SRABANI CHAKRABORTY, Kolkata V. I.T.O. Wd - 29(3),Kolkata, Kolkata

ITA 1724/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75083 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 23-11-2012
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN LD CITSR
• Assessee Lawyers: TAPAN CHAKRABORTY S LD ARS
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C,KOLK ATA (BEFORE HONBLE SHRI SHAMIM YAHYA, AM & & HONB LE SHRI GEORGE MATHAN, JM.) I.T.A.NO. 1724/KOL/2012 A.Y 2004-05 SMT. SRABANI CHAKRABORTY -VS- I.T .O WARD 29(3), KOLKATA PAN: ADKPC 2488D (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI SOUMITRA CHOUDHURY & TAPAN CHAKRABORTY, ADVOCATES, LD.ARS RESPONDENT BY : SHRI RAVI JAIN, LD.CIT/SR.DR DATE OF HEARING : 27-03-2014 DATE OF PRONOUNCEMENT : 27 -03-2014 : O R D E R : SHRI GEORGE MATHAN, JM : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XVI, KOLKATA I N APPEAL NO. 39/CIT(A)- XVI/29(3)/11-12 DATED 14-08-2012 FOR THE ASSESSM ENT YEARS 2004-05. 2. S/SHRI SOUMITRA CHOUDHURY AND TAPAN CHAKRABORTY, ADVOCATES, LEARNED ARS REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI RAV I JAIN, LEARNED CIT/SR.DR REPRESENTED ON BEHALF OF THE REVENUE. 3. IN THE ASSESSEES APPEAL IN ITA NO. 1724/KOL/201 2 FOR THE A.Y 2004-05, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APP EALS) ERRED BOTH IN LAW AND IN FACT BY CONFIRMING THE ADD ITION OF RS.22,96,099/- MADE BY THE LD. ASSESSING OFFICER U/ S.40A(3) OF THE INCOME TAX ACT, 1961 WITHOUT CONSIDERING THE DIR ECTION GIVEN BY THE HONBLE I.T.A.T KOLKATA VIDE ORDER DATED 1 3.01.2011 IN ITA NO.1449/KOL/2010 IN THE CASE OF THE APPELLANT. 2. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APP EALS) MIS- DIRECTED HIMSELF BY NOT CONSIDERING THE EXPLANATIO N OF THE C.B.D.T, AS LAID DOWN IN RULE 6DD(J)(F), WHICH READ S AS UNDER:- (F) SPECIFIC DISCOUNT IS GIVEN BY THE SELLER FOR PA YMENT TO BE MADE BY WAY OF CASH-CIRCULAR NO.220 [F. NO.206/1 7/76-IT(A)- II], DATED 31-05-1977. 3. FOR THAT THE ORDER IS ILLEGAL, ARBITRARY, VOID-A B-INITIO AND WITHOUT JURISDICTION . 4. FOR THAT THE APPELLANT SEEKS PERMISSION TO RAISE ADDITIONAL GROUND/GROUNDS OR TO MODIFY ANY OF THE GROUNDS BEFO RE OR AT THE TIME OF HEARING OF THE APPEAL. . ITA NO.1724/KOL/12-SARBANI CHAKRABORTY 2 4. IT WAS SUBMITTED BY THE LD. AR FOR THE ASSESSEE THAT THE ASSESSEE IS A DEALER OF CEMENT AND THERE WAS AN UNDERSTANDING BETWEEN ASSES SEE AND HER HUSBAND THAT HER HUSBAND, SRI TARUN CHAKRABORTY WOULD PROCURE CEMENT FOR HER BUSINESS IF THE AMOUNT WAS PAID IN CASH. IT WAS THE SUBMISSION THAT DURIN G THE YEAR 2004-05 THE SUPPLY OF CEMENT WAS DIFFICULT DUE TO THE SHORTAGE OF CEMENT AVAILABILITY IN THE MARKET. AS THE APPELLANT REQUIRED THE CEMENT FOR COMPLETING HER BUSINESS TRANSACTION, THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH HER HUSBAND FOR THE PURCHASE OF CEMENT IN CASH. THE LEARNED AR FOR THE ASSESSEE DREW OUR ATTENTION TO THE AGREEMENT, WHICH HAS SHOWN AT PAGES 11-12 OF THE ASSESSEES PAPER BOOK. AS PER TH E SAID AGREEMENT THE ASSESSEE WOULD GET DISCOUNT OF AN AMOUNT OF RS. 1.50/- PER BAG. IT WAS THE FURTHER SUBMISSION THAT THIS AGREEMENT WAS ALSO ENTERED INTO AS THE BUSINESS OF THE ASSESSEE HAS BEEN SITUATED IN A REMOTE VILLAGE IN SOUTH 24 PARGANAS AND THERE WERE DIFFICULTIES IN GETTING CHEQUES ENCASHED AND CASH WITHIN THE SHORT TIME. IT WAS TH E SUBMISSION THAT CONSEQUENT TO THE PURCHASE OF CEMENT IN CASH, THE AO HAD INVOKED THE PROVISIONS OF SECTION 40A(3) OF THE I.T ACT 1961 AND MADE DISALLOWANCE FOR THE VIOLATIO N OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT. IT WAS THE SUBMISSION THAT THE ISSUE HAD REACHED THE TRIBUNAL AND THE TRIBUNAL HAD SET ASIDE THE ISSUE TO THE FILE OF THE AO VIDE ORDER DATED 13-01-2011 IN ITA NO. 1449/KOL/2010 FOR RE-ADJUDICATION IN THE LINE WITH THE PROVISIONS OF RULE 6DD(F) OF THE I.T RULES AS IT STOOD THEN. IT WAS THE SUBMISSION THAT THE AO HAS REPEATED THE ADDITION AND THE LD.CIT(A) HAS ALSO CONFIRMED THE ORDER OF THE A O IN DOING SO. IT WAS THE SUBMISSION THAT THE PROVISIONS OF RULE 6DD OF THE I.T RULES 19 62 WERE NOT EXHAUSTIVE AND THE SAID RULE WAS TO BE INTERPRETED LIBERALLY IN VIEW OF THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF SMT. HARSHILA CHORDIA VS. ITO REPORTED IN (2008) 298 ITR 349(RAJ) AS ALSO THE DECISION OF THE HONBLE GUJARAT HIGH CO URT IN THE CASE OF ANUPAM TELE SERVICES VS. ITO IN TAX APPEAL NO.556 OF 2013 DAT ED 22-01-2014. IT WAS THE SUBMISSION THAT THE GENUINENESS OF THE TRANSACTION S HAVE NOT BEEN DOUBTED OR DISPUTED BY THE AO OR BY THE LD.CIT(A). IT WAS THE SUBMISS ION THAT THE PROVISIONS OF SECTION 40A(3) OF THE I.T ACT 1961 WAS INTRODUCED FOR CURB ING THE POSSIBILITY OF ON MONEY TRANSACTION BY INSISTING THAT ALL PAYMENTS WHERE EXPENDITURE IN EXCESS OF CERTAIN SUM MUST BE MADE BY WAY OF ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK ITA NO.1724/KOL/12-SARBANI CHAKRABORTY 3 DRAFT. THE LEARNED AR FOR THE ASSESSEE HAS ALSO RE LIED UPON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF ATTAR SINGH GURMUKH SINGH VS. ITO, LUDHIANA REPORTED IN (1991) 191 ITR 667 (SC) TO SUBMIT THAT THE CONSIDER ATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE ALSO TO BE CONSIDERED. HE HAS ALSO RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT IN T HE CASE OF CIT, KOLKATA-XI VS. CPL TANNERY REPORTED IN (2008) 175 TAXMAN 316(CAL)/ 318 ITR 179 (CAL)/IT APPEAL NO. 186 OF 2008 GA NO. 867 OF 2008 AUG 4, 2008 TO SUBMIT T HAT BUSINESS EXPEDIENCY, OBLIGATION AND EXIGENCY FOR THE ASSESSEES BUSINESS TO MAKE CASH PAYMENTS FOR THE PURCHASE OF GOODS ESSENTIAL FOR CARRYING ON BUSINESS WAS ALSO TO BE CONSIDERED. IT WAS THE SUBMISSION THAT THE ADDITION AS MADE BY THE AO AND AS CONFIRM ED BY THE LD. CIT(A) MAY BE DELETED. 5. IN REPLY, THE LEARNED CIT/SR.DR HAS SUBMITTED TH AT THE ASSESSEE HAS ONLY ARGUED ON RULE 6DD(F) BEFORE THE AO AND THE LD.CIT(A). NOW, T O TAKE FURTHER RECOURSE RULES 6DD( L ), 6DD(G) OR RULE 6DD(K) WAS NOT PERMISSIBLE. IT W AS THE SUBMISSION THAT NONE OF THE ARGUMENTS WERE PUT BEFORE THE AO OR THE LD.CIT (A). IT WAS THE SUBMISSION THAT THE ORDER OF THE LD.CIT(A) WAS LIABLE TO BE UPHELD. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT THE OUTSET A PERUSAL OF THE ORIGINAL ASSESSMENT ORDER, WHICH HAS FOUND AT PAGES 1-2 OF THE PAPER BOOK CLEARLY SHOWS THAT THE AO IS NOT DISPUTING THE GENUINENESS OF THE CASH PAY MENT FOR THE PURCHASE OF CEMENT THROUGH HER HUSBAND, SHRI TARUN CHAKRABORTY. THE A O IS HOLDING ON THAT THERE IS VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE I. T ACT 1961. FURTHER A PERUSAL OF THE ASSESSMENT ORDER AS THE CONSEQUENCE OF THE SETTING ASIDE BY THE TRIBUNAL SHOWS THAT AGAIN THE AO HAS ONLY RELIED UPON THE RULE 6DD(F). THOUGH HE HAS EXTRACTED THE PROVISIONS OF RULE 6DD(F), IT IS NOTICED THAT HE HAS EXTRACTED TH E AMENDED RULE 6DD(F) OF THE I.T RULES 1962. A PERUSAL OF THE ORDER OF THE LD.CIT(A) SHOW S THAT HE HAS RESTRICTED HIMSELF TO THE PROVISIONS OF RULE 6DD(J) AND 6DD(F) AND HAS ASSUM ED THAT THE TRIBUNAL HAS SET ASIDE THE LIMITED ISSUE. WHEREAS A PERUSAL OF THE ORDER OF THE TRIBUNAL FOUND AT PAGES 4-5 OF THE PAPER BOOK SHOWS THAT THE ISSUE WAS RESTORED TO THE FILE OF THE AO FOR FRESH ADJUDICATION. A PERUSAL OF THE DECISION OF THE HONBLE JURISDIC TIONAL CALCUTTA HIGH COURT IN THE CASE OF CPL TANNERY (REFER TO SUPRA) SHOWS THAT THE HONBLE CALCUTTA HIGH COURT HAS ACCEPTED THE FACT THAT IF THE ASSESSEE PAYS CASH FOR THE PURCH ASE OF GOODS ESSENTIAL FOR CARRYING ON ITS BUSINESS ON ACCOUNT OF BUSINESS EXPEDIENCY, OBLIGAT ION AND EXIGENCY OF THE BUSINESS, THEN ITA NO.1724/KOL/12-SARBANI CHAKRABORTY 4 DISALLOWANCE PROVIDED IN SECTION 40A(3) OF THE ACT SHOULD NOT BE MADE. WHEN THIS JUDGMENT OF THE HONBLE JURISDICTIONAL CALCUTTA HIG H COURT IS READ ALONG WITH THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF ANUPAM TELE SERVICES (REFER TO SUPRA) AS ALSO THE DECISION OF THE HONBLE RAJAS THAN HIGH COURT IN THE CASE OF SMT. HARSHILA CHORDIA (REFER TO SUPRA), IT BECOMES CLEAR THAT THE EXCEPTION CONTAINED IN RULE 6DD ARE NOT EXHAUSTIVE AND THE SAID RULE MUST BE INTERPRETED LIBERALLY. FURTHER, A PERUSAL OF THE DECISION OF THE HONBLE APEX COURT IN THE C ASE OF ATTAR SINGH GURMUKH SINGH (REFER TO SUPRA) CLEARLY SHOWS THAT IF THE GENUINEN ESS AND BONAFIDE NATURE OF THE TRANSACTIONS OF THE ASSESSEE ARE NOT DISPUTED AND THE ASSESSEE IS ABLE TO SHOW THAT THERE WAS BUSINESS EXIGENCY AS ALSO BUSINESS EXPEDIENCY F OR THE REQUIREMENTS OF PAYING CASH FOR THE PURCHASE OF GOODS NECESSARY FOR THE BUSINESS, THEN THE ASSESSEE WOULD BE ENTITLED TO GET RELIEF FROM THE APPLICABILITY OF THE PROVISIONS OF SECTION 40A(3) OF THE I.T ACT 1961. IN THE PRESENT CASE, CLEARLY THE REVENUE HAS NOT DISP UTED THE GENUINENESS OR BONAFIDE OF THE TRANSACTIONS IN RESPECT OF PURCHASE OF CEMENT IN C ASH. THE PERSON FROM WHOM THE CEMENT HAS BEEN PURCHASED AND ALSO THE PERSON THROUGH WHO M THE CEMENT HAS BEEN PURCHASED, HAVE BEEN IDENTIFIED AND GENUINENESS ALSO PROVED. THE AGREEMENT WITH THE PROCURER OF THE CEMENT ON BEHALF OF THE ASSESSEE ALSO PROVED THE BUSINESS EXPEDIENCY IN SO FAR AS THE SAVING OF AN AMOUNT OF RS. 1.50/- PER BAG OF C EMENT AS ALSO BUSINESS EXIGENCY IN SO FAR AS THE PROCUREMENT OF CEMENT, WHEN THERE IS SH ORTAGE OF CEMENT. ALL THE CONDITIONS REQUIRED FOR SHOWING THE BUSINESS EXPEDIENCY, EXIG ENCY AND BONAFIDE AND THE TRANSACTIONS HAVING BEEN PROVED. WE ARE OF THE VIEW THAT CASH PA YMENT MADE BY THE ASSESSEE FOR THE PROCUREMENT OF THE CEMENT WOULD NOT BE HIT BY THE PROVISIONS OF SECTION 40A(3) OF THE I.T ACT 1961. THE ADDITION/DISALLOWANCE AS MADE BY TH E AO AND AS CONFIRMED BY THE LD.CIT(A) ON THIS ISSUE STANDS DELETED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27-03-2014 SD/- SD/- (SHAMIM YAHYA ) ( GEORGE MATHAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 27-03-2014 ITA NO.1724/KOL/12-SARBANI CHAKRABORTY 5 *P.PAUL(SR.P.S.) COPY OF THE ORDER IS FORWARDED TO :- 1) SMT. SARBANI CHAKRABORTY, FLAT NO.30B, SOUTH CI TY TOWER-1,375 PRINCE ANWAR SHAH ROAD, KOL-68. 2) THE I.T.O W 29(3), AAYKAR BHAVAN DAKSHIN, 2 GARI AHAT ROAD, KOL-31. 3) C.I.T.(APPEALS)- 4) C.I.T., 5) D.R., I.T.A.T. (TRUE COPY) BY ORDER ASSTT. REGISTRAR I.T.AT., KOLKATA