TMI Blog2019 (8) TMI 1457X X X X Extracts X X X X X X X X Extracts X X X X ..... e and has paid taxes thereon, then no disallowance should be made. Contention of the Ld. Counsel is concerned that only 30% should be disallowed in view of amendment brought in the statute w.e.f. 01-04-2015 and should be applied retrospectively - where disallowance has been made hundred percent and assessee does not challenge the quantum, then can he claim that disallowance ought to have been at reduced percentage. In a vice versa situation if amended provision increase the quantum of disallowance, then can revenue retrospectively disallow higher percentage of disallowance. Answer would be no. Whenever there is an amendment with regard to rate of tax or fixation of any quantum of deduction for disallowance or allowance, then such an amendment has to be interpreted prospectively only after the statute has brought the provision with prospective date. It is a trite law that a substantive provision cannot be given retrospective effect unless statute provides for. Its only when any beneficial provision is brought in the statute to undo any hardship and or remove any mischief, then such an amended provision is given retrospective effect. Thus, the contention raised by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed by the Ld. CIT( A) is confirmed and additions stands deleted. - Decided in favour of assessee. - IT APPEAL NO. 1228 (DELHI) OF 2015 - - - Dated:- 23-8-2019 - Amit Shukla, Judicial Member And Dr. B.R.R Kumar, Accountant Member N.K. Bansal, Sr. DR for the Appellant. V.K. Agarwal, AR and Ms. Sweta Bansal, CA for the Respondent. ORDER Amit Shukla, The aforesaid appeal has been filed by the revenue against impugned order dated 13.1.2015, passed by Ld. CIT(Appeals)-8, Delhi for the quantum of assessment passed u/s 143(3) for the assessment year 2010-11. In the grounds of appeal the revenue has raised following grounds:- 1. On the facts and in the circumstances of the case Ld. CIT(A) erred in law and on facts in deleting the disallowance of ₹ 97,900/- made by the Assessing Officer u/s 40(a)(ia) of the Income Tax Act, 1961. 2. The Ld. CIT(A) has erred in law and on facts in deleting addition of ₹ 14,81,258/- made by the Assessing Officer out of Labour expenses. 3. The Ld. CIT (A) has erred in law and on facts in deleting disallowance of ₹ 2,22,59,664/- made by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 M/s Kundan Lai Bhagwan Das 4,05,178 4 M/s Monga Iron Steel Pvt. Ltd. 9,69,099 5 M/s Sristhi Sales Corporation 26,50,250 6 M/s Yogesh Agencies 3,95,446 7 Shri Yousuf Khan 6,50,000 8 NKG Infrastructure Ltd. 1,66,33,109 Total 2,22,59,664 4. Ld. CIT (A) in so far as disallowance u/s 40(a)(ia) is concerned observed that this amount was shown as paid in the balance sheet and therefore, no disallowance could have be en made and deleted the said addition after following the judgment of Hon'ble Allahabad High Court in the case of CIT v. Vector Shipping Services (P.) Ltd. [2013] 38 taxmann.com 77/218 Taxman 93 (Mag)/357 ITR 642 (All). 5. In so far as adhoc disallowance of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment can be considered for addition. Ld. AO is directed to provide sufficient opportunity to the Ld. AR of the appellant at the time of order giving effect to this order and verify the explanation given by the appellant and accordingly reconsider the amount taken by him. Respectfully following the case of CIT v. Pancham Dass Jain (2006) 156 Taxman 507 (All.). I am of the opinion that provisions of section 68 are not attracted to amounts representing purchases made on credit. Since all purchases are claimed in Profit Loss Account, only unpaid purchases reflected in balance sheet cannot be added u/s 68 of the I.T. Act. Hence, Ground No. 8 is allowed. 8. Before us Ld. DR, in so far as disallowance u/s 40(a)(ia) is concerned, submitted that now the Supreme Court judgment in the case of Palam Gas Service v. CIT [2017] 81 taxmann.com 43/247 Taxman 379/394 ITR 300 (SC) the Hon'ble Supreme Court has settled the issue that not only on the amount shown as payable is disallowable u/s 40(a)(ia) but also on the amount shown as paid. Thus, reasoning of the Ld. CIT (A) deserves to be rejected. 9. On the other hand, Ld. Counsel for the assessee admitted that the controv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... av (supra), we are unable to subscribe to the contention of the Ld. Counsel, because when a substantive provision has been brought in the statute from a prospective date, it cannot be given retrospective effect. Because, now the statute has quantified the disallowance at a flat rate of 30% instead of 100% and such a reduced percentage of disallowance cannot be imported for all the past assessments. Further, such an amendment cannot be held to be beneficiary provision or clarificatory albeit as this provision now quantifies the disallowance at a certain percentage and such a quantification of disallowance cannot be held to be retrospective. For example, where disallowance has been made hundred percent and assessee does not challenge the quantum, then can he claim that disallowance ought to have been at reduced percentage. In a vice versa situation if amended provision increase the quantum of disallowance, then can revenue retrospectively disallow higher percentage of disallowance. Answer would be no. Whenever there is an amendment with regard to rate of tax or fixation of any quantum of deduction for disallowance or allowance, then such an amendment has to be interpreted prospective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. Lastly in so far as addition on account of sundry creditors are concerned, Ld. DR submitted that all the sundry creditors remained unverified even in response to enquiries made by the AO u/s 133(6). AO at page 5 of the assessment order has clearly mentioned that assessee has not filed any supporting bills/ vouchers or books of accounts. Accordingly, he submitted that such an addition has to be made u/s 68 and in support he relied upon the following judgment of Hon'ble Karnataka High Court in the case of Smt. Rekha Krishna Raj v. ITO [2013] 33 taxmann.com 64/215 Taxman 159. 16. On the other hand, Ld. Counsel for the assessee submitted that assessee has filed copy of ledger account of the sundry creditors which gives the opening and closing balances as well as bill numbers, details of payment made and additions made during the year. Ld. AO without even verifying the books of accounts or the records as produced before him has made the entire addition u/s 68 when most of the amount were not credited during the year and they are coming from the earlier years. He thus strongly supported the order of the Ld. CIT (A). 17. We have heard the rival submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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