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TMI Blog2017 (2) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee. - ITA No.6614/Mum/2014 - - - Dated:- 15-2-2017 - Sh. Rajendra, Accountant Member and Pawan Singh, Judicial Member For The Revenue by : Ms. Beena Santosh (DR) For The Assessee by : Shri Rahul Hakani (AR) Order u/s.254(1)of the Income- tax Act,1961(Act) Per Pawan Singh, J.M. 1. This appeal by Revenue under section 253 of the Income Tax Act ( Act ) is directed against the order of Commissioner of Income-Tax (Appeals)-33, Mumbai dated 20.08.2014 for Assessment Year (AY) 2007-08. The Revenue has raised the following grounds of appeal: 1. The Ld. CIT(A) has erred on facts and in law in not appreciating the fact that the amendment to section 40(a)(ia) inserted by the finance Act 2010 has application for and from AY 2010-11 and not earlier to 2010-11. 2. The Ld. CIT(A) has erred on facts and in law in deleting the disallowance of ₹ 16,63,444/- made by the AO u/s 40(a)(ia) of the act without appreciating the fact that the amendment brought in by the finance act 2010-11 has prospective effect and not retrospective effect. 3. The Ld. CIT(A) has erred on facts and in law in deleting the disallowance made by AO u/s 69(c) of the act o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO. The above gift should have been disallowed u/s. 56(1)(vi) of the I.T. Act. (e) The assessee sold 500 shares of M/s. Orient Cont. Co. on 31.03.2006 and earned the S.T. Capital Gain of ₹ 22,520/-. However, the same has not been included in the income of A.Y. 2006-07. As per the direction of ld. CIT, the Assessing Officer (AO) issued notice to the assessee u/s 143(2) and u/s 142(1) of the Act for fresh assessment. While making fresh assessment, the AO besides other addition and disallowance, disallowed a sum of ₹ 16,63,444/- u/s 40(a)(ia) , disallowed a sum of ₹ 2,04,85,861/- u/s 69C of the Act in assessment order dated 11.03.2013 passed under section u/s 143(3) r.w.s. 263 of the Act. On appeal before CIT(A) both the disallowance i.e. u/s 40(a)(ia) and 69C was deleted. Thus, Aggrieved by the order of CIT(AO) the Revenue has filed the present appeal before us. 3. We have heard ld. DR for Revenue and ld. AR for the assessee and perused the material available on record. The Ground No. 1 2 relates to deleting the disallowance of ₹ 16,63,444/- u/s 40(a) (ia) of the Act. The Ld. DR for the Revenue supported the order of AO and argued that despit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 210 (1) of the Act is that the as long as the payee/resident (which in this case is ALIP) has filed its return of income disclosing the payment received by and in which the income earned by it is embedded and has also paid tax on such income, the Assessee would not be treated as a person in default. As far as the present case is concerned, it is not disputed by the Revenue that the payee has filed returns and offered the sum received to tax. 5. We may also refer that the coordinate bench of Mumbai Tribunal in Piyush C Mehta 52 SOT 27, by following the decision of Calcutta High Court in CIT Vs Virgin Creation in ITA No. 302 of 2011 dated 23.11.2011 held that when the deducted tax was paid before the due date of return no disallowance is warranted. The Hon ble Apex Court in R.B. Jodhamal Kuthiala 82 ITR 570 held that the provision which has the remedy to make the provision workable, require to be treated with retrospective operation so that reasonable restriction can be given to the section as well. Thus, we may conclude that ground No. 1 2 of appeal raised by Revenue is squarely covered in favour of assessee by the decision of Hon ble Delhi High Court in Ansal land Mark Towns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some of the supplier have closed down their business and ask for further time to produce the parties. The assessee instead of producing the parties filed details of this of the parties payments made aware and contended that they are not in a position to produce the parties after more than five years from the date of purchase. The AO made the enquiries through Ward Inspector, who reported that none of the parties mentioned in the list are available on the address mentioned in the bills. The AO after examining the details of each of the parties and their outstanding as on 31st March 2007 added a sum of ₹ 58,26,358/-as well as made the addition of a entire aggregate of purchases under section 69C of the Act. During the first appellate proceeding similar arguments were made before Commissioner (Appeals). The assessee further filed evidences in the form of paper book containing reconciliation the statement, utilization / consumption of RAM material purchased from all 11 parties, ratio of consumption as compared to the preceding years, comparison of gross profit ratio of the current year and the preceding years, Bank statements showing the details of payment made to the parties, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai in case of Rajeev Kalahathi ( ITA No. 6727/ Mum/2012 vide order dated 23 August 2014 has held on a similar set of facts that went the transportation of goods are not in doubt or the conjunction of metal is not in doubt addition cannot be made merely on the basis of the supplier one hawala dealers. In the instant case assessee has shown product wise consumption of raw material indicating the receipt and consumption of material. I do not find any reason to sustain the addition made by the AO. Therefore, considering the above facts and more so the remand report of the AO addition made by the AO is deleted. This ground is allowed. 8. We have seen that the ld CIT(A) on filing additional evidence before him, forwarded the evidence to AO for his report. The AO furnished his report and after considering the remand report, examined the gross profit for previous years and found that the gross profit of assessee was increased in the year under consideration. We have further noticed that the ld DR could not bring any material in our notice or convince us, which may influence us to differ with the finding of the ld CIT (A). Thus, we do not find any merit in the ground No.3 4 of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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