Imtiaz Ahmed, Kolkata V. ITO, Ward - 52(3), Kolkata, Kolkata

ITA 194/KOL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2542 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 01-02-2010
• Court: TRIBUNAL
• Department Lawyers: MUZAFFAR HUSSAIN
• Assessee Lawyers: GAUTAM B ANERJEE
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SRI D. K. TYAGI, JM & HONBLE SRI C. D. RAO , AM] I.T.A. NO.194/KOL/2010 ASSESSMENT YEAR: 2003-04 IMTIAZ AHMED, KOLKATA. -VS- INCOME-TAX OFFICER, WD-52(3), KOLKATA (PA NO.AEJPA 6020 M) (APPELLANT) (RESPONDENT) APPELLANT BY : SRI GAUTAM BANERJEE RESPONDENT BY : SRI MUZAFFAR HUSSAIN O R D E R PER D. K. TYAGI, JM: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE LD. CIT(A), KOLKATA DATED 30.10.2009 FOR ASSESSMENT YEA R 2003-04 ON THE SOLE GROUND OF SUSTAINING THE DISALLOWANCES U/S. 40A(3) OF THE I. T. ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WA S ENGAGED IN THE MANUFACTURING OF FINISHED LEATHER. THE AO FOUND THAT THE ASSESSEE H AD PURCHASED RAW HIDES AND SKIN FOR RS.1,43,60,316/- DURING THE YEAR FROM DIFFERENT PAR TIES, THE PAYMENTS OF WHICH WERE MADE EITHER BY WAY OF CASH OR BY BEARER CHEQUE. AC CORDING TO AO THIS WAS IN CONTRAVENTION OF PROVISIONS OF SEC. 40A(3) OF THE A CT. THE ASSESEE EXPLAINED BEFORE THE AO THAT THE PAYMENTS MADE OTHERWISE THAN BY A/C PAY EE CHEQUE/DRAFT TOWARDS PURCHASE OF RAW HIDES AND SKIN WERE COVERED BY THE EXCEPTION LAID DOWN IN RULE 6DD(F)(II) OF THE I. T. RULES. THE AO., HOWEVER, FOUND THAT THE PAYME NT MADE BY THE ASSESSEE WAS NOT COVERED UNDER THE EXCEPTION LAID DOWN IN RULE 6DD(F )(II) AND, ACCORDINGLY, DISALLOWED 20% OF THE PAYMENT MADE OTHERWISE THAN BY A/C PAYEE CHEQUE/DRAFT, WHICH CAME TO RS.28,72,206/- AND ADDED THE SAME TO THE TOTAL INCO ME OF THE ASSESSEE. THE MATTER WAS THEN CARRIED TO THE FIRST APPELLATE AUTHORITY AND IT WAS HELD THAT IT WAS EVIDENT FROM THE BILLS AND INVOICES THAT ALL THE PARTIES FROM WHOM P URCHASES MADE WERE ALL HIDES AND SKIN MERCHANTS OR WHOLESALERS AND NOT ORIGINAL PRODUCERS AND HENCE THE ASSESSEE IS NOT ENTITLED TO BENEFIT OF EXCEPTION LAID DOWN IN RULE 6DD(F)(II) OF THE RULES. THE MATTER THEREAFTER CARRIED TO THE ITAT AND IT WAS HELD THAT IT WOULD MEET THE ENDS OF JUSTICE IF AN OPPORTUNITY IS ALLOWED TO THE ASSESSEE TO ESTABLISH BEFORE THE AO BY PRODUCING NECESSARY EVIDENCE THAT THE PURCHASES OF HIDES AND SKIN WERE FROM PRODUCER SO AS TO ESTABLISH THAT HIS CASE FALLS WITHIN THE AMBIT OF R ULE 6DD(F)(II) OF THE RULES. THEREAFTER, ON SECOND ROUND OF LITIGATION, THE ASSESSEE MADE A WRITTEN SUBMISSION CLAIMING THAT 2 DISALLOWANCE U/S. 40A(3) WAS NOT ATTRACTED AS THE C ASE OF THE ASSESEE FALLS UNDER RULE 6DD(F)(II). SINCE NO EVIDENCE WAS PRODUCED BEFORE THE AO TO SHOW THAT THE PURCHASE OF RAW HIDES AND SKIN WERE FROM PRODUCERS IT WAS ONCE AGAIN HELD BY THE AO THAT ASSESSEE WAS NOT COVERED BY THE SAID RULE 6DD(F)(II) OF THE I. T. RULES. ACCORDINGLY, HE MADE THE DISALLOWANCE U/S. 40A(3) OF RS.28,72,206/-. ON FURTHER APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS HELD THAT THE PAYMENTS FOR PURCHASE OF RAW HIDES AND SKIN DID NOT FALL WITHIN THE MITIGATING CIRCUMSTANCES ME NTIONED UNDER RULE 6DD(F)(II) AND WERE REQUIRED TO BE CONSIDERED FOR DISALLOWANCES U/ S. 40A(3). THEREFORE, HE CONFIRMED THE ACTION OF THE AO IN MAKING THE DISALLOWANCES. B EING FURTHER AGGRIEVED, NOW THE ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE WHILE REITERATING HIS SAME SUBMISSIONS AS SUBMITTED BEFOR E THE LOWER AUTHORITIES FURTHER SUBMITTED THAT WHILE PASSING THE ORDER FOR AY 2007- 08 THE AO HAS NOT MADE ANY ADDITION ON THIS GROUND WHATSOEVER. SINCE THERE IS NO CHANGE IN THE MODE OF PURCHASE AS WELL AS THE PROFILES OF THE SUPPLIERS OVER THE Y EARS IT MAY BE PRESUMED THAT THE SAME SET OF CIRCUMSTANCES PREVAILED IN THE EARLIER YEAR. THUS ON THE PROPER APPRECIATION OF FACTS IT SEEMS THAT DEPARTMENT IS NOT SURE OF ITS S TAND. IT IS TRYING TO BLOW HOT AND COLD IN THE SAME BREATH. FOR THE SAKE OF CONSISTENCY THE P REVALENT CIRCUMSTANCES MAY BE HELD TO BE SACROSANCT. THUS WHEN FOR THE SAME SET OF SUPPL IERS DEPARTMENT IS SATISFIED ABOUT THE APPLICABILITY OF RULE 6DD, IT IS NOT CLEAR AS TO WH Y THE LOGIC CANNOT BE APPLIED TO THE EARLIER YEAR. HE ALSO SUBMITTED THAT IN VIEW OF THE ABOVE CONTENTION IT IS CLEAR THAT THE SUPPLIERS ARE THE ACTUAL PRODUCERS AND CANNOT BE CO NSIDERED AS TRADER OR MIDDLEMAN OR BROKER BY WHATEVER NAME CALLED. HE ALSO CONTENDED T HAT SINCE THE ASSESSEE HAS DISCHARGED ITS ONUS NOTHING FURTHER CAN BE EXPECTED FROM HIM. THE DEPARTMENT CAN IN NO WAY TAKE A DIAMETRICAL OPPOSITE VIEW OUT OF PURE SURMISE AND CONJECTURE FOR AN EARLIER ASSESSMENT YEAR. HE ALSO CONTENDED THAT UND ER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE HAS MADE OUT A STRONG CASE TO PR OVE THAT THE PURCHASES WERE MADE FROM ACTUAL PRODUCERS AND IN VIEW OF CIRCULAR NO. 4 /2006 DATED 29.03.2006, EXCEPTION WILL BE ALLOWED UNDER SUB-CLAUSE (F). IT MAY ALSO B E NOTED THAT THERE IS NO PRESCRIBED DOCUMENT FOR PROVING THE STATUS OF SUPPLIERS UNLIKE THOSE FOR PERSONS WHO BUYS ANIMALS FROM FARMERS AND SELLS THE SAME AS LAID DOWN IN THE CIRCULAR 8/2006 DT. 6.10.2006. 4. ON THE OTHER HAND, THE LD. DR HEAVILY RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 3 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO PERUSED THE CIRCULAR CITED SU PRA. WE FIND THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE EITHER BEFORE THE LOWER AUTH ORITIES OR BEFORE US THAT THE PURCHASES WERE MADE FROM THE PRODUCERS OF RAW HIDES AND SKIN, DESPITE THE FACT THAT IN THE FIRST INNINGS THE MATTER WAS RESTORED TO THE FI LE OF THE AO ONLY FOR THIS PURPOSE BY THE ITAT. SINCE THE ASSESEE HAS FAILED TO ESTABLISH TH AT THE HIDES AND SKIN WERE PURCHASED FROM THE PRODUCERS, THE CASE OF THE ASSESSEE DOES N OT FALL WITHIN THE AMBIT OF RULE 6DD(F)(II) OF THE I. T. RULES. THEREFORE, FOLLOWIN G THE RATIO AS LAID DOWN BY THE SPECIAL BENCH OF KOLKATA TRIBUNAL IN THE CASE OF ITO VS. M/ S. KENARAM SAHA & SUBHASH SAHA & ORS. REPORTED IN 116 ITD 1, THE ORDER PASSED BY T HE LD. CIT(A) IS HEREBY UPHELD. THE APPEAL OF THE ASSESSEE IS, THEREFORE, DISMISSED . 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. 7. THE ORDER IS PRONOUNCED IN THE COURT ON 25.6.201 0 SD/- SD/- (C. D. RAO) (D. K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25TH JUNE, 2010 COPY TO : 1. SRI IMTIAZ AHMED, 35/1D, TOPSIA ROAD, KOLKATA-39 2. ITO, WARD-52(3), KOLKATA. 3. CIT(A), KOLKATA. 4. CIT, KOLKATA. 5. D.R., ITAT, KOLKATA. TRUE COPY BY ORDER DEPUTY REGISTRAR JD.(SR.P.S.) I.T.AT., KOLKATA