Smt. Urmi Shit, V. ITO, Ward-1(4), Asansol, Asansol

ITA 145/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1743 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 30-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADAV ADD L
• Assessee Lawyers: R N RAM
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI N.V. VASUDEVAN, JM & SHRI M. BALAGANESH, AM ] I.T.A NO. 145/KOL/201 5 ASSESSMENT YEAR : 2010-1 1 SMT. URMI SHIT -VS- ITO WARD -1(4), ASANSOL [PAN: BKYPS1389B] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI R.N. RAM, AR FOR THE RESPONDENT : SHRI SALLONG YADAV, ADD L. CIT DR DATE OF HEARING : 01.08.2017 DATE OF PRONOUNCEMENT : 04.08.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), KOLKATA [ IN SHORT THE LD CIT A] IN APPEAL NO. 23/CIT(A)/ASL/W-1(4)/ASL/13-14 DATED 03.12.2014 AG AINST THE ORDERS PASSED BY THE ITO, WARD-1(4), ASANSOL [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 11.01.2013 F OR THE ASSESSMENT YEAR 2010-11. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE MADE U/S 40A(3) OF TH E ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE 4. THE ASSESSEE IS A RETAIL VENDOR OF COUNTRY LIQUOR AND PACHAI. THE COUNTRY LIQUOR IS AN EXCISAB LE COMMODITY. ITS PURCHASE AND SALE ARE STRICTLY CONTROLLED BY THE STATE GOVERNMEN T. PREVIOUSLY, THE RETAIL DEALERS LIKE THE ASSESSEE USED TO DEPOSIT THE COST PRICE, EXCISE DUTY, BOTTLING CHARGES ETC. IN THE TREASURY AGAINST FORM TR-7 IN CASH FOR GETTING SUPP LIES FROM THE WHOLESALE LICENSEE. 2 ITA NO.145/KOL/2015 SMT. URMI SHIT A.YR.2010-11 2 SUBSEQUENTLY, THE EXCISE DEPARTMENT BY A NOTIFICATI ON DATED 29.08.2005 CHANGED THE PROCEDURE. AS PER THE REVISED PROCEDURE PRESCRIBED BY THE EXCISE DEPARTMENT, FOR LIFTING COUNTRY SPIRIT, THE ASSESSEE, WHO IS A RETAIL VENDO R, WAS REQUIRED TO MAKE THE ENTIRE PAYMENT CONSISTING OF COST OF THE STOCK-IN-TRADE, E XCISE DUTY AND BOTTLING CHARGES ETC. ONLY TO THE WHOLESALE LICENSEE APPOINTED BY THE STA TE GOVERNMENT. FOLLOWING THE REVISED PROCEDURE, THE ASSESSEE MADE PAYMENTS PARTL Y BY DEMAND DRAFTS AND PARTLY BY CASH DEPOSITS IN THE BANK A/C OF ITS SUPPLIER I.E. M/S. ASANSOL BOTTLING AND PACKAGING CO. PVT. LTD. MAINTAINED IN THE STATE BANK OF INDIA . WHILE COMPLETING THE ASSESSMENTS OF THE ASSESSEE, THE LD. A.O. ALLOWED THE PAYMENTS MADE BY DEMAND DRAFTS IN THE SUM OF RS 6,90,298/- AND DISALLOWED THE PAYMENTS MADE BY THE CASH DEPOSITS (IN EXCESS OF RS.20,000 ON EACH OCCASION) MADE IN THE BANK A/C OF THE SUPPLIER MAINTAINED IN THE STATE BANK OF INDIA IN TERMS OF SEC.40A(3) OF THE I . T. ACT TO THE TUNE OF RS. 48,10,982/- AND COMPLETED THE ASSESSMENT. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD C ITA AND CLAIMED THAT ITS CASE IS COVERED UNDER THE EXCEPTIONS PROVIDED IN RULE 6DD(B ) AND RULE 6DD(K) OF THE IT RULES. THE LD CITA HOWEVER IGNORED THE SAME AND CO NFIRMED THE DISALLOWANCE MADE BY THE LD AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A) ERRED IN SUSTAINING THE ORDE R OF THE LD. AO DISALLOWING THE ENTIRE PURCHASE CONSIDERATION (INCLUDING EXCISE DUTY, SALES TAX AND OTHER LEVIES ETC.) OF COUNTRY SPIRIT FOR VIOLATION OF PRO VISIONS OF SEC. 40A(3) OF THE I.T. ACT, 1961 ON THE GROUND THAT SUCH PURCHASE CONSIDER ATION WAS ALLEGEDLY PAID IN CASH TO THE SUPPLIER. 1.(A) THAT SINCE THE ENTIRE AMOUNT OF PURCHASE CONS IDERATION WAS ADMITTEDLY PAID TO THE BANK IN THE ACCOUNT OF THE SUPPLIER MAINTAIN ED IN THE SAID BANK, THE PAYMENT WAS COVERED BY RULE 6DD(A)(I)OF THE I.T. RU LES AND THEREFORE THE PROVISIONS OF SEC. 40A(3) WERE NOT ATTRACTED. 1.(B) THAT SINCE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE BANK IN WHICH THE CASH PAYMENTS WERE MADE BY THE ASSESSEE IMPLIE DLY BECAME HIS AGENT AND AS THE BANK WAS REQUIRED TO MAKE CASH PAYMENTS TO THE SUPPLIER WHO WAS ITS CUSTOMER, ALL THE CONDITIONS PRESCRIBED IN RULE 6DD (K) OF THE I.T. RULES WERE 3 ITA NO.145/KOL/2015 SMT. URMI SHIT A.YR.2010-11 3 SATISFIED AND THEREFORE, SUCH PAYMENTS THROUGH BANK ESCAPED THE PROVISIONS OF SECTION 40A(3) OF THE I.T. ACT, 1961. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE ENTIRE ADDITION MADE BY THE AO DISRE GARDING THE FACT THAT BY VIRTUE OF NOTIFICATION OF THE STATE GOVERNMENT THE PROCEDURE OF DEPOSITING CASH IN THE GOVT. TREASURY WAS CLOSED AND PAYMENT FOR PU RCHASE IN CL. EXCISE DUTY AND OTHER IMPOSITIONS HAVE TO BE MADE TO THE WAREHOUSE OWNED BY ASANSOL BOTTLING & PACKAGING CO. PVT. LTD WHICH IS UNDER DIRECT CONT ROL AND SUPERVISION OF THE STATE GOVERNMENT AND PAYMENT TO THE WAREHOUSE/OR TO THE BANK ACCOUNT OF ASANSOL BOTTLING & PACKAGING CO. PVT. LTD WAS AS GO OD AS PAYMENT TO THE GOVT. AND SUCH PAYMENT IS COVERED UNDER EXCEPTION PROVIDE D UNDER RULE 6DD(B) AND PROVISIONS CONTAINED U/S 40(A)(3) IS NOT APPLICABLE IN CASE OF SUCH PAYMENTS. 3. THAT THE CASE IS SQUARELY COVERED BY THE DECISIO N OF HONBLE ITAT C BENCH, KOLKATA IN THE CASE OF ASHOK MONDAL A.Y. 2009-10 I. T.A. NO. 873/KOL/2012 WHEREIN THEIR LORDSHIP DECIDED THE CASE IN THE FAVO UR OF ASHOK MONDAL RELYING ON THE VIEW THAT CASH PAYMENTS TO THE WAREHOUSE IS COV ERED UNDER RULE 6DD(B) AND BEYOND THE SCOPE OF ANY ADDITION U/S 40A(3). 4. THAT, THE APPELLANT CRAVES LEAVE TO ALTER, AMEND , RESCIND AND SUBSTITUTE ANY OF THE ABOVE MENTIONED GROUNDS AND ADD ANY FURTHER GRO UNDS BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 5. THE LD AR STATED THAT THE ISSUE UNDER DISPUTE IS COVERED BY THE FOLLOWING ORDERS OF THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE :- A) ASSESSEES OWN CASE FOR ASST YEAR 2008-09 IN ITA NO. 176/KOL/2014 DATED 25.11.2016. B) RAMANGAR PACHWAI & C.S.(S) SHOP VS ITO IN ITA NO . 148/KOL/2015 (AY 2007-08) ; ITA NO. 185/KOL/2014 (AY 2008-09) & ITA NO. 186/KOL /2014 (AY 2010-11) DATED 5.8.2016. C) NUNI CHINCHURIA PACHWAI & C.S.SHOP VS ITO IN ITA NOS. 187 & 188/KOL/2014 FOR ASST YEARS 2008-09 & 2010-11 DATED 4.10.2016. D) RAMNAGAR PACHWAI & C.S.(S) SHOP VS ITO IN ITA NO . 938/KOL/2016 FOR ASST YEAR 2011-12 DATED 18.11.2016. E) AMRAI PACHWAI & C.S.SHOP VS ITO IN ITA NO. 1251/ KOL/2011 DATED 15.1.2014. 4 ITA NO.145/KOL/2015 SMT. URMI SHIT A.YR.2010-11 4 6. IN RESPONSE TO THIS, THE LD DR FAIRLY CONCEDED T HAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS ORDERS OF THIS TRIBUNAL. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND TH AT THE ISSUE UNDER DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE AFORESAID ORDERS RELIED UPON BY THE LD AR AND ALSO BY THE ORDER OF THIS TRIBUNAL IN ASSESSEES OW N CASE SUPRA, WHEREIN IT WAS HELD THAT:- 8. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. IT IS OBSERVED THAT THE ISSUE INVOLVED IN THIS APPEAL OF THE ASSESSEE RELATING TO THE DISALLOWANCE UNDER SECTION 40A(3) IS SQUARELY COVER ED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS DECISIONS OF THIS TRIBUNAL. IN ONE OF SUCH CASES, NAMELY M/S AMRAI PACHWAI & C.S. SHOP DECIDED BY THE TRIBUNAL VIDE ITS ORDER DA TED 15.01.2014 PASSED IN I.T.A. NO. 1251/KOL/2011, PAYMENTS WERE MADE BY THE ASSESSEE AGAINST PURCHASES MADE FROM THE SAME PARTY, NAMELY M/S ASANSOL BOTTLING & PACKAGING CO. PVT. LTD. BY DEPOSITING THE CASH DIRECTLY IN THE BANK ACCOUNT OF THE SAID SUPPL IER IN THE SUMS EXCEEDING RS. 20,000/- AND THE DISALLOWANCE MADE FOR THE SAME U/S 40A(3) WAS DELETED BY THE TRIBUNAL. 9. BUT, WITH REGARD TO THE SUBMISSIONS OF THE LD. D R IN RESPECT OF DECISION IN THE CASE OF ITO VS. KENARAM SAHA & SUBHASH SAHA REPORTED 116 IT D 0001(KOL) AS CONSIDERED BY THE CIT-A IN THE IMPUGNED ORDER AND THE OPERATIVE P ORTION OF THE DECISION SUPRA IS REPRODUCED HEREIN BELOW FOR READY REFERENCE: 18.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL PLACED BEFORE US. AFTER HEARING BOTH THE PARTIES AND PERUS ING THE ORDER OF THE CIT(A), WE FIND THAT THE CIT(A) DELETED THE DISALLOWANCE WI THOUT GIVING ANY FINDING WITH REGARD TO ANY SPECIFIC CLAUSE OF R. 600 IN WHICH TH E ASSESSEE'S CASE FALLS. AS WE HAVE ALREADY DISCUSSED THAT ONCE THERE IS PAYMENT O F ANY EXPENDITURE IN VIOLATION OF S. 40A(3), THE ASSESSEE CAN ESCAPE THE DISALLOWANCE UNDER THE SAID SECTION ONLY IF ASSESSEE'S CASE FALLS WITHIN THE AM BIT OF ANY OF THE CLAUSES OF R. 6DD. THE MATTER WAS REQUIRED TO BE EXAMINED WHETHER ASSESSEE'S CASE FALLS UNDER ANY SPECIFIC CLAUSE. IN THIS CASE WE FIND THA T NEITHER THE ASSESSEE PROPERLY CLAIMED NOR THE AO EXAMINED THE CASE WITH REFERENCE TO THE RELEVANT RULE. EVEN BEFORE THE CIT(A) THE POSITION DID NOT CHANGE. BUT THE ARGUMENTS OF THE ASSESSEE'S COUNSEL WERE HAVING REGARD TO BUSINESS E XPEDIENCY, SMALLNESS OF ASSESSEE'S CAPITAL, ASSESSEE BEING NEW TO THE BUSIN ESS, ETC. PAYMENT IN CASH WAS MADE. AT THE TIME OF HEARING BEFORE US, THE ASSESSE E MADE A SPECIFIC CLAIM THAT THE CASH PAYMENT WAS MADE TO THE AGENT WHO IN TURN WAS REQUIRED TO MAKE THE PAYMENT IN CASH TO THE SELLERS OF SUCH GOODS. THERE FORE, ASSESSEE'S CASE FALLS WITHIN THE AMBIT OF CL. (I) OF R. 6DD AND THIS WAS THE CLAIM BEFORE THE REVENUE AUTHORITIES. HOWEVER, THIS CLAIM HAS TO BE EXAMINED IN ACCORDANCE WITH LAW. IN 5 ITA NO.145/KOL/2015 SMT. URMI SHIT A.YR.2010-11 5 THE ABOVE CIRCUMSTANCES, IN OUR OPINION, IT WOULD M EET THE ENDS OF JUSTICE IF THE ORDERS OF THE AUTHORITIES BELOW ON THIS POINT ARE S ET ASIDE AND THE MATTER IS RESTORED BACK TO THE FILE OF THE AO WITH THE DIRECT ION THAT HE WILL ALLOW ADEQUATE OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE NECESSAR Y EVIDENCE IN SUPPORT OF HIS CLAIM. THEREAFTER THE AO WILL READJUDICATE THE MATT ER IN ACCORDANCE WITH LAW AND IN THE LIGHT OF OUR OBSERVATIONS/FINDINGS IN TH IS ORDER. 10. THE FACTS OF THE AFOREMENTIONED CASE ARE THAT T HE ASSESSEE IS AN AOP AND IS A BIG DEALER IN THE CHAIN OF AGENTS INVOLVED IN THE PUBLI C DISTRIBUTION SYSTEM FOR SUPPLY OF KEROSENE OIL WITHIN THE STATE OF WEST BENGAL. DURIN G THE YEAR UNDER CONSIDERATION THE ASSESSEE THEREIN MADE THE PAYMENT OF RS. 1,34,58,43 0 FOR PURCHASE OF KEROSENE OIL IN CASH EXCEEDING RS. 20,000. ACCORDING TO AO, THE PAY MENT WAS IN VIOLATION OF THE PROVISIONS OF S. 40A(3) AND DISALLOWED 20% OF THE P AYMENT MADE BY THE ASSESSEE TO AN EXTENT OF RS. 26,91,680/-. IN FIRST APPEAL, THE CIT -A DELETED THE DISALLOWANCE HOLDING THAT THE ASSESSEE'S CASE IS COVERED' UNDER RULE 6DD (K) AS WELL AS RULE. 6DD(I) OF INCOME TAX RULES. THE SPECIAL BENCH FOUND THAT THE ASSESSEE CLAIMED THAT THE AGENT IS THE REPRESENTATIVE OF GOVERNMENT OF WEST BENGAL AND , THEREFORE, PAYMENT MADE TO THE .AGENT BEING REPRESENTATIVE OF GOVERNMENT OF WEST B ENGAL IS A PAYMENT TO THE GOVERNMENT OF WEST BENGAL. BUT, HOWEVER, THE SPECIA L BENCH FOUND NO CLAIM, AS SUCH, WAS MADE BY THE ASSESSEE BEFORE THE AO AND THE BENC H OPINED THE CLAIM OF THE ASSESSEE WOULD REQUIRE EXAMINATION, ACCORDINGLY, RESTORED TH E MATTER BACK TO THE FILE OF THE AO WITH THE DIRECTION THAT HE SHALL EXAMINE THE ASSESS EE'S CONTENTION WHETHER ITS CASE FALLS UNDER CLS, (B), (K) AND (I) OF RULE 600. THEREFORE, WE FIND NO OBSERVATION AS MADE BY THE SPECIAL BENCH IN FAVOUR OF THE REVENUE AS OBSERVED BY THE CIT-A IN HIS ORDER AND AS RELIED BY THE LD.DR BEFORE US. THUS, WE ARE OF THE OPINION AS THERE WAS NO CATEGORICAL FINDING OF THE SPECIAL BENCH RELATING TO THE ISSUE ON HAND AND REJECT THE CONTENTIONS OF THE RESPONDENT REVENUE IN THIS REGARD. 11. NOW, LET US EXAMINE THE DECISION OF THE TRIBUNA L VIDE ITS ORDER DATED 15.01.2014 PASSED IN ITA NO. 1251/KOL/2011 IN THE CASE OF M/S. AMRAI PACHWAI & C.S. SHOP, WHEREIN IT HELD THAT M/S. ASANSOL BOTTLING & PACKAG ING CO. PVT. LTD. IS A BOTTLING PLANT CUM WAREHOUSE UNDER RULE 2(VII) OF THE WEST BENGAL EXCISE RULES, 2005 AND IS A LICENSED WHOLESALE VENDOR OF COUNTRY SPIRIT GRANTED POWER UNDER SECTION 22 OF THE BENGAL EXCISE ACT AND FURTHER HELD THAT THE CASH PA YMENTS MADE BY DEPOSITING INTO THE BANK ACCOUNT OF M/S ASANSOL BOTTLING & PACKAGING CO PVT LIMITED BY THE RETAIL VENDOR FOR PURCHASE OF COUNTRY SPIRIT AS PER RULE 6(2) OF THE EXCISE RULES 2005 HAS TO BE CONSTRUED AS PAYMENT MADE TO THE STATE GOVERNMENT A UTHORITY IN TERMS OF THE EXCEPTION AS PROVIDED IN RULE 6DD(B) AND FOR BETTER UNDERSTAN DING, THE FOLLOWING REASONS GIVEN IN PARAGRAPHS NO. 21 & 22 OF ITS ORDER IS REPRODUCE D AS UNDER:- '21. WE FIND THAT M/S. ASANSOL BOTTLING & PACKAGING CO. PVT. LTD. IS A BOTTLING PLANT CUM WAREHOUSE UNDER RULE 2(VII) OF THE WEST BENGAL EXCISE RULES, 2005 WITH PRIVILEGE GRANTED U/S 22 OF THE BENGAL EXCISE ACT, 1909. AT THIS JUNCTURE, IT WOULD BE RELEVANT TO GO INTO THE DEFINITION OF WAREHOUSE AS PROVIDED UNDER THE STATE EXCISE RULES, 2005, AS BELOW:- 6 ITA NO.145/KOL/2015 SMT. URMI SHIT A.YR.2010-11 6 'WAREHOUSE', UNDER RULE 2(VII) OF THE W.B. EXCISE R ULES, 2005, MEANS THE WAREHOUSE FOR SUPPLY OF COUNTRY SPIRIT TO RETAIL VE NDORS, ESTABLISHED AT CONVENIENT PLACES BY THE COMMISSIONER AT THE EXPENS E OF THE STATE GOVERNMENT, OR AT THE EXPENSE OF A PERSON TO WHOM THE EXCLUSIVE PRIVILEGE OF SUPPLYING OR SELLING COUNTRY SPIRIT BY WHOLESALE HAS BEEN GRANTE D UNDER SECTION 22 OF THE ACT, OR OF A LICENSED WHOLESALE VENDOR OF COUNTRY SPIRIT . THE ABOVE DEFINITION MAKES IT CLEAR THAT THE 'WAREH OUSE' REFERRED TO UNDER THE STATE EXCISE RULES IS UNDER THE DIRECT CONTROL AND AUTHOR ITY OF THE COMMISSIONER OF STATE EXCISE BECAUSE IT IS ESTABLISHED BY THE COMMISSIONE R OF STATE EXCISE AND AS SUCH IS A STATE GOVERNMENT ESTABLISHMENT. IT IS ALSO PERTINEN T TO NOTE THAT THE EXPENDITURE IN RELATION TO SUCH WAREHOUSE IS BORNE BY THE STATE GO VERNMENT OR BY THE LICENSEE TO WHOM THE EXCLUSIVE PRIVILEGE IS GRANTED U/S 22 OF T HE BENGAL EXCISE ACT, 1909. HENCE THERE COULD BE NO DOUBT THAT THE WAREHOUSE IS ESTAB LISHED BY THE STATE EXCISE COMMISSIONER. HENCE IT COULD BE SAFELY CONCLUDED TH AT THE WAREHOUSE SO ESTABLISHED BY THE STATE EXCISE COMMISSIONER IS A STATE GOVERNMENT ESTABLISHMENT. IT WOULD ALSO BE PERTINENT TO NOTE THAT THE SAID WAREHOUSE HAS BEEN SPECIFICALLY ESTABLISHED FOR SUPPLY OF COUNTRY SPIRIT TO RETAIL VENDORS (ASSESSEE HEREIN) ONLY AND NOT TO ANYBODY ELSE. IT WOULD BE PERTINENT TO LOOK INTO THE DEFINITION O F 'WHOLESALE LICENSEE' AS PER RULE 2(VIII) OF THE EXCISE RULES 2005 AS BELOW.- RULE 2(VIII) - 'WHOLESALE LICENSEE' MEANS THE WHOLE SALE VENDOR OF COUNTRY SPIRIT TO WHOM LICENCE HAS BEEN GRANTED IN WEST BENGAL EXCISE FORM NO. 26. IT WOULD BE PERTINENT TO LOOK INTO SECTION 22 OF TH E BENGAL EXCISE ACT. 1909 AT THIS JUNCTURE AS BELOW:- SECTION 22 - GRANT OF EXCLUSIVE PRIVILEGE OF MANUFA CTURE AND SALE OF COUNTRY LIQUOR OR INTOXICATING DRUGS - (1) THE STATE GOVERNMENT MAY GRANT TO ANY PERSON, O N SUCH CONDITIONS AND FOR SUCH PERIOD AS IT MAY THINK FIT, THE EXCLUSIVE PRIVILEGE - (A) OF MANUFACTURING, OR SUPPLYING BY WHOLESALE, OR (B) OF MANUFACTURING, AND SUPPLYING BY WHOLESALE, O R (C) OF SELLING, BY WHOLESALE OR RETAIL, OR (D) OF MANUFACTURING OR SUPPLYING BY WHOLESALE AND SELLING RETAIL, OR (E) OF MANUFACTURING AND SUPPLYING BY WHOLESALE AND SELLING RETAIL, ANY COUNTRY LIQUOR OR INTOXICATING DRUG WITHIN ANY SPECIFIED LOCAL AREA: PROVIDED THAT PUBLIC NOTICE SHALL BE GIVEN TO THE I NTENTION TO GRANT ANY SUCH EXCLUSIVE PRIVILEGE. AND THAT ANY OBJECTIONS MADE BY ANY PERS ON RESIDING WITHIN THE AREA AFFECTED SHALL BE CONSIDERED BEFORE AN EXCLUSIVE PRIVILEGE I S GRANTED. 7 ITA NO.145/KOL/2015 SMT. URMI SHIT A.YR.2010-11 7 (2) NO GRANTEE OF ANY PRIVILEGE UNDER SUB-SECTION ( 1) SHALL EXERCISE THE SAME UNLESS OR UNTIL HE HAS RECEIVED A LICENSE IN THAT BEHALF FROM THE COLLECTOR OR THE EXCISE COMMISSIONER. HENCE IT COULD BE SAFELY CONCLUDED THAT M/S. ASANSO L BOTTLING & PACKAGING CO. PVT LTD (BOTTLING PLANT) IS A WAREHOUSE WITHIN THE MEANING OF RULE 2(VII) OF THE EXCISE RULES 2005 AND SAID WAREHOUSE IS A STATE GOVERNMENT ESTAB LISHMENT, ESTABLISHED AND CONTROLLED BY THE EXCISE COMMISSIONER. IT WOULD BE RELEVANT TO REPRODUCE RULE 6DD(B) OF THE IT RULES AT THIS JUNCTURE; - (B) WHERE THE PAYMENT IS MADE TO THE GOVERNMENT AND , UNDER THE RULES FRAMED BY IT, SUCH PAYMENT IS REQUIRED TO BE MADE IN LEGAL TENDER . IN THE INSTANT CASE, THE ASSESSEE (RETAIL VENDOR) H AD MADE CASH PAYMENTS FOR PURCHASE OF COUNTRY SPIRIT BY DEPOSITING CASH DIRECTLY INTO THE BANK ACCOUNT OF M/S ABPL AS PER RULE 6(2) OF THE EXCISE RULES 2005, IT HAS TO BE CO NSTRUED AS PAYMENT MADE TO THE STATE GOVERNMENT AUTHORITY AND ACCORDINGLY FALLS UNDER TH E EXCEPTION PROVIDED IN RULE 6DD(B) OF THE IT RULES. 22. IT IS NOT IN DISPUTE THAT M/S ASANSOL BOTTLING & PACKAGING CO. PVT LTD HAVE BEEN GRANTED LICENCE TO ACT AS A WHOLESALER FOR SUPPLY O F COUNTRY LIQUOR TO THE RETAIL VENDOR AS PER THE REGULATIONS OF THE EXCISE DEPARTMENT, GO VERNMENT OF WEST BENGAL. AT THE COST OF REPETITION, WE WOULD LIKE TO STATE THAT THE SAID REGULATION MANDATED THE PAYMENTS TO BE MADE DIRECTLY INTO THE BANK ACCOUNT OF THE SA ID WHOLESALE LICENSEE BY THE RETAIL VENDOR (I. E ASSESSEE HEREIN) FOR STRICT AND EFFECT IVE REGULATION OF THE COUNTRY' LIQUOR AND FOR PREVENTION OF SPURIOUS STOCKS AND BLACK MARKETI NG TRANSACTIONS FROM THE SAME. HENCE IT COULD BE SAFELY CONCLUDED THAT THE SAID WH OLESALE LICENSEE HAD ACTED AT THE INSTANCE OF THE STATE GOVERNMENT. ONCE THIS IS SO, THEN THE SAID WHOLESALE LICENSEE COULD BE CONSTRUED AS AN AGENT OF THE STATE GOVERNM ENT. FOR THE SAKE OF CONVENIENCE, THE RELEVANT RULE IS REPRODUCED HEREUNDER: - RULE 6DD(K) - WHERE THE PAYMENT IS MADE BY ANY PERS ON TO HIS AGENT WHO IS REQUIRED TO MAKE PAYMENT IN CASH FOR GOODS OR SERVICES ON BEHAL F OF SUCH PERSON. THE PAYMENT MADE BY THE ASSESSEE RETAIL VENDOR TO T HE PRINCIPAL, GOVERNMENT OF WEST BENGAL THROUGH ITS WHOLESALE AGENT. THE RELATIONSHI P BETWEEN THE ASSESSEE (AUTHORIZED RETAILER) AND GOVERNMENT OF WEST BENGAL (THE SUPPLI ER) ACTING UNDER WEST BENGAL EXCISE RULES THROUGH ITS AUTHORISED WHOLESALER LICE NSEE (AGENT), BOTH DEFACTO AND DEJURE, IS ONE OF 'PRINCIPAL' AND 'AGENT'. WE HOLD THAT THE ASSESSEE RETAIL VENDOR HAD MADE PAYMENT TO THE SAID AGENT (WHOLESALE LICENSEE) WOULD FALL UNDER THE EXCEPTION PROVIDED IN RULE 6DD(K) OF THE RULES'. 12. WE ALSO FIND ON RECORD A COPY OF LICENSE FOR TH E BOTTLING OF COUNTRY SPIRIT UNDER FORM NO-1 AS PLACED BY THE LD.AR AND ON PERUSAL OF THE S AME THE SAID LICENSE WAS ISSUED BY THE COLLECTOR BURDWAN WEST AREA, WEST BENGAL AUTHOR ISING THE SAID BOTTLING COMPANY TO SELL BY WHOLESALE OF COUNTRY SPIRIT AND RULE 2(V III) OF EXCISE RULES 2005 DEFINES THE 8 ITA NO.145/KOL/2015 SMT. URMI SHIT A.YR.2010-11 8 'WHOLESALE LICENSEE' MEANS THE WHOLESALE VENDOR OF COUNTRY SPIRIT TO WHOM LICENCE HAS BEEN GRANTED IN WEST BENGAL EXCISE FORM NO. 26. 13. AS THE ISSUE INVOLVED IN THE PRESENT APPEAL AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THE CASE OF M/S. AMRAI PACHW AI & C.S. SHOP SUPRA, WE RESPECTFULLY FOLLOW THE DECISION RENDERED BY THE CO ORDINATE BENCH OF THIS TRIBUNAL IN THE SAID CASE AND DELETE THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER AND CONFIRMED BY THE CIT-A UNDER SECTION 40A(3) OF THE ACT. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. RESPECTFULLY FOLLOWING THE AFORESAID DECISION, WE H OLD THAT THE ASSESSEES CASE FALLS UNDER THE EXCEPTIONS PROVIDED IN RULE 6DD(B) AND (K ) OF THE RULES AND ACCORDINGLY, NO DISALLOWANCE U/S 40A(3) OF THE ACT COULD BE MADE IN THE FACTS AND CIRCUMSTANCES OF THE CASE TO THE TUNE OF RS 48,10,982/-. ACCORDINGLY, T HE GROUNDS RAISED BY THE ASSESSEE IN THIS REGARD ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 04.08.2017 SD/- SD/- [N.V. VASUDEVAN] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 04.08.2017 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. SMT. URMI SHIT, KULTORA, G.T. ROAD, P.O.-SITARAM PUR-713359, DIST-BURDWAN 2. ITO, WARD-1(4), ASANSOL, SAHANA APARTMENT, LOWER CHELIDANGA, P.O.-ASANSOL-713304 3..C.I.T.(A)-ASANSOL 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S