient equipment and machinery to perform required job, they are providing services from assessee premises and there was the mismatch in signature of job workers in bank opening form and in the bills/invoices raised to assessee.Held: Basis of disallowances by AO merely a suspicion and not conclusive evidences especially in the circumstances where there were many more direct evidences available on record which included the payment through banking channel after deduction of TDS, copies of income tax returns, confirmation in statement recorded under section 131, registrations under Provident Fund Act of Labour contractors. Similarly, job workers in their statement recorded under section 131(1) had confirmed that they provided services of job work, received charges based on competitive market rate and offered the same for taxation. Further, there was no evidence brought by revenue suggesting that amount paid to job worker returned to assessee in any manner. On perusal of details of job work expenses incurred by assessee in earlier years, expenses for the year under consideration towards job charges in relation to the sales has reduced significantly. Accordingly, there was a direct relation between amount of sales viz-a-viz job work charges incurred by assessee, therefore such turnover could not be achieved without incurring job work expenses. When job work parties of whose statement were recorded under section 131(1) themselves confirmed that sign on the bills and that on account opening form was their, there was no ground of any other presumption. Accordingly, there could not be any addition of job work expenses under section 69C.

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