TMI Blog2020 (7) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... finding of the learned CIT (A). Thus there cannot be any disallowance of the job work expenses as alleged by the AO. In holding so we find support and guidance from the judgment of Hon ble Gujarat High Court in the case of CIT vs. Avinash M Jhawar [ 2011 (4) TMI 1514 - GUJARAT HIGH COURT] - Decided against revenue. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ] - I.T.A. No. 414/Rjt/2015 - - - Dated:- 1-6-2020 - Shri Waseem Ahmed, Accountant Member And Smt. Madhumita Roy, Judicial Member For the Appellant : Shri M. N. Mourya, CIT.D.R. For the Respondent : Shri D. M. Rindani, A.R. ORDER PER BENCH: The captioned appeal has been f i led at the instance of the Revenue against the order of the Commissioner of Income Tax (Appeals)-1, Rajkot (CIT(A) in short) dated 26/06/2015 relevant to Assessment Year (AY) 2012-13. 2. The Revenue has raised the following grounds of appeal: 1. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. Ghanshyam Kher Grinding Job work 1319260 13. Shailendra Chauhan Welding Fabrication Job work 2217685 14 Noor Mohmmad Mansuri Welding Job work 3041605 15 Chotabhal B Bavariya Turning Job work 1131314 16 Yogesh L Bavala Drilling Job work 5063978 17 Jitendra Kumar Rashbihari Fitting job work 3638400 18 Imtiyaz Alikhan Pathan Turning Job work 1196400 19 Ram Bahadur Paswan Welding Job work 2815415 20 Mustafa Industries Welding Job work 12680754 21 Shailesh Industries Cutting Job work 101481 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced to 4.80% as against 11.43% in the assessment year 2010-11 which resulted increased in the gross profit margin for the year under consideration in comparison to the earlier assessment year. ii. The impugned job work charges have been paid to the parties through account payee cheque and after deducting the tax under the relevant provisions of the Act. Thus the identity of the party cannot be doubted as the payment was made through the banking channel. iii. Most of the job worker s have filed their respective income tax return showing the amount of income received from the assessee. iv. The parties mention and serial No. 22 and 23 were registered Labour contractors and were engaged in supplying the labour as many as 200 to 250. These parties were registered under the Provident fund Act. These parties were maintaining regular books of accounts including monthly salary register which were also audited and they were also filing the income tax return. v. The parties in their statements furnished under section 131 of the Act have not denied to have rendered job work services to the assessee against the payment received from the assessee. The parties have also disclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... custody of the assessee which was used in showing the bogus bills. In view of the above the AO held that the expenses claimed by the assessee for ₹ 10,24,42,002/- under the head of the job work charges are not genuine. Thus he disallowed the same and added to the total income of the assessee. 4. Aggrieved assessee preferred an appeal to the learned CIT (A). 5. The assessee before the learned CIT (A) submitted that the parties appeared before the AO in response to the notice under section 131 of the Act have admitted the fact that they have signed the bills raised to the assessee as well as in the bank opening form. Furthermore, there are more glaring evidences such as the payment was made through account payee cheque after the deduction of TDS and Income Tax returns of the job workers. The assessee also submitted that it was having cash credit facility in Union Bank of India therefore the bank accounts of the aforesaid parties were opened in the same bank account so as to facilitate easy transfer of payment. Similarly, the cash was withdrawn from the bank immediately by the parties for meeting their day-to-day expenses with respect to the salary of the workers. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany to these parties came back to the Appellant Company in any form. Even the statements recorded do not implicate the transactions with the assessee in any way. I find that the assessee has discharged its onus by adducing sufficient evidences. I also find that the job party is assessed to tax and the job charges received by them from the Appellant Company are included in their total job receipts. The job parties who were summoned and whose statement recorded u/s 131 have confirmed to the Assessing Officer that they have done job work for the Appellant Company. Sufficient evidences as mentioned above were furnished to Assessing Officer. In this way the Appellant Company has discharges its onus and proved that job work expenses are bona fide and genuine in its case. Merely by arbitrary presumptions it cannot be said that the amounts might have come back to Appellant Company. There is no such finding at all. There is no basis at all for this presumption. This renders the arbitrary presumption of the Assessing Officer to be completely baseless and unsustainable. In the absence of any such finding, the genuine expenditure incurred by Appellant Company for job work paid by ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard the rival contentions and gone through the facts and circumstances of the case. 'We have also perused the case records including the assessment order as well as the order of the CIT(A). We have also perused the paper book furnished by the assesses. We find that the assesses is an exporter of value added textile fabrics. We further find that the value addition work was got done from this job work party: We further find that the Assessee during the assessment proceedings has furnished following evidences in support of expenditure:- Job charges invoices raised by job party. Bank statements evidencing payments to the job party by account payee cheques, Copies of TDS certificates in respect of TDS deducted u/s 194C from this job party. Confirmation from this job party that they have done job work of Value addition and received payment for it. Ledger account copy of this Job party. We find that the assessee has discharged his onus by adducing sufficient evidences and it is well established law that assessee is required to prove his source only. Once the assessee proves his source (supply of service), addition cannot be made in his hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and invoices Without such processes (for which payments are made), production could not have been achieved at all, which establishes need and expediency as also factum of services having been rendered and received When all technical infrastructure belongs to company and it has its own plant, it is obvious for contracted workers to come and work in company premises; this is no reason for disallowance at all All contractors who were examined have confirmed rendering of services and receipt of payments for the same, for which payments were made by bank and TDS was made Party-wise evidence in support of impugned expenditure was submitted which included itemized bills/rates/nature of work done, bank statements, accounts and ITRs of large contractors All are PAN holders with KYCs in Banks In two large contractors' cases, even their labour payment registers were produced, which proves deployment and payment to labourers by them Similar expenditure (mostly same parties even) in earlier and later years are allowed to company by the Dept. in scrutiny assessments While GP ratio has improved over years (15.05% in AY 10-11 to 20.93% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... worker has not sufficient equipment and machinery to perform required job, they are providing services from assessee premises and there was the mismatch in the signature of the job workers in the bank opening form and in the bills/invoices raised to the assessee. In our considered view the basis of disallowances by the AO are merely a suspicion and not the conclusive evidences especially in the circumstances where there are many more direct evidences available on record. Such evidences include the payment through banking channel after the deduction of TDS, copies of the income tax returns, confirmation in the statement recorded under section 131 of the Act, registrations under the Provident fund Act of the Labour contractors. Further the allegation of the AO for mismatch in the signature as discussed above and the job worker working from the premises of the assessee has been sufficiently addressed by the assessee. Accordingly, the learned CIT (A) has given very clear finding of on the issues raised by the AO. Similarly, the Job workers in their statement recorded under section 131(1) have confirmed that they provided services of job work, received charges based on competitive m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hearing. However the period of 60 days can be extended under exceptional circumstances but the same should not ordinarily be further extended beyond another 30 days. In simple words the total time available to the Bench is of 90 days upon the conclusion of the hearing. However, during the prevailing circumstances where the entire world is facing the unprecedented challenge of Covid 2019 outbreak, resulting the lockdown in the country, the orders though substantially prepared but could not be pronounced for the unavoidable reasons within the maximum period of 90 days. In such circumstances we find that the Hon ble Mumbai Tribunal in the case of JSW Limited Vs Deputy Commissioner of Income Tax in ITA No. 6103/MUM/2018 vide order dated 14-5-2020 extended the time for pronouncing the order within 90 days of time by observing as under: 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the discussions above, the period during which lockdown was in force can be anything but an ordinary period. 10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon ble Bombay High Court did not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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