TMI Blog2023 (3) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... ses incurred towards job work was only Rs.10.87 crores, the absence of inquiry vis-a-vis job works would not render the assessment order passed by the AO, in these facts, erroneous. The expense incurred on job work was only 7.6% of the total contract value. It is not disputed, that in the preceding period, the expenditure towards job work as percentage of the contract value worked to 8.61%. PCIT, in our view, has in a sense attempted a reappreciation of the material placed before the AO and concluded that the examination of issue at hand should have been conducted in a particular manner. Having regard to the factors referred to hereinabove i.e., the manner in which the payments were made, production of bills, deduction of withholding tax, the amount which was claimed as expenditure when compared with the contract receipts, in our view, the AO s approach could not have been found flawed with by the PCIT, while exercising powers u/s 263 of the Act. A close perusal of the same would show, that they arose in a different fact situation. The judgment of the Division Bench of this Court in Commissioner of Income-tax vs. Ashok Logani [ 2011 (5) TMI 564 - DELHI HIGH COURT] was con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d loss account; (ii) Payments made to related parties under Section 40(A)(2)(b) of the Act; (iii) Current liabilities; (iv) Payments made to the contractors; and (v) Payment made towards stamp duty. 8. What is not in dispute, and something which emerges from the record, is that out of the five heads, only two heads, ultimately, became the subject matter of the PCIT s order passed under Section 143(3) of the Act. These two heads were: large other expenses claimed in profit and loss account , and payment made to contractors . 9. It is common ground, that even these two heads overlapped, and hence the ultimate focus of the PCIT was on to the payment towards job work amounting to Rs.10.87 crores. 10. The PCIT, thus, in the operative part of its order dated 25.03.2021 made the following observations: 10. From the above discussion, it is clear that the Assessing officer failed to enquire into and verify Job work charges claimed by the assessee which was one of the main reasons viz Large other expenses claimed in the P L Account on the basis of which the case of the assessee was selected. 11. Accordingly the assessment order u/s 143(3) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e record. 20. According to us, what clearly emerges from the record is as follows: (i) One, limited scrutiny under CASS was conducted. (ii) Two, queries were raised by the AO concerning job work charges. (iii) Three, ultimately, the entire focus of the PCIT was on job work charges, although five heads had been taken up initially for examination. (iv) Four, towards job work charges, the respondent had claimed as expenses, Rs.10.87 cr. 21. Given these broad facts, the Tribunal examined the issue at some length, bearing in mind the material on record. The Tribunal, thereupon, returned inter alia the following findings of fact: (i) Firstly, as noted above, the AO had raised a specific query with regard to the job work charges, and also asked for details, including bills as well as the withholding tax deducted on the payments made. (ii) Secondly, the assessee had filed party-wise details concerning the relevant bills and vouchers. (iii) Thirdly, the payments had been made through account payee cheques. (iv) Fourthly, withholding tax had been deducted with regard to each and every payment made towards job work charges. (v) Lastly, confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not brought any record or himself conducted any enquiry that such a payment of job work charges are bogus and non-genuine, or are inflated expenditure debited in the profit and loss account. Accordingly, the reasons given by the ld. PCIT for setting aside the assessment order cannot be upheld and the same is set aside and assessment order accepting the said job work charges is upheld. Accordingly, the appeal of the assessee is allowed [Emphasis is ours] 23. Having perused the reasons furnished by the Tribunal with regard to inquiry not being held by the AO under Section 133(6) of the Act, we are of the opinion, that the Tribunal was right, for two reasons. 23.1 Firstly, this was the most pragmatic view, given the fact that in the construction industry, labourers do move from one worksite to another, quite frequently. 23.2 Secondly, and this is in our view a more important aspect, the job work was carried out in 2014-15, and therefore, to commence an inquiry after nearly three years would have not led to any fruitful results. 24. In our view, if the facts obtaining in the case are juxtaposed with the admitted fact, that the total value of contract receipts wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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