ACIT, Circle - 1, Asansol, Asansol V. Sri Tushar Kanti Banerjee, Burdwan

ITA 1742/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2788 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 28-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHERJEE
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.1741-1742/KOL/2017 ASSESSMENT YEARS:2012-13 & 2013-14 ACIT, CIRCLE-1, SAHANA APARTMENT, LOWER CHELIDANGA, ASANSOL-713304 / V/S . SRI TUSHAR KANTI BANERJEE, M/S RAMBANDH C.S. SHOP, RAMBADH, P.O. BURNPUR, DIST. BURDWAN, PIN 713325 [ PAN NO.AHSPB 1846 N ] /APPELLANT .. /RESPONDENT /BY ASSESSEE NONE /BY RESPONDENT SHRI A. BHATTACHERJEE, ADDL. CIT-DR /DATE OF HEARING 26-07-2018 /DATE OF PRONOUNCEMENT 29-08-2018 /O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THESE TWO REVENUES APPEALS FOR ASSESSMENT YEARS 2 012-13 & 2013-14 ARISE AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-AS ANSOLS SEPARATE ORDERS; BOTH DATED 31.05.2017 PASSED IN CASE NO.S 115/CIT(A) /SL /ACITCIR-1/ASL/15-16 & 230/CIT(A)/ASL/WD-1(2)/ASL/15-16; BOTH DATED 31.05 .2017, INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT T HE ACT. CASE CALLED TWICE. NONE APPEARS AT THE ASSESSEES B EHEST. THE REGISTRY HAS ALREADY SENT RPAD NOTICE(ES); DATED 02.07.2018. WE ACCORDINGLY PROCEED EX PARTE . ITA NO. 1741-42/KOL/2017 A.YS. 12-13 & 13 -14 ACIT, CIR-1, ASL VS. SRI TUSHAR K ANTI BANERJEE PAGE 2 2. IT EMERGES AT THE OUTSET THAT THE REVENUES SOLE SUBSTANTIVE GRIEVANCE IDENTICALLY PLEADED IN THE INSTANT TWO APPEALS SEEK S TO RESTORE ASSESSING OFFICERS ACTION INVOKING SECTION 40A(3) DISALLOWANCES OF 2,52,77,125/- AND 99,63,303/- (ASSESSMENT YEAR-WISE) ALLEGING CASH PAYMENTS IN VI OLATION OF SPECIFIED MODES FOR PURCHASING COUNTRY SPIRIT FROM PAYEE M/S ASANSOL B OTTLING & PACKAGING CO LTD. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY CONT ENDS DURING THE COURSE OF HEARING THAT CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE IMPUGNED DISALLOWANCE WITH THE FOLLOWING DETAILED DISCUSSION :- 3. DECISION: THE ONLY ISSUE IN THIS CASE IS DISALL OWANCE MADE BY THE AO US 40A(3) ON ACCOUNT OF PURCHASE OF COUNTRY SPIRIT IN CASH. THE ASSESSEE HAS FILED THE DETAILED SUBMISSIONS AND HAS ARGUED THAT THE ISSUE IS COVERED BY THE DECISION OF THE HON'BLE JURISDICTIONAL TRIBUNAL IN THE CASE OF PUSHPLATA MONDAL IN ITA NO.965/KOL/2010 , DATED 28.07.2011. THE ASSESSEE HAS P8URCHAED COUNTRY SPIRIT FROM ASANSOL BOTTLING & PACKAGING CO . PVT. LTD FOR THE VALUE OF RS.25277125/- WHICH WAS DISALLOWED BY THE AO U/S 40 A(3) I HAVE GONE THROUGH THE SUBMISSIONS OF THE ASSESSEE AND THE FINDINGS OF THE E AO. THE ISSUE UNDER CONSIDERATION HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY A NUMBER OF DECISIONS GIVEN BY THE HON'BLE JURIS DICTIONAL TRIBUNAL. THIS ISSUE IS COVERED BY THE DECISION OF THE JURISD ICTIONAL TRIBUNAL IN BOLKUNDA PACHWAI & (S) C.S. SHOP CASE IN ITA NO.S 165 & 1665/KOL/2014 FOR THE ASSESSMENT YEARS 2008-09 & 2009-10. IN THIS CASE T HE HON'BLE TRIBUNAL HAS DISCUSSED THE ISSUE OF CASH PURCHASE MADE BY THE AS SESSEE FORM ASANSOL BOTTLING & PACKAGING CO. PVT. LTD. THE HON'BLE TRIB UNAL HAS HELD AS UNDER: WE FIND THAT M/S ASANSOL BOTTLING & PACKAGING CO. PVT. LTD IS A BOTTLING PLANT CUM WAREHOUSE UNDER RULE 2(VII) OF T HE W4SST BENGAL EXCISE RULES 2005 WITH PRIVILEGE GRANTED UNDER SECT ION 22 OF THE BENGAL EXCISE ACT, 1909. AT THIS JUNCTURE, IT WOULD BE REL EVANT TO GO INTO THE DEFINITION OF WAREHOUSE AS PROVIDED UNDER THE STATE EXCISE RULES 2005 AS BELOW:- WAREHOUSE UNDER RULE 2(VII) OF THE W.B. EXCISE RULES 2015, MEANS THE WAREHOUSE FOR SUPPLY OF COUNTRY SPIRIT TO RETAIL VENDORS, ESTABLISHED AT CONVENIENT PLACES BY THE CO MMISSIONER AT THE EXPENSE OF THE STATE GOVERNMENT, OR AT THE EXPE NSE OF A PERSON TO WHOM THE EXCLUSIVE PRIVILEGE OF SUPPLYING OR SELLING COUNTRY SPIRIT BY WHOLESALE HAS BEEN GRANTED UNDER SECTION 22 OF THE ACT, OR OF A LICENSED WHOLESALE VENDOR OF COUNT RY SPIRIT. THE ABOVE DEFINITION MAKES IT CLEAR THAT THE WAREHOUSE REFERRED TO UNDER THE STATE EXCISE RULES IS UNDER THE DIRECT CO NTROL AND AUTHORITY OF THE COMMISSIONER OF STATE EXCISE BECAUSE IT IS ESTA BLISHED BY THE COMMISSIONER OF STATE EXCISE AND AS SUCH IS A STATE GOVERNMENT ESTABLISHMENT. IT IS ALSO PERTINENT TO NOTE THAT TH E EXPENDITURE IN RELATION ITA NO. 1741-42/KOL/2017 A.YS. 12-13 & 13 -14 ACIT, CIR-1, ASL VS. SRI TUSHAR K ANTI BANERJEE PAGE 3 TO SUCH WAREHOUSE IS BORNE BY THE STATE GOVERNMENT OR BY THE LICENSEE TO WHOM THE EXCLUSIVE PRIVILEGE IS GRANTED UNDER SE CTION 22 OF THE BENGAL EXCISE ACT, 1909. HENCE THERE COULD BE NO DO UBT THAT THE WAREHOUSE IS ESTABLISHED BY THE STATE EXCISE COMMIS SIONER. HENCE IT COULD BE SAFELY CONCLUDED THAT THE WAREHOUSE SO EST ABLISHED BY THE STATE EXCISE COMMISSIONER IS A STATE GOVERNMENT ESTABLISH MENT. IT WOULD ALSO BE PERTINENT TO NOTE THAT THE SAID WAREHOUSE H AS 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 BEL OW: RULE 2(VIII)- WHOLESALE LINCENSEE MEANS THE WHOL ESALE VENDOR OF COUNTRY SPIRIT TO WHOM LINCENCE HAS BEEN GRANTED IN WEST 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-GRNT OF EXCLUSIVE PRIVILEGE OF MANUFACTU RE AND SALE OF COUNTRY LIQUOR OR INTOXICATING DRUGS. (1) THE STATE GOVERNMENT MAY GRANT TO ANY PERSON, ON SU CH 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, OR (C) OF SELLING, BY WHOLESALE OR RETAIL, OR (D) OF MANUFACTURING OR SUPPLYING BY WHOLESALE AND SELL ING RETAIL, OR (E) OF MANUFACTURING AND SUPPLYING BY WHOLESALE AND SEL LING RETAIL ANY COUNTRY LIQUOR OR INTOXICATING DRUG WITHIN ANY SPECIFIC LOCAL AREA; PROVIDED THAT PUBLIC NOTICE SHALL BE GIVEN TO THE INTENTION TO GRANT ANY SUCH EXCLUSIVE PRIVILEGE, AND THAT ANY OB JECTIONS MADE BY ANY PERSON RESIDING WITHIN THE AREA AFFECTED SHA LL BE CONSIDERED BEFORE AN E EXCLUSIVE PRIVILEGE IS GRANT ED. (2) NO GRANTEE OF ANY PRIVILEGE UNDER SUB-SECTION (1)SH ALL EXERCISE THE SAME UNLESS OR UNTIL HE HAS RECEIVED A LICENSE IN THAT BEHALF FORM 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 RULES 2005 AND SAID WAREHOUSE IS A STATE GOVERNMENT ESTABLISHMENT, ESTA BLISHED AND CONTROLLED BY THE EXCISE COMMISSIONER. IT WOULD BE RELEVANT TO REPRODUCE RULE R6DD(B) OF THE IT RULES AT THIS JUNC TURE:- (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. ITA NO. 1741-42/KOL/2017 A.YS. 12-13 & 13 -14 ACIT, CIR-1, ASL VS. SRI TUSHAR K ANTI BANERJEE PAGE 4 IN THE INSTANT CASE, THE ASSESSEE (RETAIL VENDOR) H AD MADE CASH PAYMENTS FOR PURCHASE OF COUNTRY SPIRIT BY DEPOSITI NG CASH DIRECTLY INTO THE BANK ACCOUNT OF M/S ABPL AS PER R ULE 6(2) OF THE EXCISE RULES 2005, IT HAS TO BE CONSTRUED AS PA YMENT MADE TO THE STATE GOVERNMENT AUTHORITY AND ACCORDINGLY FALL S UNDER THE EXCEPTION PROVIDED IN RULE 6DD(B) OF THE IT RULES. IT IS NOT IN DISPUTE THAT M/S ASANSOL BOTTLING & PA CKAGING CO. PVT LTD HAS BEEN GRANTED LICENSE TO ACT AS A WHOLESALER FOR SUPPLY OF COUNTRY LIQUOR TO THE RETAIL VENDOR AS PER THE REGULATIONS OF THE EXCISE DEPARTMENT, GOVERNMENT OF WEST BENGAL. AT THE COST OF REPETITION, WE WOULD LIKE TO STATE THAT THE SAID REGULATION MANDAT ED THE PAYMENTS 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 S TOCKS AND BLACK MARKETING TRANSACTIONS FORM THE SAME. HENCE IT COUL D BE SAFELY CONCLUDED THAT THE SAD WHOLESALE 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 HEREUN DER:- 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 WHOLESALE AGE NT. THE RELATIONSHIP BETWEEN THE ASSESSEE (ATHORIZED RETAIL ER) AND GOVERNMENT OF WEST BENGAL (THE SUPPLIER) ACTING UNDER W4EST BE NGAL EXCISE RULES THROUGH ITS AUTHORIZED WHOLESALER LICENSEE (AGENT), BOTH DE FACTO AND DEMURE, IS ONE OF PRINCIPAL AND AGENT . WE HOLD THAT THE ASSESSEE RETAIL VENDOR HAD MADE PAYMENT TO THE SAID AGENT (W HOLESALE LICENSEE) WOULD FALL UNDER THE EXCEPTION PROVIDED IN RULE 6DD (K) OF THE RULES. THE LD. AUTHORIZED REPRESENTATIVE HAD ADVANCED ANOT HER ARGUMENT THAT THE PAYMENT IS MADE BY THE ASSESSEE TO STATE BANK O F INDIA AND ACCORDINGLY THE SAME WOULD FALL UNDER THE EXCEPTION PROVIDED IN RULE 6DD(A) OF THE RULE. WE FIND THAT THE ASSESSEE HAD M ADE PAYMENTS ONLY TO THE CUSTOMER OF STATE BANK OF INDIA AND NOT TO S TATE BANK OF INDIA. HENCE THE ASSESSEES CASE DOES NOT FALL UNDER THE E XCEPTION PROVIDE IN RULE 6DD(A) OF THE RULES. WE HOLD FROM THE AFORESAID FINDINGS THAT THE ASSESS EES CASE FALLS UNDER THE EXCEPTIONS PROVIDED IN RULE 6DD(B) AND RULE 6DD (K) OF THE RULES. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES AN D RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREI NABOVE, WE HAVE NO HESITATION IN DELETING THE DISALLOWANCE MADE UNDER SECTION 40A(3) OF THE ACT. ACCORDINGLY THE GROUND NO.2 RAISED BY THE ASSE SSEE FOR BOTH THE YEARS UNDER APPEAL IS ALLOWED. ITA NO. 1741-42/KOL/2017 A.YS. 12-13 & 13 -14 ACIT, CIR-1, ASL VS. SRI TUSHAR K ANTI BANERJEE PAGE 5 THE FACTS OF THE CASE ARE SIMILAR REGARDING DISALLO WANCE U/S. 540A(3). I AM OF THE OPINION THAT THE ISSUE UNDER CONSIDERATIO N IS COVERED BY THE DECISION OF JURISDICTIONAL TRIBUNAL AS DISCUSSED AB OVE. RESPECTFULLY FOLLOWING THE ABOVE DECISION, THE APPEAL OF THE ASS ESSEE IS HEREBY ALLOWED. THE DISALLOWANCE MADE UNDER SECTION 40A(3) OF RS.25277125/- IS HEREBY DELETED. 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RE VENUES GRIEVANCE . THE SAME IS FOUND TO BE DEVOID OF MERIT AS THE ABOVE CO-ORDI NATE BENCH HAS CONCLUDED QUA THE VERY PAYEE THAT IT FALLS WITHIN THE EXCEPTION PROVI DED IN RULE 6DD(K) OF THE INCOME TAX RULES SINCE ACTING AS AGENT OF THE GOVERNMENT O F WEST BENGAL (PRINCIPAL). NO EXCEPTION ON FACTS OR LAW HAS BEEN POINTED OUT AT T HE REVENUES BEHEST DURING THE COURSE OF HEARING. WE THEREFORE UPHOLD THE CIT(A)S FINDINGS IN BOTH T HESE APPEALS. 4. THESE TWO REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 29/08/2018 SD/- SD/- ( ) (%& ) (P.M.JAGTAP) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER *DKP-SR.PS ' - 29/08/2018 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-SRI TUSHAR KANTI BANERJEE, M/S RAMBANDH C .S. SHOP, RAMBANDH, PO. BURN PUR, DIST. BURDWN, PIN-713325 2. /REVENUE-ACIT, CIRCLE-1, SAHANA APARTMENT LOWER C HELIDANGA, ASANSOL-713304 3. * , / CONCERNED CIT 4. , - / CIT (A) 5. - &&* , * / DR, ITAT, KOLKATA 6. 1 / GUARD FILE. BY ORD ER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO *,