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TMI Blog2020 (7) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order with a direction to frame denovo assessment keeping in view the observations made in the order passed under section 263 of the Act. Pursuant to the directions of the revisional authority, the Assessing Officer took up the assessment proceedings again and in the course of such proceedings conducted enquiry on the specific issue raised by the revisional authority in the order passed under section 263 of the Act. After calling upon the assessee to furnish various information/documents, the Assessing Officer ultimately completed assessment under section 143(3) r/w section 263 of the Act making the following additions. 1. Difference in receipt as per TDS certificate and P&L A/c Rs. 17,59,509 2. Interest income not offered to tax Rs. 31,814 3. Capital introduction added u/s 68 Rs. 22,75,552 4. Unexplained investment in house property u/s 69 Rs. 10,89,000 5. Addition u/s 68 on account of sundry creditors Rs. 2,15,92,724 3. The assessee contested the additions made by filing an appeal before the first appellate authority. After considering the submissions of the assessee in the context of the facts and material on record, learned Commissioner (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed by learned Commissioner (Appeals), the Assessing Officer has not made any in-depth enquiry to ascertain the correctness of assessee's claim regarding the receipt of labour charges. By simply issuing a notice under section 133(6) of the Act to Unity Infra Projects Ltd., the Assessing Officer has finished his part of the job without pursuing the concerned party any further even after not receiving any reply. Thus, the facts on record clearly show lack of proper enquiry by the Assessing Officer. It is a well settled legal principle that without making proper enquiry and bringing contrary material on record to falsify assessee's claim, the Assessing Officer cannot make addition purely on conjecture and surmises. That being the case, we do not find any infirmity in the decision of the learned Commissioner (Appeals) on the issue. Accordingly, ground raised is dismissed. 7. In ground no.2, the Revenue has challenged the deletion of addition of Rs. 10,89,000, made under section 69 of the Act. During the assessment proceedings, the Assessing Officer noticed that as per the details available, the assessee had purchased immovable property during the year by investing an amount of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Commissioner (Appeals) remains uncontroverted before us. Thus, it is established on record that source of investment in house property amounting to Rs. 10,89,000, has been properly explained by the assessee. That being the case, the addition made has been rightly deleted by learned Commissioner (Appeals). This ground is dismissed. 8. The common issue raised in grounds no.3 and 4, relates to the deletion of addition made of Rs. 2,15,92,724, on account of unexplained sundry creditors. Brief facts are, during the assessment proceedings, the Assessing Officer called upon the assessee to furnish the details of sundry creditors shown at Rs. 2,34,57,196. He found that out of the aforesaid, amount of Rs. 2,15,55,802, relates to suppliers which works out to almost 92% of the total sundry creditors. He, therefore, called upon the assessee to prove the genuineness of the sundry creditors. In response to the query raised, the assessee furnished a detailed submission vide letter dated 18th August 2015, to establish its claim of sundry creditors. It was submitted by the assessee that out of the total sundry creditors an amount of Rs. 2,23,73,670, was on account of wages and salary and out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the outstanding labour charges shown as sundry creditors cannot be treated as unexplained and added to the income of the assessee. She observed, even if the claim of the assessee regarding outstanding labour charges is not acceptable, the best can be done is to tax the profit element in the business and not the entire amount when the fact remains that the assessee has shown receipt of labour charges from Unity Infra Projects Ltd., for an amount of Rs. 3,34,77,197. Accordingly, she directed the Assessing Officer to estimate profit @ 8% on the labour charges received of Rs. 3,34,77,197, and add to the income of the assessee. Accordingly, she sustained the addition made by the Assessing Officer to the extent of Rs. 26,78,176. 10. The learned Departmental Representative drawing our attention to the observations of the Assessing Officer and other material on record, submitted that various documentary evidences furnished before the first appellate authority were never furnished before the Assessing Officer. Therefore, there is a violation of rule 46A. Further, he submitted that the assessee having failed to furnish the details of the sundry creditors and the persons to whom the outst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record. On a perusal of record, it is very much clear that the assessee is engaged in the business of labour contractor. This fact has also been admitted by the Assessing Officer in the assessment order. It is also a fact that in the books of account as well as in the Profit & Loss account, the assessee has shown an amount of Rs. 3.34 crores towards labour charges received from Unity Infra Projects Ltd. Facts available on record also establish that the assessee had entered into a contract with Unity Infra Projects Ltd. for supply of labour. Thus, it is quite natural and logical for the assessee to incur substantial expenditure towards labour, considering the fact that the work entrusted to the assessee was labour intensive. It is also a fact on record that in the course of proceedings before the Departmental Authorities, the assessee had furnished various documentary evidences to substantiate its claim of labour charges. Merely because some details of payees / labourers such as PAN, address, bank account copy, return of income copy, etc., could not be furnished, the Assessing Officer has treated the labour charges as unexplained and added to the income of the assessee. On one h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Being faced with a similar situation the Tribunal in case of DCIT V/s JSW Limited, ITA Nos.6264 & 6103/Mum/2018, dated 14th May 2020, after interpreting rule 34(5) of the Income Tax (Appellate Tribunal) Rules, 1963 as well as various decisions of the Hon'ble Supreme Court as well as the Hon'ble Jurisdictional High Court held that keeping in view the extraordinary situation prevailing due to the pandemic, the lockdown period has to be excluded for the purpose of time limit fixed for pronouncement of order as per rule 34(5). The relevant observation of the Bench in this regard is reproduced hereunder for better clarity:- "7. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 7th January 2020, this order thereon is being pronounced today on 14th day of May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows: (5) The pronouncement may be in any of the following manners: - (a) The Bench may pronounce the order im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon'ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that "In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saster, 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 approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed "while calculating the time for disposal of matters made timebound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly". The extraordinary steps taken suo motu by Hon'ble jurisdictional High Court and Hon'ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words "ordinarily", in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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