M/s Urma C. S. Shop, Purulia V. ITO3(4), Purulia, Purulia

ITA 147/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4395 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 30-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 27-01-2014
• Court: TRIBUNAL
• Assessee Lawyers: R N RAM
• Section: 40A(3)

Judgement Text

I.T.A. NO. 147/KOL./2014 ASSESSMENT YEAR: 2008-2009 & I.T.A. NO. 37/KOL/2015 ASSESSMENT YEAR: 2010-2011 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 147/KOL/ 2014 ASSESSMENT YEAR: 2008-2009 & I.T.A. NO. 37/KOL/2015 ASSESSMENT YEAR: 2010-2011 M/S. URMA C.S. SHOP,............................... .............................APPELLANT BARA URMA HATTALA, PURULIA-723 154 [PAN: AABFU 3173 H] -VS.- INCOME TAX OFFICER,................................ ...............................RESPONDENT WARD-3(4), PURULIA APPEARANCES BY: SHRI R.N. RAM, A.R., FOR THE ASSESSEE SHRI PRAVASH ROY, JCIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : AUGUST 30, 2016 DATE OF PRONOUNCING THE ORDER : OCTOBER 04, 2016 O R D E R THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST TWO SEPARATE ORDERS DATED 25.11.2013 AND 02.12.2014 PAS SED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), ASANSOL FOR T HE ASSESSMENT YEARS 2008-09 AND 2010-11 AND THE SOLITARY COMMON ISSUE I NVOLVED THEREIN RELATES TO THE DISALLOWANCE OF RS.29,12,693/- AND R S.32,49,267/- MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT( APPEALS) FOR A.YS. 2008-09 AND 2010-11 RESPECTIVELY UNDER SECTION 40A( 3) OF THE ACT. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM, WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN COUNTRY SPIRI T AND PACHWAI. THE RETURNS OF INCOME FOR BOTH THE YEARS UNDER CONSIDER ATION WERE FILED BY IT ON 10.10.2008 AND 30.03.2011 DECLARING TOTAL INCOME OF RS.14,480/- AND I.T.A. NO. 147/KOL./2014 ASSESSMENT YEAR: 2008-2009 & I.T.A. NO. 37/KOL/2015 ASSESSMENT YEAR: 2010-2011 PAGE 2 OF 6 RS.32,940/- FOR A.YS. 2008-09 AND 2010-11 RESPECTIV ELY. AS NOTICED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE ASSESSEE-FIRM HAD MADE PURCHASES OF RS.29,12,693/- AND RS.32,49,267/- FROM M/S. ASANSOL BOTTLING & PACKING CO. PVT. LIMIT ED DURING A.YS. 2008- 09 AND 2010-11 RESPECTIVELY AND PAYMENTS AGAINST TH E SAME WERE MADE BY DEPOSITING CASH DIRECTLY IN THE BANK ACCOUNT OF M/S. ASANSOL BOTTLING & PACKING CO. PVT. LIMITED IN THE SUMS EXCEEDING RS.2 0,000/-. ACCORDING TO THE ASSESSING OFFICER, THE SAID PAYMENTS WERE MADE BY THE ASSESSEE IN CONTRAVENTION OF SECTION 40A(3) OF THE INCOME TAX A CT, 1961 AND SINCE THE ASSESSEE COULD NOT EXPLAIN ANY EXCEPTIONAL CIRC UMSTANCES AS SPECIFIED UNDER RULE 6DD OF INCOME TAX RULES, 1962 FOR MAKING SUCH PAYMENTS, HE MADE A DISALLOWANCE OF RS.29,12,693/- AND RS.32,49, 267/- UNDER SECTION 40A(3) FOR A.Y. 2008-09 AND 2010-11 RESPECTIVELY. 3. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U NDER SECTION 40A(3) IN BOTH THE YEARS UNDER CONSIDERATION WAS CH ALLENGED BY THE ASSESSEE IN THE APPEALS FILED BEFORE THE LD. CIT(AP PEALS) AND SINCE THE SUBMISSIONS MADE BY THE ASSESSEE IN SUPPORT OF ITS CASE ON THE ISSUE WAS NOT FOUND ACCEPTABLE BY HIM, THE LD. CIT(APPEALS) P ROCEEDED TO CONFIRM THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDE R SECTION 40A(3) IN BOTH THE YEARS UNDER CONSIDERATION. AGGRIEVED BY TH E ORDERS OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THESE APPE ALS BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE ISSUE INVOLVED IN THESE APPEALS OF THE ASSESSEE RELATING TO THE DISALLOWANCE UNDER SECTION 40A(3) IS SQUARELY COVERED 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 V IDE ITS ORDER DATED 15.01.2014 PASSED IN ITA NO. 1251/KOL/2011, PAYMENT S WERE MADE BY THE ASSESSEE AGAINST PURCHASES MADE FROM THE SAME P ARTY, NAMELY M/S. I.T.A. NO. 147/KOL./2014 ASSESSMENT YEAR: 2008-2009 & I.T.A. NO. 37/KOL/2015 ASSESSMENT YEAR: 2010-2011 PAGE 3 OF 6 ASANSOL BOTTLING & PACKING CO. PVT. LIMITED BY DEP OSITING THE CASH DIRECTLY IN THE BANK ACCOUNT OF THE SAID SUPPLIER I N THE SUMS EXCEEDING RS.20,000/- AND THE DISALLOWANCE MADE FOR THE SAME UNDER SECTION 40A(3) WAS DELETED BY THE TRIBUNAL FOR THE FOLLOWIN G REASONS GIVEN IN PARAGRAPHS NO. 21 & 22 OF ITS ORDER:- 21. WE FIND THAT M/S. ASANSOL BOTTLING & PACKAGING CO. PVT. LTD. IS A BOTTLING PLANT CUM WAREHOUSE UNDER R ULE 2(VII) OF THE WEST BENGAL EXCISE RULES, 2005 WITH PRIVILEG E GRANTED U/S 22 OF THE BENGAL EXCISE ACT, 1909. AT THIS JUNC TURE, IT WOULD BE RELEVANT TO GO INTO THE DEFINITION OF WARE HOUSE AS PROVIDED UNDER THE STATE EXCISE RULES, 2005, AS BEL OW:- WAREHOUSE, UNDER RULE 2(VII) OF THE W.B. EXCISE RULES, 2005, MEANS THE WAREHOUSE FOR SUPPLY OF COUN TRY SPIRIT TO RETAIL VENDORS, ESTABLISHED AT CONVENIENT PLACES BY THE COMMISSIONER AT THE EXPENSE OF THE STATE GOVERN MENT, OR AT THE EXPENSE OF A PERSON TO WHOM THE EXCLUSIVE PR IVILEGE OF SUPPLYING OR SELLING COUNTRY SPIRIT BY WHOLESALE HA S BEEN GRANTED UNDER SECTION 22 OF THE ACT, OR OF A LICENS ED WHOLESALE VENDOR OF COUNTRY SPIRIT. THE ABOVE DEFINITION MAKES IT CLEAR THAT THE 'WAREH OUSE' REFERRED TO UNDER THE STATE EXCISE RULES IS UNDER T HE DIRECT CONTROL AND AUTHORITY OF THE COMMISSIONER OF STATE EXCISE BECAUSE IT IS ESTABLISHED BY THE COMMISSIONER OF ST ATE EXCISE AND AS SUCH IS A STATE GOVERNMENT ESTABLISHMENT. IT IS ALSO PERTINENT TO NOTE THAT THE EXPENDITURE IN RELATION TO SUCH WAREHOUSE IS BORNE BY THE STATE GOVERNMENT OR BY TH E LICENSEE TO WHOM THE EXCLUSIVE PRIVILEGE IS GRANTED U/S 22 OF THE BENGAL EXCISE ACT, 1909. HENCE THERE COULD BE N O DOUBT THAT THE WAREHOUSE IS ESTABLISHED BY THE STATE EXCI SE COMMISSIONER. HENCE IT COULD BE SAFELY CONCLUDED TH AT THE WAREHOUSE SO ESTABLISHED BY THE STATE EXCISE COMMIS SIONER IS A STATE GOVERNMENT ESTABLISHMENT. IT WOULD ALSO BE PERTINENT TO NOTE THAT THE SAID WAREHOUSE HAS BEEN SPECIFICALLY ESTABLISHED FOR SUPPLY OF COUNTRY SPIR IT TO RETAIL VENDORS (ASSESSEE HEREIN) ONLY AND NOT TO ANYBODY E LSE. IT WOULD BE PERTINENT TO LOOK INTO THE DEFINITION O F 'WHOLESALE LICENSEE' AS PER RULE 2(VIII) OF THE EXC ISE RULES 2005 AS BELOW.- RULE 2(VIII) - 'WHOLESALE LICENSEE' MEANS THE WHOLE SALE VENDOR OF COUNTRY SPIRIT TO WHOM LICENCE HAS BEEN G RANTED 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:- I.T.A. NO. 147/KOL./2014 ASSESSMENT YEAR: 2008-2009 & I.T.A. NO. 37/KOL/2015 ASSESSMENT YEAR: 2010-2011 PAGE 4 OF 6 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 OB JECTIONS MADE BY ANY PERSON RESIDING WITHIN THE AREA AFFECTE D SHALL BE CONSIDERED BEFORE AN EXCLUSIVE PRIVILEGE IS GRAN TED. (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 COMMIS SIONER. HENCE IT COULD BE SAFELY CONCLUDED THAT M/S. ASANSO L BOTTLING & PACKAGING CO. PVT LTD (BOTTLING PLANT) IS A WAREH OUSE WITHIN THE MEANING OF RULE 2(VII) OF THE EXCISE RUL ES 2005 AND SAID WAREHOUSE IS A STATE GOVERNMENT ESTABLISHM ENT, ESTABLISHED AND CONTROLLED BY THE EXCISE COMMISSION ER. IT WOULD BE RELEVANT TO REPRODUCE RULE 6DD(B) OF THE I T 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 DEP OSITING CASH DIRECTLY INTO THE BANK ACCOUNT OF M/S ABPL AS PER RULE 6(2) OF THE EXCISE RULES 2005 , IT HAS TO BE CONSTR UED AS PAYMENT MADE TO THE STATE GOVERNMENT AUTHORITY AND ACCORDINGLY FALLS UNDER THE EXCEPTION PROVIDED IN R ULE 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 OF COUNTRY LIQUOR TO THE RETA IL VENDOR AS PER THE REGULATIONS OF THE EXCISE DEPARTMENT, GO VERNMENT I.T.A. NO. 147/KOL./2014 ASSESSMENT YEAR: 2008-2009 & I.T.A. NO. 37/KOL/2015 ASSESSMENT YEAR: 2010-2011 PAGE 5 OF 6 OF WEST BENGAL. AT THE COST OF REPETITION, WE WOULD LIKE TO STATE THAT THE SAID REGULATION MANDATED THE PAYMENT S TO BE MADE DIRECTLY INTO THE BANK ACCOUNT OF THE SAID WHO LESALE LICENSEE BY THE RETAIL VENDOR (I.E ASSESSEE HEREIN) FOR STRICT AND EFFECTIVE REGULATION OF THE COUNTRY LIQUOR AND FOR PREVENTION OF SPURIOUS STOCKS AND BLACK MARKETING TRANSACTIONS FROM THE SAME. HENCE IT COULD BE SAFEL Y CONCLUDED THAT THE SAID WHOLESALE LICENSEE HAD ACTE D AT THE INSTANCE OF THE STATE GOVERNMENT. ONCE THIS IS SO, THEN THE SAID WHOLESALE LICENSEE COULD BE CONSTRUED AS AN AG ENT OF THE STATE GOVERNMENT. 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 G OODS OR SERVICES ON BEHALF OF SUCH PERSON. THE PAYMENT MADE BY THE ASSESSEE RETAIL VENDOR TO T HE PRINCIPAL, GOVERNMENT OF WEST BENGAL THROUGH ITS WH OLESALE AGENT. THE RELATIONSHIP BETWEEN THE ASSESSEE (AUTHO RIZED RETAILER) AND GOVERNMENT OF WEST BENGAL (THE SUPPLI ER) ACTING UNDER WEST BENGAL EXCISE RULES THROUGH ITS AUTHORISED WHOLESALER LICENSEE (AGENT), BOTH DEFACT O 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. 5. AS THE ISSUE INVOLVED IN THE PRESENT APPEALS AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THE CASE OF M/S. AMRAI PACHWAI & C.S. SHOP (SUPRA), I RESPECTFULLY FOLLOW THE DECISION RENDERED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE SAI D CASE AND DELETE THE DISALLOWANCES MADE BY THE ASSESSING OFFICER AND CON FIRMED BY THE LD. CIT(APPEALS) UNDER SECTION 40A(3) OF THE ACT. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 04, 2 016. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 4 TH DAY OF OCTOBER, 2016 I.T.A. NO. 147/KOL./2014 ASSESSMENT YEAR: 2008-2009 & I.T.A. NO. 37/KOL/2015 ASSESSMENT YEAR: 2010-2011 PAGE 6 OF 6 COPIES TO : (1) M/S. URMA C.S. SHOP, BARA URMA, HATTALA, PURULIA-723 154 (2) INCOME TAX OFFICER, WARD-3(4), PURULIA, (3) COMMISSIONER OF INCOME TAX(APPEALS), ASANSOL; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.