M/s. Ramlal Rupchand, Kolkata V. ITO, Ward - 45(1), Kolkata , Kolkata

ITA 1210/KOL/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 7215 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 01-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BISWANATH DAS CIT SR DR RE
• Assessee Lawyers: NAVEEN SURANA
• Section: 40A(3); 143(3); 131; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA SMC BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER) ITA NO. 1210/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. RAMLAL RUPCHAND.......................APPELLANT C/O VIMAL TEXTILES 18, J.L. BAJAJ STREET KOLKATA 700 007 [PAN : AAGFR 7933 R] VS. INCOME TAX OFFICER, WARD-45(1), KOLKATA..................RESPONDENT APPEARANCES BY: SHRI NAVEEN SURANA, FCA, APPEARED ON BEHALF OF THE ASSESSEE. SHRI BISWANATH DAS, ADDL. CIT, SR. D/R. APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : SEPTEMBER 4 TH , 2018 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 28 TH , 2018 ORDER PER J. SUDHAKAR REDDY, AM :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-13, KOLKATA, (HEREINAFTER THE LD. CIT(A)), DT. 17/04/2018, PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT), RELATING TO ASSESSMENT YEAR 2009-10. 2. THE ASSESSING OFFICER IN THIS CASE PASSED AN ORDER U/S 143(3) OF THE ACT, PURSUANT TO THE ORDER OF THE LD. PR. CITS ORDER PASSED U/S 263 OF THE ACT. THE ASSESSEE PURCHASES GOODS FROM M/S. RUPA & CO. LTD. OUT OF THE TOTAL PURCHASES MADE FROM M/S. RUPA & CO. LTD., AN AMOUNT OF RS.22,00,000/- WAS PAID ON VARIOUS DATES IN CASH IN VIOLATION OF SECTION 40A(3) OF THE ACT. BEFORE THE LD. ASSESSING OFFICER, IN RESPONSE TO THE SHOWCAUSE NOTICE, THE ASSESSEE PLEADED THAT M/S. RUPA & CO. LTD. HAD FORCED THE ASSESSEE TO PAY IN CASH AND THAT THIS FACT IS EVIDENCED BY THE LETTERS WRITTEN BY THEM. THE ASSESSING OFFICER ISSUED SUMMONS U/S 131 OF THE ACT TO M/S. RUPA & CO. LTD, AND IN RESPONSE SHRI PIYUSH JHUNJHUWALA, LD. SR. COUNSEL FOR THE ASSESSEE APPEARED ON 27/06/2014 AND SUPPORTED THE SUBMISSIONS OF THE ASSESSEE. THE ASSESSING OFFICER REJECTED THE CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT THE EXCEPTIONAL CIRCUMSTANCES PROVIDED UNDER RULE 6DD OF 2 ITA NO. 1210/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. RAMLAL RUPCHAND THE INCOME TAX RULES, 1962 (RULES), DO NOT COVER THE FACTS AND CIRCUMSTANCES OF THIS CASE. HE MADE A DISALLOWANCE U/S 40A(3) OF THE ACT. ON APPEAL THE LD. FIRST APPELLATE AUTHORITY CONFIRMED THE SAME ON THE GROUND THAT THE ASSESSEE HAS FAILED TO EXPLAIN ANY COMPLEX SITUATION REQUIRING THE ASSESSEE TO MAKE CASH PAYMENTS. 3. AFTER HEARING RIVAL CONTENTIONS, I FIND FROM THE PAPER BOOK THAT M/S RUPA & CO. LTD. HAS ISSUED LETTERS ON VARIOUS OCCASIONS, NECESSITATING THAT PAYMENTS TO BE MADE IN CASH AS THE SAME IS URGENTLY REQUIRED. IT IS ALSO STATED THAT IT WOULD RETAIN CERTAIN GOODS AND THAT THE GOODS WOULD BE REALISED ONLY WHEN PAYMENT IN CASH IS RECEIVED BY THEM. THE LD. D/R SUBMITS THAT THESE LETTERS ARE IDENTICAL AND HENCE THE GENUINENESS OF THE SAME IS DOUBTFUL. WE FIND THAT THE ASSESSING OFFICER NOR THE LD. CIT(A) DOUBTED THE GENUINENESS OF THE LETTERS. IN FACT M/S RUPA & CO. LTD. CONFIRMED THE ISSUANCE OF SUCH LETTERS IN RESPONSE TO THE SUMMONS ISSUE BY THE ASSESSING OFFICER. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF M/S. A DAGA ROYAL ARTS VS. ITO, ITA NO. 1065/JP/2016, ASSESSMENT YEAR 2014-15, ORDER DT. 15/05/2018, AND THE ORDER OF THE KOLKATA A BENCH OF THE TRIBUNAL IN THE CASE OF M/S. EXCEL ENGINEERS VS. JCIT IN ITA NO. 1588/KOL/2013, ORDER DT. 25/11/2016, AND CERTAIN OTHER DECISIONS. HE ALSO DREW THE ATTENTION OF THE BENCH TO THE CBDT CIRCULAR ISSUED AND POINTED OUT THAT THE BOARD HAS SPECIFICALLY STATED THAT EACH AND EVERY CIRCUMSTANCES COULD NOT BE COVERED UNDER RULE 6DD OF THE RULES. THE JAIPUR BENCH OF THE ITAT IN THE CASE OF M/S. A DAGA ROYAL ARTS VS. ITO (SUPRA) WHILE DEALING WITH IDENTICAL ISSUES HELD AS FOLLOWS:- 42. WE FIND FORCE IN THE CONTENTIONS SO RAISED BY THE LD AR. THE TRANSACTIONS HAVE BEEN EXECUTED BY THE ASSESSEE WITHIN A SPAN OF ONE AND HALF MONTH AND THERE ARE TRANSACTIONS WHERE THE PAYMENT HAS BEEN MADE THROUGH CHEQUE AND THERE ARE TRANSACTIONS WHERE THE PAYMENT HAS BEEN MADE THROUGH CASH. THE SAID CONTENTIONS ARE SUPPORTED BY THE FACT THAT ON THE SAME DAY, THERE ARE CASH AND CHEQUE PAYMENTS AS EVIDENCED FROM THE DETAILS OF THE TRANSACTIONS APPEARING AT PAGE 7 AND 8 OF THE ASSESSMENT ORDER. IT IS THEREFORE CLEAR THAT THE ASSESSEE WAS HAVING SUFFICIENT BANK BALANCE AND ONLY AT THE INSISTENCE OF THE SPECIFIC SELLERS, THE ASSESSEE HAS WITHDRAWN CASH AND MADE PAYMENT TO THEM AND WHEREVER, THE SELLER HAS INSISTED ON CHEQUE PAYMENTS, THE PAYMENT HAS BEEN MADE BY CHEQUE. THIS MAKES OUT A CASE THAT THE ASSESSEE HAS BUSINESS EXPEDIENCY UNDER WHICH IT HAS TO MAKE PAYMENT IN CASH AND IN ABSENCE OF WHICH, THE TRANSACTIONS COULD NOT BE COMPLETED. THE SECOND PROVISO TO SECTION 40A(3) REFERS TO 'THE NATURE AND EXTENT OF BANKING FACILITY, CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS' WHICH MEANS THAT THE OBJECT OF THE LEGISLATURE IS NOT TO MAKE DISALLOWANCE OF CASH 3 ITA NO. 1210/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. RAMLAL RUPCHAND PAYMENTS WHICH HAVE TO BE COMPULSORY MADE BY THE ASSESSEE ON ACCOUNT OF BUSINESS EXPEDIENCY. FURTHER, THE SOURCE OF CASH PAYMENTS IS CLEARLY IDENTIFIABLE IN FORM OF THE WITHDRAWALS FROM THE ASSESSEE'S BANK ACCOUNTS AND THE SAID DETAILS WERE SUBMITTED BEFORE THE LOWER AUTHORITIES AND HAVE NOT BEEN DISPUTED BY THEM. IT IS NOT THE CASE OF THE REVENUE EITHER THAT UNACCOUNTED OR UNDISCLOSED INCOME OF THE ASSESSEE HAS BEEN UTILISED IN MAKING THE CASH PAYMENTS. 43. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE LEGAL PROPOSITION LAID DOWN BY THE VARIOUS COURTS AND COORDINATE BENCHES REFERRED SUPRA, WE ARE OF THE VIEW THAT THE IDENTITY OF THE PERSONS FROM WHOM THE VARIOUS PLOTS OF LAND HAVE BEEN PURCHASED AND SOURCE OF CASH PAYMENTS AS WITHDRAWALS FROM THE ASSESSEE'S BANK ACCOUNT HAS BEEN ESTABLISHED. THE GENUINENESS OF THE TRANSACTION HAS BEEN ESTABLISHED AS EVIDENCED BY THE REGISTERED SALE DEEDS AND LASTLY, THE TEST OF BUSINESS EXPEDIENCY HAS BEEN MET IN THE INSTANT CASE. FURTHER, AS HELD BY THE HON'BLE RAJASTHAN HIGH COURT IN CASE OF HARSHILA CHORDIA (SUPRA), THE CONSEQUENCES, WHICH WERE TO BEFALL ON ACCOUNT OF NON-OBSERVATION OF SUB-SECTION (3) OF SECTION 40A MUST HAVE NEXUS TO THE FAILURE OF SUCH OBJECT. THEREFORE THE GENUINENESS OF THE TRANSACTIONS AND IT BEING FREE FROM VICE OF ANY DEVICE OF EVASION OF TAX IS RELEVANT CONSIDERATION. THE INTENT AND THE PURPOSE FOR WHICH SECTION 40A(3) HAS BEEN BROUGHT ON THE STATUTE BOOKS HAS BEEN CLEARLY SATISFIED IN THE INSTANT CASE. THEREFORE, BEING A CASE OF GENUINE BUSINESS TRANSACTION, NO DISALLOWANCE IS CALLED FOR BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 4. APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THIS ORDER TO THE FACTS OF THIS CASE, I DELETE THE DISALLOWANCE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. KOLKATA, THE 28 TH DAY OF SEPTEMBER, 2018. SD/- [ J. SUDHAKAR REDDY ] ACCOUNTANT MEMBER DATED : 28.09.2018 {SC SPS} 4 ITA NO. 1210/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. RAMLAL RUPCHAND COPY OF THE ORDER FORWARDED TO: 1. M/S. RAMLAL RUPCHAND C/O VIMAL TEXTILES 18, J.L. BAJAJ STREET KOLKATA 700 007 2. INCOME TAX OFFICER, WARD-45(1), KOLKATA 3. CIT(A)- 4. CIT- 15 , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT, KOLKATA BENCHES