Amrai Pachwai & C.S. Shop, Durgapur V. DCIT, Circle - 1, Durgapur, Durgapur

ITA 1251/KOL/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5635 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 26-09-2011
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA PRASAD JCITSR
• Assessee Lawyers: SOMNATH GHOSH LD
• Section: 40A(3)

Judgement Text

, A , INCOME TAX APPELLATE TRIBUNAL, BENCH- A KOLKATA ( ) BEFORE . . , SHRI P.K.BANSAL, ACCOUNTANT MEMBER !' /AND #$#% 1 ' , SHRI GEORGE MATHAN, JUDICIAL MEMBER '( / ITA NO.1251/KOL/2011 A.Y 2008-09 M/S. AMRAI PACHWAI & C.S SHOP PAN:AAJFA 7637G - ! - - VERSUS - . D.C.I.T CIRCLE-1 DURGAPUR ( '* / APPELLANT ) ( +,'* / RESPONDENT ) '* . / FOR THE APPELLANT /SHRI SOMNATH GHOSH, ADVOCATE, LD.AR +,'* . / FOR THE RESPONDENT: / SHRI RAJENDRA PRASAD, JCIT/SR.DR /!0 1 2 /DATE OF HEARING : 09-01-2014 34 1 2 /DATE OF PRONOUNCEMENT: 15 -01-2014 / ORDER #$#% 1 ' , SHRI GEORGE MATHAN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), DURGAPUR IN APPEAL NO. 72/CIT(A)/DGP/2010-11 DATED 18-08-2011 FOR THE AS SESSMENT YEAR 2008-09. 2. SHRI SOMNATH GHOSH, ADVOCATE, LEARNED AR REPR ESENTED ON BEHALF OF THE ASSESSEE. AND SHRI RAJENDRA PRASAD, LEARNED JCIT/SR .DR REPRESENTED ON BEHALF OF THE REVENUE. 3. IN THE ASSESSEES APPEAL, THE ASSESSEE HAS RAIS ED THE FOLLOWING GROUNDS OF APPEAL:- 1. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APP EALS) DURGAPUR FAILED TO APPRECIATE THAT NONE OF THE COND ITIONS PRECEDENT FOR THE ASSUMPTION OF JURISDICTION U/S. 40A(3) OF T HE INCOME TAX ACT, 1961 EXISTED AND/OR HAS BEEN COMPLIED WITH AND/OR F ULFILLED IN THE INSTANT CASE BY THE LD. DEPUTY COMMISSIONER OF INCO ME TAX. CIRCLE .1, DURGAPUR AND THE IMPUGNED DISALLOWANCE MADE IN THE SUM OF ITA NO.1251/KOL/11A- AMRAI PACHWAI & C.S SHOP 2 RS. 1,11,11,235/- WITHOUT ANY INFRINGEMENT ON THAT BEHALF IS AB INITLO VOID, ULTRA VIRES AND EXFACIE NULL IN LAW. 2. FOR THAT UNDER THE CIRCUMSTANCES OF THE CASE, TH E LD. COMMISSIONER OF INCOME TAX (APPEALS) DURGAPUR ACTED UNLAWFULLY IN UPHOLDING THE IMPUGNED DISALLOWANCE RESORTED TO BY THE LD. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1, DURGAP UR BY INVOKING THE PROVISION OF S. 40A(3) OF THE INCOME T AX ACT, 1961 IN THE SUM OF RS. 1,11,11,235/- INCURRED FOR MAKING PU RCHASE OF COUNTRY SPIRIT ACTING AS A LICENCEE OF THE GOVERNME NT WITHOUT CONSIDERING THE EXCEPTION CONTAINED IN RULE 6DD(B) READ WITH RULE 6DD(K) OF THE INCOME TAX RULES, 1962 AND HIS PURPOR TED FINDING ON THAT BEHALF IS ALTOGETHER CAPRICIOUS, UNWARRANTED A ND ERRONEOUS. 3. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APP EALS) DURGAPUR MISREAD EVIDENCES, CONSIDERED IMPROPER FAC TS, FAILED TO CONSIDER PROPER POSITION IN LAW, MISPLACED ONUS OF PROOF AND CAME TO AN ERRONEOUS FINDING IN UPHOLDING THE ADDITION O F RS. 1,11,11,235/- MADE BY THE LD. DEPUTY COMMISSIONER O F INCOME TAX, CIRCLE 1, DURGAPUR INVOKING THE PROVISIONS OF S. 40 A(3) OF THE ACT. 4.. IT WAS THE SUBMISSION BY THE LEARNED AR FOR THE ASSESSEE THAT THE ONLY ISSUE IN THIS APPEAL WAS AGAINST THE ACTION OF THE LD.CIT (A) IN CONFIRMING THE DISALLOWANCE MADE BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT ON PURCHASE OF COUNTRY SPIRIT AND EMPTY BOTTLES FROM THE GOVERNMENT AUTHOR ISED DISTRIBUTORS. IT WAS SUBMITTED THAT THE ASSESSEE IS A FIRM, WHO IS IN THE BUSINESS OF TRADING OF COUNTRY SPIRIT AND COUNTRY LIQUOR. IT WAS THE SUBMISSION THAT ASSESSE E HAD PURCHASED COUNTRY SPIRIT AND EMPTY BOTTLES FOR AN AMOUNT OF RS.1,11,11,235/- F ROM THE TERRITORIAL LICENSEE BOTTLING PLANT, IFB AGRO INDUSTRIES LTD, CITY CENTRE, DURGAP UR. IT WAS THE SUBMISSION THAT PURCHASE CONSIDERATIONS WERE DEPOSITED IN CASH INTO THE BANK ACCOUNT OF THE SAID SELLER. IT WAS THE SUBMISSION THAT AS THE PAYMENT S WERE MADE IN CASH FOR THE PURCHASES, THE AO HAD INVOKED THE PROVISIONS OF SE CTION 40A(3) OF THE ACT. IT WAS SUBMITTED THAT THE AO HAD FAILED TO APPRECIATE THAT THE PAYMENTS HAD BEEN MADE FOR PURCHASES FROM THE GOVERNMENT AUTHORISED LICENSEE A GENT COVERED BY THE PROVISIONS OF RULE 6DD(B) OF THE I.T RULES 1962 AS ALSO EXCEPT ION OF RULE 6DD(K) OF THE I.T RULES 1962. IT WAS THE SUBMISSION THAT CONSEQUENTL Y THE AO HAD DISALLOWED THE PURCHASE IN ITS ENTIRETY BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE I.T ACT 1961. IT WAS THE FURTHER SUBMISSION THAT THE LD.CIT (A) ALSO DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE BY RELYING UPON THE DEC ISION OF THE HONBLE KERALA HIGH ITA NO.1251/KOL/11A- AMRAI PACHWAI & C.S SHOP 3 COURT IN THE CASE OF K. ABDU & CO. REPORTED IN 170 TAXMAN 297(KER). IT WAS THE SUBMISSION THAT THE HONBLE KERALA HIGH COURT IN T HE CASE OF K. ABDU & CO (REFER TO SUPRA) HAS REFERRED TO THE PROVISIONS OF RULE 6DD(A ) OF THE I.T RULES 1962. IT WAS THE SUBMISSION THAT SAID DECISION OF HONBLE KERALA HI GH COURT IN THE CASE (REFER TO SUPRA) WAS IN RELATION TO THE PAYMENTS TO INSTITUT IONS REFERRED TO THEREIN AND NOT TO THE ACCOUNT OF PERSONS WHOSE ACCOUNTS ARE MAINTAINED B Y SUCH INSTITUTIONS. IN SHORT, IT WAS THE SUBMISSION THAT RULE 6DD(A) REFERRED TO THE PAYMENTS MADE TO THE INSTITUTIONS, REFERRED TO THEREIN BEING RESERVE BAN K OF INDIA OR ANY OTHER BANKING COMPANY MENTIONED IN THE SAID SUB RULE OF THE I.T RULES 1962. IT WAS THE SUBMISSION THAT PAYMENTS IN THE ASSESSEES CASE HAD BEEN MADE TO THE GOVT LICENSEE AGENT. UNDER RULE FRAMED BY THE GOVERNMENT, THE PAYMENT WA S REQUIRED TO BE MADE IN LEGAL TENDER. IT WAS THE SUBMISSION THAT AS PER DIRECTION THE PAYMENTS HAD TO BE MADE BY RETAIL VENDOR BEING THE ASSESSEE TO THE CREDIT OF T HE WHOLESALE LICENSEE SPECIFIED BY THE GOVERNMENT, WHICH IN THE PRESENT CASE WAS THE T ERRITORIAL LICENSEE BOTTLING PLANT, IFB AGRO INDUSTRIES LTD, CITY CENTRE, DURGAPUR. IT WAS THE SUBMISSION THAT THE ASSESSEE, WHO IS A RETAILER OF COUNTRY SPIRIT GETS HIS PAYMENT FROM SALE OF COUNTRY SPIRIT IN CASH AND AS THE ASSESSEE HAS TO PURCHASE THE COUNTRY SPIRIT FROM THE GOVERNMENT AUTHORISED WHOLE SALE LICENSEE, THE SAM E HAS TO BE MADE BY CASH. IT WAS THE FURTHER SUBMISSION THAT NO BODY WOULD BE WI LLING TO SELL LIQUOR MORE SPECIFICALLY COUNTRY LIQUOR ON CREDIT OR CHEQUE IN SO FAR AS ONCE THE PRODUCT LEAVES THE CONTROL OF THE SELLER AND THE SAME IS CONSUMED, THEN RECOVERY WOULD BE PRACTICALLY IMPOSSIBLE. IT WAS THE SUBMISSION THAT THE ASSESSEE HAVING PURCHASED THE COUNTRY SPIRIT FROM THE GOVERNMENT, THE PAYMENT IN CASH BEING LEGAL TENDER TO THE ACCOUNTS OF THE GOVERNMENT WAS WITHIN THE EXEMPTION PROVIDED IN RULE 6DD(B) OF THE I.T RULES 1962. THE LEARNED AR FOR THE ASSESSEE HAS FURTHER SUBMITTED THAT THE ADDITION AS MADE BY THE AO AND AS CONFIRMED BY THE LD.CIT(A) IN THE INTEREST OF JUSTICE MAY BE DELETED IN SO FAR AS THE COMPLETE PURCHASE OF THE ASSESSEE HAVE BEEN DISALLOWED WITHOUT, APPRECIATING THE FACT. 5. IN REPLY, THE LEARNED JCIT(SR.DR) HAS VEHEMENTLY SUPPORTED THE ORDERS OF THE AO AND THE LD.CIT(A). IT WAS THE SUBMISSION THAT WHETHER THE LICENSEE WAS TO DEAL IN ITA NO.1251/KOL/11A- AMRAI PACHWAI & C.S SHOP 4 COUNTRY SPIRIT ITSELF, IS TO BE VERIFIED. IT WAS TH E SUBMISSION THAT THE ORDERS OF THE AO AND LD.CIT(A) WERE LIABLE TO BE UPHELD ON THIS ISS UE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT THE OUTSET A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE AO HAS RECO GNISED THE ASSESSEES BUSINESS IN TRADING OF COUNTRY SPIRIT AND COUNTRY LIQUOR. CO PY OF FORM OF LICENCE ISSUED BY DURGAPUR MUNICIPAL CORPORATION AND COPY OF FORM III ISSUED BY DEPARTMENT OF EXCISE, GOVT. OF W.B WERE ALSO FOUND AT PAGES 177 AND 179 OF THE ASSESSEES PAPER BOOK. IN ANY CASE THE VALIDITY OF LICENCE OF THE ASSESSEE T O TRADE IN COUNTRY SPIRIT AND COUNTRY LIQUOR IS NOT THE ISSUE BEFORE US. THE ISSUE IS WH ETHER THE PAYMENTS MADE BY THE ASSESSEE FOR THE PURCHASE OF COUNTRY SPIRIT FROM T HE TERRITORIAL LICENSEE BOTTLING PLANT, IFB AGRO INDUSTRIES LTD, CITY CENTRE, DURGAPUR. FAL LS WITHIN THE EXEMPTION PROVIDED UNDER RULE 6DD(B) OF THE I.T RULES 1962. ADMITTEDLY , THE AO HAS RECOGNISED THAT THE PROVISION OF RULE 6DD(B) OF THE I.T RULES 1962 IS A PPLICABLE IN CASE OF PAYMENTS MADE TO GOVERNMENT DIRECTLY. THIS IS FOUND IN PAGE 2 OF THE ASSESSMENT ORDER. A PERUSAL OF THE KOLKATA GAZETTE TUESDAY DATED 20 TH SEPT 2005 SHOWS THAT THE GOVERNMENT OF WEST BENGAL, DEPARTMENT OF EXCISE HAS ISSUED A NOTIFICATION, WHEREIN THE WAREHOUSE HAS BEEN IDENTIFIED TO MEAN THE WAREH OUSE FOR SUPPLY OF COUNTRY SPIRIT TO THE RETAIL VENDORS, ESTABLISHED AT CONV ENIENT PLACES BY THE COMMISSIONER AT THE EXPENSE OF THE STATE GOVERNMENT, OR AT THE EXPE NSE OF A PERSON TO WHOM THE EXCLUSIVE PRIVILEGE OF SUPPLYING OR SELLING COUNTR Y SPIRIT BY WHOLESALE HAS BEEN GRANTED U/S. 22 OF THE ACT OF A LICENSED WHOLESALE VENDOR OF COUNTRY SPIRIT. FURTHER, IT HAS BEEN SPECIFICALLY IDENTIFIED THAT THE AUTHORI SED REPRESENTATIVE OF THE WHOLESALE LICENSEE SHALL REALIZE THE NECESSARY AMOUNT OF DUT Y, COST PRICE AND BOTTLING CHARGE, IF THERE BE ANY, AT THE PRESCRIBED RATE AND SUCH OTHE R IMPOSITION, AS MAY BE PRESCRIBED BY LAW, FROM THE RETAIL VENDOR TO WHOM THE COUNTR Y SPIRIT IS TO BE ISSUED FROM THE CONCERNED WAREHOUSE. IT IS ALSO SPECIFICALLY MENT IONED IN SECTION (2) OF THE SAID NOTIFICATION THAT NO RETAIL VENDOR OF COUNTRY SPIRI T SHALL DEPOSIT DUTY DIRECT INTO THE LOCAL TREASURY FOR ISSUE OF COUNTRY SPIRIT TO BE TAKEN B Y HIM FROM THE WAREHOUSE CONCERNED, WHICH CLEARLY SHOWS THAT THE WAREHOUSE IS FOR THE S UPPLY OF THE COUNTRY LIQUOR, SPECIFICALLY, THE WAREHOUSE IS UNDER THE DIRECT CON TROL AND CUSTODY OF THE STATE GOVT. THE STATE GOVERNMENT HAS CLOSED ITS DOORS IN SO FAR AS THE LOCAL TREASURY IS ITA NO.1251/KOL/11A- AMRAI PACHWAI & C.S SHOP 5 CONCERNED AND THE PAYMENT FOR THE PURCHASE OF COUNT RY SPIRIT OR COUNTRY LIQUOR HAS TO BE MADE TO THE WAREHOUSE, RUN BY THE GOVERNMENT. TH IS SHOWS THAT ANY PAYMENT MADE TO THE WAREHOUSE, WHICH IS UNDER THE DIRECT CO NTROL OF THE STATE GOVERNMENT, IS A PAYMENT MADE DIRECTLY TO THE GOVERNMENT. ONCE, THIS IS ACCEPTED THEN THE PROVISIONS OF RULE 6DD(B) OF THE I.T RULES 1962 WHICH CLEARLY SPELLS OUT THAT THE PAYMENT MADE TO THE GOVERNMENT IN LEGAL TENDER UNDER THE RULES FRAMED BY THE GOVERNMENT, IS EXEMPTED FROM THE RIGOURS OF SECTION 40A(3) OF THE ACT. HERE, IT IS NOTICED THAT THE PAYMENTS MADE BY THE ASSESSEE FOR PURCHASE OF COUNT RY SPIRIT AND COUNTRY LIQUOR IS TO THE GOVERNMENT AS PER THE NOTIFICATION ISSUED BY TH E GOVERNMENT AND IS IN LEGAL TENDER SPECIFIED BY THE NOTIFICATION. IN THE CIRCUMSTANCES , WE ARE OF THE VIEW THAT THE PAYMENT MADE BY THE ASSESSEE FOR THE PURCHASE OF COUNTRY LI QUOR AND COUNTRY SPIRIT FROM THE TERRITORIAL LICENSEE BOTTLING PLANT, IFB AGRO INDUS TRIES LTD, CITY CENTRE, DURGAPUR IS PROTECTED BY THE EXEMPTION IN TERMS OF RULE 6DD(B) OF THE I.T RULES 1962. IN THE CIRCUMSTANCES, THE ADDITION AS MADE BY THE AO AND A S CONFIRMED BY THE LD.CIT(A) BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE I. T ACT 1961 STANDS DELETED. 7. IN THE RESULT, THE ASSESSEES APPEAL IN ITA N O.1251/KOL/2011 FOR THE ASSESSMENT YEAR 2008-09 STANDS ALLOWED AS STATED AB OVE. 5 / 6 / 7 58 THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT 15/0 1/2014 SD/- SD/- ** PRADIP SPS 1 +..9 :94; / COPY OF THE ORDER FORWARDED TO: 1. . '* / THE APPELLANT : AMRAI PACHWAI & C.S SHOP C/O SH . SOMNATH GHOSH, ADVOCATE, SEVEN BROTHERS LODGE, CHINSURAH, DST HOOGHLY PIN 712 105 2 +,'* / THE RESPONDENT- DCIT,CIR-1, DURGAPUR, AAYKAR B HAWAN, AAYKAR BITHI,CITY CENTRE, DURGAPUR, DIST: BURDWAN PIN 7131 26. 3 . / THE CIT, ( . . , ) ( P.K.BANSAL, ACCOUNTANT MEMBER ) ( #$#% 1 ' , ) (GEORGE MATHAN, JUDICIAL MEMBER) ( (( ( 2 2 2 2 ) )) ) DATE 15/01/2014 ITA NO.1251/KOL/11A- AMRAI PACHWAI & C.S SHOP 6 4. . . ( )/ THE CIT(A) 5 . !<.7 +. / DR, KOLKATA BENCH 6 . GUARD FILE . ,9 +./ TRUE COPY, // BY ORDER, 5 '# /ASSTT REGISTRAR