Shri Nityananda Saha, Kolkata V. ITO, Ward - 52(2), Kolkata, Kolkata

ITA 1512/KOL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9221 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2011
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 30-07-2010
• Court: TRIBUNAL
• Department Lawyers: B R PURAKAYASTHA
• Assessee Lawyers: M M SARCAR
• Keywords: Set aside
• Section: 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND , . . !' ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SHR I C. D. RAO, AM] # # # # / I.T.A NO. 1512/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR : 2006-07 SRI NITYANANDA SAHA. VS INCOME TAX OFFICER, WD- 52(2), KOLKATA (PAN-ALWPS 5663 A) ( )* /APPELLANT ) (+,)*/ RESPONDENT ) FOR THE APPELLANT: SHRI M. M. SARCAR FOR THE RESPONDENT: SHRI B. R. PURAKAYASTHA !- / ORDER THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A)-XXXIII, KOLKATA IN APPEAL NO.176/CIT(A)-XXXIII/WD-52(2)/KOL/08-09 VIDE DATED 23.06.2010. THE ASSESSMENT WAS FRAMED BY ITO, WARD-52(2), KOLKATA O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSME NT YEAR 2006-07 VIDE HIS ORDER DATED 19.12.2008. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF ASSESSING OFFICER IN DISAL LOWING CASH PAYMENT FOR PURCHASE OF RICE BY INVOKING PROVISIONS OF SECTION 40(A)(3) OF THE ACT. FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING TWO GROUNDS: 1. FOR THAT THE LEARNED INCOME TAX OFFICER AS WELL AS THE COMMISSIONER OF INCOME TAX (APPEALS) WAS WRONG, UNJUST AND ARBITRAR Y IN DISALLOWING CASH PAYMENTS FOR COST OF RICE IGNORING FACT THAT THE CA SH PAYMENTS ARE GENUINE AS PER LAW AND WERE MADE FOR SMOOTH RUNNING OF THE BUSINES S OF ESSENTIAL COMMODITY LIKE RICE. 2. FOR THAT LEARNED COMMISSIONER OF INCOME TAX (APP EAL) WAS NOT CORRECT IN DESCRIBING THE RICE MILL OWNERS AS TRADERS ONLY AND FAILS TO CONSIDER THAT THE RICE MILL OWNERS ARE PROCESSOR OF AGRICULTURAL PROD UCTS LIKE RICE AND ALLOWED TO BE PAID IN CASH U/R 6DD(F)(IV) OF THE I. T. RULE, 1 962. 2 ITA 1512/K/2010 NITYANANDA SAHA. A.Y.06-07 3. THE ASSESSEE ALSO RAISED ADDITIONAL GROUNDS, WHI CH WERE SUBSEQUENTLY WITHDRAWN AS NOT PRESSED AND TO THAT EFFECT AN ENDORSEMENT WA S MADE BY THE LD. COUNSEL FOR THE ASSESSEE ON INSTRUCTION OF THE ASSESSEE. 4. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT THE ASSESSEE IS A WHOLESALE DEALER OF RICE AND HE PURCHASES RICE FROM DIFFERENT PARTS OF BENGAL AND SOMETIMES OUTSIDE BENGAL FROM RICE MILLS. THE ASSESSEES CON TENTION BEFORE THE ASSESSING OFFICER AND BEFORE THE CIT(A) AND EVEN NOW BEFORE US IS, TH AT THE RICE MILL OWNERS ACCEPT ONLY CASH AND THEY DO NOT ACCEPT CHEQUES FROM THE PURCHA SERS OF RICE FOR WANT OF BANKING FACILITIES IN RURAL AREAS, WHERE RICE MILLS ARE SIT UATED. THE ASSESSEE CONTENDED THAT RICE MILLERS RECEIVED PAYMENT IN CASH FOR CONVENIENCE AS PAYMENTS TO CULTIVATORS FOR PURCHASING PADDY IS MADE IN CASH. IT WAS ALSO CONT ENDED THAT IT IS CUSTOMARY TO PAY COST OF RICE IN CASH TO THE MILLERS FOR SMOOTH RUNNING O F THE BUSINESS AND THERE IS NOTHING ILLEGAL IN PAYMENT OF CASH FOR PURCHASE OF RICE. I T WAS CLAIMED BY THE ASSESSEE THAT ALL THE PAYMENTS IN CASH FOR PURCHASE OF RICE ARE GENUI NE PAYMENTS AND IT IS FOR THE PURPOSE OF SMOOTH RUNNING OF BUSINESS. THE ASSESSEE CONTEND ED THAT THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAS FAILED TO CONSIDER THE FACTS AND LEGAL PROTECTION PROVIDED BY RULE 6DD(F)(IV) OF THE I. T. RULES, 1962. 5. WE FIND THAT THE ASSESSEE HAS MADE PURCHASES IN CASH FROM RICE MILLS SITUATED IN KOLKATA, HOOGHLY ETC. AND THE SAME ARE DETAILED OUT BY ASSESSING OFFICER AS UNDER: DETAILS OF REPLIES RECEIVED AMOUNT OF SALE DATE OF PAYMENT MODE OF PAYMENT AMOUNT OF PAYMENT RECEIVED I) II) III) M/S. GIRIRAJ RICE MILL (P) LTD., REGD. OFFICE 7C, KIRON SANKAR ROY ROAD, KOLKATA-700 001 M/S. MA GOURI RICE MILL P.O. KAMARPUKUR, PS GOGHAT, DIST. HOOGHLY M/S. MAHA LAKSHMI RICE MILL KIRTI CHANDRAPURL, P.O. NABARAJ, HOOGLY RS.3,81,000/- RS.5,86,000/- RS.1,98,000/- 17.02.05 29.06.05 25.03.06 26.03.06 08.07.05 26.07.05 28.09.05 29.01.06 08.03.06 14.10.05 15.12.05 CASH CASH CASH CASH CASH CASH CASH CASH CASH CASH CASH RS. 95,000/- RS. 95,000/- RS. 95,000/- RS. 96,000/- RS. 99,000/- RS. 96,000/- RS. 97,000/- RS. 98,000/- RS. 98,000/- RS. 98,000/- RS.1,00,000/- 3 ITA 1512/K/2010 NITYANANDA SAHA. A.Y.06-07 IV) M/S. SITARAM RICE MILL, VILL + P.O KHATUL, PS GOGHAT, DIST. HOOGLY RS.2,95,000/- 22.05.05 18.11.05 10.12.05 CASH CASH CASH RS.1,00,000/- RS. 95,000/- RS.1,00,000/- 6. THE ASSESSEE ADMITTEDLY ARGUED THAT NO DOUBT THE SE PAYMENTS ARE IN CASH BUT RICE MILLS ARE SITUATED IN RURAL AREAS. WHEN POINTED OU T TO THE LD. COUNSEL FOR THE ASSESSEE THAT KOLKATA, HOOGLY AND THE ADDRESSES AS GIVEN ARE CLEARLY IN THE AREA WHERE BANKING FACILITIES ARE AVAILABLE, AS POINTED OUT BY LD. DR. THE ASSESSEE HAS NOT BROUGHT ANY EVIDENCE THAT THERE ARE NO BANKING FACILITIES IN TH OSE AREAS AS NOTED BY THE ASSESSING OFFICER. WE FIND FROM RULE 6DD THAT THERE IS NO RU LE 6DD(F)(IV) AS REFERRED TO BY THE LD. COUNSEL FOR THE ASSESSEE IN ITS WRITTEN SUBMISS ION BEFORE THE LOWER AUTHORITIES OR EVEN NOW BEFORE US. WE FIND THAT THE ASSESSEE WANT ED TO REFER RULE 6DD(G), WHICH READS AS UNDER: WHERE THE PAYMENT IS MADE IN A VILLAGE OR TOWN, WH ICH ON THE DATE OF SUCH PAYMENT IS NOT SERVED BY ANY BANK, TO ANY PERSON WH O ORDINARILY RESIDES, OR IS CARRYING ON ANY BUSINESS, PROFESSION OR VOCATION, I N ANY SUCH VILLAGE OR TOWN; 7. IT IS APPARENT FROM THE ARGUMENTS ABOVE MADE BY THE LD. COUNSEL THAT HE WANTED TO REFER RULE 6DD(G) AS THERE IS NO BANKING FACILIT IES AVAILABLE IN TOWN OR VILLAGE WHERE RICE MILLS OR ASSESSEES BUSINESS IS SITUATED. THE ASSESSEE COULD NOT BRING ANY INSTANCE THAT THERE IS NO BANKING FACILITIES EITHER IN KOLKA TA, THE HEADQUARTERS OF ASSESSEES BUSINESS OR IN HEADQUARTERS OF RICE MILLERS AS LIST ED OUT BY THE ASSESSING OFFICER. IT IS FAIRLY PRESUMED AND SUPPORTED BY LD. DR THAT P.S. GOGHAT, P.O NABARAJ, P.O. GOGHAT BELONG TO DISTRICT HOOGLY ARE QUITE COVERED BY BANK ING FACILITIES. THE LD. COUNSEL FOR THE ASSESSEE IN ALTERNATIVE MADE SUBMISSION THAT WH ATEVER PAYMENTS MADE ON HOLIDAYS FALLING ON SUNDAYS OR ANY NATIONAL HOLIDAY, ON WHIC H BANKS ARE CLOSED, THE SAME SHOULD BE EXCLUDED FOR MAKING DISALLOWANCE U/S.40A(3) OF T HE ACT. WE ARE IN AGREEMENT WITH THE ALTERNATIVE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE, WHEREVER THE PAYMENTS ARE MADE ON HOLIDAY I.E. NATIONAL HOLIDAYS OR SUNDAYS W HEN BANKING FACILITIES ARE CLOSED, THE DISALLOWANCE U/S. 40A(3) SHOULD NOT HAVE BEEN M ADE IN VIEW OF EXCEPTION PROVIDED BY RULE 6DD(J), WHICH READS AS UNDER: WHERE THE PAYMENT WAS REQUIRED TO BE MADE ON A DAY ON WHICH THE BANKS WERE CLOSED EITHER ON ACCOUNT OF HOLIDAY OR STRIKE. 4 ITA 1512/K/2010 NITYANANDA SAHA. A.Y.06-07 8. THE ASSESSEE FAIRLY CONCEDED THE POSITION THAT T HE ISSUE CAN BE REMITTED BACK TO THE FILE OF ASSESSING OFFICER FOR VERIFICATION OF T HE PAYMENTS MADE ON NATIONAL HOLIDAYS AND SUNDAYS, WHEN BANKING FACILITIES WAS CLOSED AND THE SAME CAN BE EXCLUDED WHILE MAKING DISALLOWANCE. IN VIEW OF THE ABOVE, WE SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR VERY LIMITED PURPOSE THAT IN CASE THE PAYMENTS FALLING ON HOLIDAYS I.E. NATIONAL HOLIDAYS OR ON SUNDAYS WHEN BANKING F ACILITIES ARE NOT AVAILABLE, THE DISALLOWANCE SHOULD NOT BE MADE, REST THE ASSESSEE HAS NO CASE. IN VIEW OF THE ABOVE DIRECTION, THIS APPEAL OF THE ASSESSEE IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR LIMITED VERIFICATION AND ALLOWED FOR STATISTICAL PU RPOSES. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. 10. ORDER PRONOUNCED IN OPEN COURT ON 21ST DAY OF M ARCH, 2011. SD/- SD/- . . !' , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ' ' ' ') )) ) DATED 21ST DAY OF MARCH, 2011 ./ $01 2 JD.(SR.P.S.) !- 3 +4 5!4&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT SRI NITYANANDA SAHA, 32, T. P. LANE, RAJP UR, SONARPUR, KOLKATA-700 149. 2 +,)* / RESPONDENT, ITO, WARD-52(2), KOLKATA 3 . -$ / THE CIT(A), KOLKATA 4. -$ ( )/ CIT, KOLKATA 5 . => +$ / DR, KOLKATA BENCHES, KOLKATA ,4 +/ TRUE COPY, !-$?/ BY ORDER, 1 /ASSTT. REGISTRAR .