ITO, Ward - 1(2), Jalpaiguri, Jalpaiguri V. M/s. Ethelbari C.S. Shop, Jalpaiguri

ITA 1322/KOL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4908 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 05-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K SANGHAI
• Assessee Lawyers: ROBIN CHOUDHUR Y
• Section: 40A(3)

Judgement Text

1 ITA NO. 1322/KOL/2017 ETHELBARI C. S. SHOP, AY 2014-15 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 1322/KOL/2017 ASSESSMENT YEAR: 2014-15 INCOME-TAX OFFICER, WD-1(2), JALPAIGURI VS. M/S. ETHELBARI C. S. SHOP (PAN: AACFE0037F) APPELLANT RESPONDENT DATE OF HEARING 06.09.2018 DATE OF PRONOUNCEMENT .10.2018 FOR THE APPELLANT SHRI P. K. SANGHAI, FCA FOR THE RESPONDENT SHRI ROBIN CHOUDHURY, ADDL. CIT , SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A), JALPAIGURI DATED 27.04.2017 FOR AY 2014-15. 2. THE SOLE GROUND INVOLVED IN THIS APPEAL OF REVEN UE IS AGAINST THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION OF RS.1,13,84,651/- MADE U /S. 40A(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF COUNTRY LIQUOR. AT THE TIME OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAS PURCHASED BULK OF COUNTRY SPIRIT AND FOREIGN LIQUOR DRINKS THROUGH CASH PAYMENTS ABOVE RS. 20,000/- WHICH ARE AS UNDER: (I) MONALISA BOTTLING INDUSTRIES PVT. LTD. RS. 79,57,403/- (COUNTRY SPIRIT) (II) M/S. MAYA SAHA (FOREIGN LIQUOR) RS. 24,3 3,467/- (III) M/S. DENZONG PVT. LTD. (FOREIGN LIQUOR) R S. 8,41,981/- (IV) GALAXY COUNTRY SPIRIT BOTTLING (COUNTRY SPIRI T) RS. 1,51,800/- TOTAL: RS.1,13,84,651/- 2 ITA NO. 1322/KOL/2017 ETHELBARI C. S. SHOP, AY 2014-15 ACCORDING TO AO, THE PARTIES FROM WHOM THE ASSESSEE HAS PURCHASED THE COUNTRY SPIRIT AND FOREIGN LIQUOR ON VARIOUS DATES, THE ASSESSEE HAS M ADE PAYMENT ABOVE RS.20,000/- IN CASH VIOLATING THE PROVISIONS OF SEC. 40A(3) OF THE ACT. HENCE, HE ISSUED SHOW CAUSE LETTER DATED 03.11.2016 TO CLARIFY THE SAME AND A LETTER DATED 1 5.11.2016 FIXING THE CASE FOR HEARING. IN REPLY, THE ASSESSEE FILED A WRITTEN SUBMISSION BEFO RE THE AO. ACCORDING TO AO, THE SUBMISSIONS MADE BY THE ASSESSEE ARE NOT TENABLE AS THE ASSESSEE FIRM HAS DEPOSITED THE PAYMENT AGAINST PURCHASE THROUGH BANK DEPOSITION SL IP IN THE NAME OF THE SELLERS ACCOUNT NUMBER DIRECTLY. NO AMOUNT HAS BEEN PAID/CREDITED B Y THE ASSESSEE TO MAYA SAHA AND DENZONG WINE PVT. LTD. THROUGH THE BANKING CHALLAN IN THE MODE OF NEFT/RTGS. THUS, ACCORDING TO AO, THE ASSESSEE HAS FAILED TO MAKE TH E PAYMENTS TO THE SAID TWO PARTIES THROUGH A/C PAYEE CHEQUE/DEMAND DRAFT/RTGS AND VIOL ATED THE PROVISION OF SECTION 40A(3) OF THE ACT. FURTHER, ACCORDING TO AO, NO EXP LANATION OR LOGIC PUT FORWARDED BY THE ASSESSEE SO FAR, IS NOT COMMENSURATE WITH THE EXCEP TION LAID DOWN UNDER RULE 6DD OF THE I. T. RULES, 1962. HENCE, ACCORDING TO AO, THE CONTEN TION OF THE ASSESSEE IS NOT TENABLE RATHER THE VIOLATION OF SEC. 40A(3) IS ESTABLISHED. THEREFORE, HE DISALLOWED RS.1,13,84,651/- U/S. 40A(3) OF THE ACT AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO DELETED THE ADDITION AS MADE BY THE AO. AGGRIEVED, REVENUE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE AO HAS RECORDED A FIND ING OF FACT THAT ASSESSEE HAS DEPOSITED THE PAYMENT AGAINST PURCHASE THROUGH BANK DEPOSIT O N SLIP IN THE NAME OF SELLERS ACCOUNT NUMBER DIRECTLY. BY MAKING THIS FINDING OF FACT, TH E GENUINENESS OF THE PAYMENT BEING MADE TO THE BOTTLING PLANTS/DEALERS ARE NOT DOUBTED BY THE AO. IT WAS POINTED OUT BY THE LD. AR THAT THE PAYMENTS WERE MADE TO THE LICENCEES OF EXCISE DEPARTMENT OF GOVT. OF WEST BENGAL. AND IT WAS BROUGHT TO THE NOTICE OF AUTHORI TIES BELOW AND BEFORE US THAT ONLY WHEN THE ASSESSEE FURNISH THE DEPOSIT SLIP OF PAYMENT TO THE BOTTLERS/DEALERS OF COUNTRY LIQUOR/FOREIGN LIQUOR, THEN ONLY THE ASSESSEE WOUL D BE PERMITTED TO LIFT THE COUNTRY LIQUOR FROM THE BOTTLING PLANT. SINCE THE PURCHASE PRICE O F LIQUOR WAS CLAIMED BY ASSESSEE AS AN EXPENSE TO ARRIVE AT ITS INCOME FROM BUSINESS, THE AO DISALLOWED IT BY FINDING WITH THE ASSESSEE NOT MAKING PAYMENT THROUGH BANKING CHANNEL BY MODE OF NEFT/RTGS. SO HE 3 ITA NO. 1322/KOL/2017 ETHELBARI C. S. SHOP, AY 2014-15 INVOKED SEC. 40(3) OF THE ACT TO DISALLOW RS.1.13,8 4,651/-. ON APPEAL, THE LD. CIT(A) TAKING NOTE OF THIS TRIBUNALS DECISION IN ITA NO. 1 63/KOL/2014 OF ASHOK KUMAR MONDAL, BURDWAN V. ITO, WARD 2(2), ASANSOL DT. 16.9.2016 WA S PLEASED TO DELETE THE SAME. THE TRIBUNAL HELD IN THAT CASE THAT THERE WAS A COMMERC IAL EXPEDIENCY UNDER RULE 6(2) OF WEST BENGAL RULES TO MAKE THE PAYMENTS TO THE CREDIT OF M/S.ASANSOL BOTTLING & PACKAGING PVT. LTD, BURDWAN, WHICH HAS DEEMED TO BE AN AGENT OF STATE GOVT AND SO THE PAYMENT MADE IN CASH FALLS IN THE KEYS OF RULE 6DD(B) AND R ULE 6DD(K) OF INCOME TAX RULES AND THEREFORE, THEY ARE EXEMPT AND THEREFORE, DISALLOWA NCE U/S. 40A(3) CANNOT BE SUSTAINED. THIS ORDER OF TRIBUNAL HAS BEEN RELIED UPON BY THE LD. CIT(A) TO GIVE RELIEF TO THE ASSESSEE. FROM THE GROUNDS RAISED BY THE DEPARTMENT BEFORE U S OR THE STATEMENT OF FACT FOLLOWED BY THE ITO, WARD 1(2), JALPAIGURI THERE IS NO CHALLENG E AS TO WHY THE LD. CIT(A) ERRED IN RELYING ON THE ORDER OF TRIBUNAL IN ASHOK KUMAR MON DAL, BURDWAN (SUPRA) TO GIVE RELIEF TO THE ASSESSEE. WE NOTE THAT THE DEPARTMENT HAS NOT M ADE ANY ATTEMPT TO CHALLENGE THE DECISION OF LD.CIT(A) BY DISTINGUISHING THE RATIO L AID BY THE TRIBUNAL IN ASHOK KUMAR MONDAL, BURDWAN (SUPRA), WHICH COULD HAVE ALLOWED US SCOPE TO INTERFERE WITH THE ORDER OF LD.CIT(A). SINCE DEPARTMENT FAILED TO POINT OUT ANY CHANGE IN FACTS OR LAW OR TO DISTINGUISH THE CASE OF TRIBUNAL AS RELIED UPON BY THE LD. CIT(A), AND WE BEING BOUND BY THE RATIO OF OUR OWN EARLIER DECISION, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) & THEREFORE, WE DISMISS THE APPEAL OF REVENU E. 5. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ORDER IS PRONOUNCED IN THE OPEN COURT ON 26/10/20 18 SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26 OCTOBER, 2018 4 ITA NO. 1322/KOL/2017 ETHELBARI C. S. SHOP, AY 2014-15 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT ITO, WARD-1(2), JALPAIGURI 2 RESPONDENT M/S. ETHELBARI C. S. SHOP, C/O, SUNIL KUMAR GHOSH, P.O. ETHELBARI, JALPAIGURI, PIN-735204. 3 4 5 . CIT(A), JALPAIGURI. (SENT THROUGH E-MAIL) CIT, JALPAIGURI. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSTT. REGISTRAR ITAT, KOLKATA