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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 ..... at the time of hearing the learned DR has not brought anything on record contrary to the 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 ] - 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. The H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India. In most of the cases the assessee acted as the introducer in the opening of such bank account of the parties. Further verification of the bank statement of these parties, it was revealed that there was the immediate cash withdrawal from the bank after depositing the cheques into these accounts. Furthermore, all these parties were operating from the premises of the assessee for providing the so-called Job work services. ii. The statements under section 131 of the Act, were recorded with respect to few of the parties namely Shri YogeshBavda, Shri Pravin M. Yadav, Shri Moharram Ali Ansari and Shri SanjaygiriAparnathi. From the statements, it was gathered that these workers were working as the employee of the assessee for the reasons as detailed under: a. These job workers did not have sufficient machineries and equipments to carry out the job work assigned by the assessee. b. The signatures of these parties as recorded in the statement furnished under section 131 of the Act, were not matching with other documents such as banking documents, bills issue by them to the assessee. c. In most of the cases the bills raised by the job worker were identical and generated by the compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments including in the statement furnished under section 131 of the Act. Furthermore, the computer-generated bills being identical cannot lead to draw an inference that the claim of the assessee is false more particularly where glaring evidences are available on record that assessee has undertaken the services of the job worker. Similarly the job workers were operating at the premises of the assessee for the reason that they were working on the heavy and bulky equipments which were manufactured at the premises of the assessee. As such it was not possible to transport such heavy and bulky equipments at the premises of the job worker. viii. The assessee with respect to the job workers who either not responded to the notice issued under section 131 of the Act or notice were not served upon them file the copies of the income tax return of the job worker s, copies of the bills and ledgers, bank statements, balance sheet, profit and loss account, capital account in support of its contention. The assessee further claimed that non-reply of the notice issued under provision of the Act, cannot lead to draw an inference that the aforesaid parties were not genuine. However, the AO disagreed w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing officer. The payments were made by account payee cheques after deducting due T.D.s. and there is no finding that any portion of these payments returned back to the Appellant Company. The Assessing officer has contended that the signature on the account opening forms and that on the bills is different and therefore there is presumption that the jobwork expenditure incurred in respect of 23 parties is bogus. The only contention of the Assessing officer to disallow jobwork expenses and treat it as bogus is because of change in signature in bank documents and alleged invoices provided to the Appellant Company. He has also observed that the jobwork party did not have any independent infrastructure to provide such services. Both these allegations have been adequately addressed and contended by the Appellant company in paper book filed before me and the arguments of the Appellant Company in respect of the same appears to be satisfactory and palatable. These cannot be made basis for concluding the expense as bogus. When the jobwork parties of whose statement were recorded u/s 131(1) of the Income Tax Act, 1961 themselves have confirmed that the sign on the bills and that on the accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... everybody that the bank account, now a days, could be opened only on submission of proper documents. The bank account copies collected by the assessing officer shows that the Appellant Company had made the payments to the above said parties by way of account payee cheques. Thus, it is seen that the transactions have been routed through the bank accounts. Further the Appellant Company has furnished the Income Tax Return, Bank passbook (wherever available), copy of ledger accounts, TDS deduction details of the above parties to prove their existence and bonafide of the transaction, Thus, it is seen that the Appellant Company has furnished many documents to prove the existence of the parties and bonafide of the transaction of jobwork and they have not been controverted by the assessing officer. In such cases it would have been better that before embarking upon the path of proving the expenditure as bogus, the Assessing officer should have looked into the business results compared to the earlier years i.e comparision of Gross profit margins. From the facts submitted, it is observed that Gross profit margin of the Appellant Company has increased from 15.05% in A.Y. 2010-11 to 20.93% In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the job work charges in question incurred by the Appellant Company cannot be said to be bogus. In view of the above facts and the case laws discussed above, addition made by the Assessing officer is hereby deleted. 7. Being aggrieved by the order of the learned CIT (A), the Revenue is in appeal before us. 8. The learned DR before us reiterated the findings of the AO and vehemently relied on his order. 9. On the other hand the learned AR before us filed a paper book running from pages 1 to 245 and submitted that: Company manufactures agricultural implements of various types and weights, for harvesting, planting etc. such as harvesters, tillers, diggers, mowers etc. It manufactured nearly 68,000 large and small items and made turnover of ₹ 447 crores (last year ₹ 254crores) Company has adopted practice if using contract labour and in-house job work sourcing instead of payroll workers for business expediency perceived by it; this is a well recognized practice in large industries Business expediency was explained during assessment as also to CIT-A It retained over 900 skilled and unskilled workers by this method as against only 39 supervisors; there were thus no workers o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll contractors is based on surmises and on peripheral, insignificant factors with no cogent material; AO could not have ignored the factum of services being received and there being no other expenditure on wages and that too at a reasonable percentage; impugned disallowance formed only 2.5% of total expenditure of the company, which showed a substantial profit of over ₹ 48 crore; no company could survive without 900 workers needed for such scale of operations and it is inconceivable and improbable that a company would debit 'bogus' expenditure. Both the ld. DR and AR vehemently supported the order of the authorities below a favorable to them. 10. We have heard the rival contentions of both the parties and perused the materials available on record before us. The issue in the present case relates to the disallowance of the expenses claimed by the assessee under the head job work charges to the tune of ₹ 10,24,42,002/-. The AO was of the view that the impugned expenses are bogus or fictitious in nature and therefore the same was disallowed by him. However the learned CIT (A) was pleased to delete the addition in view of the fact that the transaction was carried out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 in tax appeal number 2299 of 2009 wherein it was held as under: From the above discussion, it can be clearly seen that the entire issue has been decided by the Tribunal on the basis of evidence on record. The assessee had made payments for job work done through account payee cheques. There were other corroborative evidences to prove such evidence. The Assessing Officer has committed error in disallowing such claim. In addition to having made payments through A/c. Payee cheques, the assessee had also produced TDS Certificate in support of its claim. The Assessing Officer observing that such cheque payments could have been withdrawn and reverted back to the assessee were not based on evidence. We find no infirmity in the order of the Tribunal. Accordingly, Tax Appeal stands dismissed. In view of the above and after considering the facts in totality, we do not find any infirmity in the order of the learned CIT (A). Hence, we decline to interfere in the order of the learned CIT-A. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown . Hon ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, It is also clarified that while calculating 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 , and also observed that arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020 . It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure . The term force majeure has been defined in Black s Law Dictionary, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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