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TMI Blog2020 (7) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... ral equipments. The assessee in the year under consideration has incurred jobs work expenses amounting to Rs. 33,67,20,932/- (Rs. 21,48,94,498.00 pertaining to Job work charges +Rs. 12,18,26,434/- pertaining to labour contractors charges). The AO out of such Job work charges conducted the enquiry with respect to certain job worker to whom Job work charges amounting to Rs. 10,24,42,002/- were paid. The details of such parties stand as under: S.No. Name of the Party Nature of work done Amount of job work expenses 1. Viharilal Ramlal Ram Welding Job work 494402 2. Vijay Hirabhai Ram Hydraulic Press Job work 135565 3. Balubha iBorkhetariya Welding Job work 1391831 4. Angadkumar Gupta Welding Job work 1625833 5. Shrilal Chauhan Welding Job work 1706535 6. Faruk M Laheji Material Handling charges 1660404 7. Sanjaygiri Aparnathi Filling & Dubering Job work 1299654 8. Baban Yadav Welding & Press Job work 40252 9. BirendraSinh Plazma Parts Job work 142214 10. Krishna Prasad Huseni Welding & Press Job work 3404658 11. Bhimsi Solanki Turning Job work 1762750 12. Ghanshyam Kher Grinding Job work 1319260 13. Shailendra Chauhan Welding & Fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a common business practice. As a result of outsourcing of such job work, the turnover of the assessee has increased from 254.52 crores in assessment year 2011-12 to Rs. 447.75 crores in the year under consideration. The job work charges to sales for the year under consideration has reduced 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 al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties made in the bank account in form viz a viz in the bills raised to the assessee. The AO in support of his contention placed the copy of the bank opening form and the bill in his order. Accordingly, the AO was of the view that all the cheque books of the parties were in the 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is adequately substantiated by the Appellant Company. There is no evidence anywhere that these concerns gave bogus jobwork bills to the Appellant Company. There is nothing on record to show that any part of the fund given by the Appellant Company 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 52 CTR (Guj) 228. I find that on similar facts the Ahmedabad Tribunal in case of Jhawar International Surat vs Income Tax Officer in ITA No.1938 & 2015/Ahd/2008 has allowed the claim by holding as under:- "We have heard 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 adduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture of products involves a large number of technical and manual processes; all of which was got done by contractors' workers, as shown in process flow chart 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 ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he preceding discussion, we note that the entire basis of making the disallowance by the AO was that job 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch to make endeavour to pronounce the order within 60 days from the conclusion of the 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 exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isaster under the National Disaster Management Act, 2005, and also in the light 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 Otter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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