ITO, Ward-2(1), Midnapore., Paschim Medinipur V. Sri Sankar Das, Paschim Medinipur

ITA 2255/KOL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5652 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 14-08-2013
• Court: TRIBUNAL
• Department Lawyers: VIVEK VERMA LD JCITSR DR
• Assessee Lawyers: SOMNATH GHOSH LD
• Section: 40A(3)

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL, BE NCH- A KOLKATA ( ) BEFORE . , ! SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER '#$ /AND 1 & ' , ! SHRI GEORGE MATHAN, JUDICIAL MEMBER $( / ITA NO.2255/KOL/2013 A.Y 2010-11 I.T.O W 2(1), MIDNAPORE - #' - VERSUS . SRI SANKAR DAS PAN: ACXPD 9795Q ( &* / APPELLANT ) ( +,&* / RESPONDENT ) &* .' / FOR THE APPELLANT / SHRI VIVEK VERMA, LD.JCIT/SR.DR +,&* .' / FOR THE RESPONDENT: / SHRI SOMNATH GHOSH, ADVOCATE,LD.AR /'#0 1 2 /DATE OF HEARING : 19-02-2014 34 1 2 /DATE OF PRONOUNCEMENT: 21-02-2014 5 / ORDER 1 &' , ! SHRI GEORGE MATHAN, JUDICIAL MEMBER ITA NO. 2255/KOL/2013 IS AN APPEAL FILED BY THE RE VENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), XXXVI , KOLKATA IN APPEAL NO. 256/CIT(A)-XXXVI/KOL/R-2, MID/2012-13 DATED 19-06- 2013 FOR THE ASSESSMENT YEAR 2010-11. . 2. SHRI VIVEK VERMA, LEARNED JCIT/SR.DR REPRESENT ED ON BEHALF OF THE REVENUE AND SHRI SOMNATH GHOSH, ADVOCATE, LEARNED AR REPRESEN TED ON BEHALF OF THE ASSESSEE. 3. IN THE REVENUES APPEAL IN ITA NO. 2255/KOL/201 3 FOR THE A.Y 2010-11, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - I. THAT, THE LD. CIT(A)-XXXVI, KOLKATA HAS ERRED IN DELETING THE ADDITION OF RS.37,75,973- MADE BY AO RELYING ON THE SUBMISSION OF THE ASSESSEE THAT THE APPELLANTS CASE DOES NOT FALL WI THIN THE MISCHIEF OF SEC 40A(3) OF I.T ACT, 1961. 2. THAT, THE LD.CIT(A)-XXXVI, KOLKATA HAS ERRED IN DISALLOWING THE HUGE ADDITION OF RS.37,75,973/- ON ACCOUNT OF CASH PAYMENTS IN CONTRAVENTION WITH THE PROVISIONS U/S. 40A(3) MADE BY THE AO WITHOUT GOING INTO THE FACTS AND MERITS OF THE CASE. ITA NO.2255/KOL/13-SRI SANKAR DAS 2 3. THAT, THE LD.CIT(A)-XXXVI, KOLKATA HAS ERRED IN DELETING THE ENTIRE ADDITION MADE BY THE AO BECAUSE OF THE FACT THAT THE BUSINESS EXPEDIENCY WHICH WARRANTS THE ASSESSEE FOR MAKING CASH PAYMENTS IS ALSO NOT PROVED DURING THE COURSE OF ASSESSMENT. BE SIDES AS PER VERDICT GIVEN BY HONBLE MADRAS HIGH COURT IN THE C ASE OF CIT VS. VEKATADHRI CONSTRUCTION (2012) 80 DTR 363 IT IS VER Y CLEAR THAT THE ASSESSEE INSTATE OF PAYING CASH TO THE SUPPLIERS DE POSITS THE SAME IN THEIR BANK ACCOUNT. PROVISION OF SEC 40A(3) WERE HE LD TO BE ATTRACTED AND PAYMENTS ARE LIABLE TO BE DISALLOWED. 4.. IT WAS THE SUBMISSION BY THE LEARNED JCIT/SR .DR THAT THE ISSUE IN THIS APPEAL WAS AGAINST THE ACTION OF THE LD.CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE AO OF THE CASH PURCHASES MADE BY THE ASSESSEE OF THE COUN TRY LIQUOR BY APPLYING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. IT WAS THE SUBMISSION THAT BEFORE THE AO THE ASSESSEE HAD SUBMITTED THAT THE EXCEPTION CONTAINED IN RULE 6DD(A) WAS APPLICABLE. IT WAS FURTHER SUBMITTED THAT, HOWEVER, BEFORE THE LD. CIT(A) THE ASSESSEE HAD CLAIMED THAT THE PROVISIONS OF RULE 6DD(B) OF THE I T RULES WAS APPLICABLE. IT WAS THE SUBMISSION THAT AS THE PAYMENTS HAD BEEN MADE IN CASH IN VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT, THE LD.CIT(A) OUGHT NOT TO HAVE DELETED THE DISALLOWANCE MADE BY THE AO. 5. IN REPLY, THE LEARNED AR FOR THE ASSESSEE HAS SU BMITTED THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ASHOK MONDAL VS. I.T.O, W 2(2), ASANSOL IN ITA NO. 873/KOL/2012 DATED 06-02-2014 FOR THE ASSESSMENT YEAR 2009-10 AS ALSO THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. AMRAI PACHWAI & C.S SH OP VS. DCIT, CIR-1, DURGAPUR IN ITA NO.1251/KOL/2011 DATED 15-01-2014 FOR THE ASSESSMEN T YEAR 2008-09. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT THE OUTSET A PERUSAL OF THE SUBMISSIONS OF THE LEARNED SR.DR THAT THE ASSESSEE HAS RAISED HIS EXCEPTION CLAIMING UNDER RULE 6DD(A) OF THE I.T RULES AND THE TRIBUNAL AND THE LD.CIT(A) BOTH HAVE CONSIDERED THE RULE 6DD(B), WOULD NOT HOLD WATER I N SO FAR AS EXEMPTION PROVIDED IS IN RULE 6DD. THE VARIOUS CLAUSES OF THE SAID RULE W OULD HAVE TO BE CONSIDERED. EVEN OTHER WISE, THE SAID RULE IS NOT EXHAUSTIVE. FURTHE R, A PERUSAL OF THE DECISIONS OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASES OF ASH OK MONDOL (REFER TO SUPRA) AND M/S. AMRAI PACHWAI & C.S SHOP (REFER TO SUPRA) SHOWS THA T THE CO-ORDINATE BENCH OF THIS TRIBUNAL HELD AS FOLLOWS:- ITA NO.2255/KOL/13-SRI SANKAR DAS 3 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT TH E OUTSET A PERUSAL OF THE DECISION IN THE CASE OF SMT. PUSHPAL ATA MONDAL SHOWS THAT THE TRIBUNAL HAD DECIDED THE CASE BY FOLLOWING THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF K. ABDU & CO. REFERRED TO SUPRA WHEREIN THE ISSUE WAS IN RELATION TO RULE 6DD (A) OF IT RULES. THE ISSUE IN THE ASSESSEES CASE IS IN RESPECT OF THE P AYMENTS MADE UNDER THE RULES FRAMED BY THE GOVERNMENT AND SUCH PAYMENT WAS REQUIRED TO BE MADE IN LEGAL TENDER. A PERUSAL OF THE GOVERNME NT NOTIFICATION ISSUED BY THE GOVT. OF WEST BENGAL CLEARLY SHOWS TH AT THE DEALERS ARE AGENTS OF THE GOVERNMENT AND THE PAYMENTS MADE ARE TO THE GOVERNMENT. IT ALSO MAKES IT CATEGORICALLY REQUIRED THAT THE PAYMENT IS TO BE MADE BEFORE LIFTING OF THE COUNTRY SPIRIT. CONSEQUENTLY, WE ARE OF THE VIEW THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/ S. AMRAI PACHWAI & C.S SHOP REFERRED TO SUPRA WHEREIN IT HAS BEEN HELD AS FOLLOWS:- . 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT THE OUTSET A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE AO HAS RECOGNISED THE ASSESSEES BUSINESS IN TRADING OF C OUNTRY SPIRIT AND COUNTRY LIQUOR. COPY OF FORM OF LICENCE ISSUED BY D URGAPUR MUNICIPAL CORPORATION AND COPY OF FORM III ISSUED BY DEPARTME NT OF EXCISE, GOVT. OF W.B WERE ALSO FOUND AT PAGES 177 AND 179 OF THE ASSESSEES PAPER BOOK. IN ANY CASE THE VALIDITY OF LICENCE OF THE ASSESSEE TO TRADE IN COUNTRY SPIRIT AND COUNTRY LIQUOR IS NOT T HE ISSUE BEFORE US. THE ISSUE IS WHETHER THE PAYMENTS MADE BY THE ASSESSEE FOR THE PURCHASE OF COUNTRY SPIRIT FROM THE TERRITORIAL LIC ENSEE BOTTLING PLANT, IFB AGRO INDUSTRIES LTD, CITY CENTRE, DURGAPUR. FALLS W ITHIN THE EXEMPTION PROVIDED UNDER RULE 6DD(B) OF THE I.T RULES 1962. A DMITTEDLY, THE AO HAS RECOGNISED THAT THE PROVISION OF RULE 6DD(B) OF THE I.T RULES 1962 IS APPLICABLE IN CASE OF PAYMENTS MADE TO GOVERNMEN T DIRECTLY. THIS IS FOUND IN PAGE 2 OF THE ASSESSMENT ORDER. A PERUSAL OF THE KOLKATA GAZETTE TUESDAY DATED 20 TH SEPT 2005 SHOWS THAT THE GOVERNMENT OF WEST BENGAL, DEPARTMENT OF EXCISE HAS ISSUED A NOTI FICATION, WHEREIN THE WAREHOUSE HAS BEEN IDENTIFIED TO MEAN THE WAREH OUSE FOR SUPPLY OF COUNTRY SPIRIT TO THE RETAIL VENDORS, ESTABLIS HED AT CONVENIENT PLACES BY THE COMMISSIONER AT THE EXPENSE OF THE S TATE GOVERNMENT, OR AT THE EXPENSE OF A PERSON TO WHOM THE EXCLUSIV E PRIVILEGE OF SUPPLYING OR SELLING COUNTRY SPIRIT BY WHOLESALE H AS BEEN GRANTED U/S. 22 OF THE ACT OF A LICENSED WHOLESALE VENDOR OF COU NTRY SPIRIT. FURTHER, IT HAS BEEN SPECIFICALLY IDENTIFIED THAT THE AUTH ORISED REPRESENTATIVE OF THE WHOLESALE LICENSEE SHALL REALIZE THE NECESSAR Y AMOUNT OF DUTY, COST PRICE AND BOTTLING CHARGE, IF THERE BE ANY, A T THE PRESCRIBED RATE AND SUCH OTHER IMPOSITION, AS MAY BE PRESCRIBED BY LAW, FROM THE RETAIL VENDOR TO WHOM THE COUNTRY SPIRIT IS TO BE ISSUED FROM THE CONCERNED WAREHOUSE. IT IS ALSO SPECIFICALLY MENTIONED IN SE CTION (2) OF THE SAID NOTIFICATION THAT NO RETAIL VENDOR OF COUNTRY SPIRI T SHALL DEPOSIT DUTY DIRECT INTO THE LOCAL TREASURY FOR ISSUE OF COUNTR Y SPIRIT TO BE TAKEN BY HIM FROM THE WAREHOUSE CONCERNED, WHICH CLEARLY SHO WS THAT THE ITA NO.2255/KOL/13-SRI SANKAR DAS 4 WAREHOUSE IS FOR THE SUPPLY OF THE COUNTRY LIQUOR, SPECIFICALLY, THE WAREHOUSE IS UNDER THE DIRECT CONTROL AND CUSTODY O F THE STATE GOVT. THE STATE GOVERNMENT HAS CLOSED ITS DOORS IN SO FAR AS THE LOCAL TREASURY IS CONCERNED AND THE PAYMENT FOR THE PURCH ASE OF COUNTRY SPIRIT OR COUNTRY LIQUOR HAS TO BE MADE TO THE WARE HOUSE, RUN BY THE GOVERNMENT. THIS SHOWS THAT ANY PAYMENT MADE TO THE WAREHOUSE, WHICH IS UNDER THE DIRECT CONTROL OF THE STATE GOVE RNMENT, IS A PAYMENT MADE DIRECTLY TO THE GOVERNMENT. ONCE, THIS IS ACCE PTED THEN THE PROVISIONS OF RULE 6DD(B) OF THE I.T RULES 1962 WHI CH CLEARLY SPELLS OUT THAT THE PAYMENT MADE TO THE GOVERNMENT IN LEGAL T ENDER UNDER THE RULES FRAMED BY THE GOVERNMENT, IS EXEMPTED FROM THE RIGOURS OF SECTION 40A(3) OF THE ACT. HERE, IT IS NOTICED THAT THE PAYMENTS MADE BY THE ASSESSEE FOR PURCHASE OF COUNTRY SPIRIT AND COU NTRY LIQUOR IS TO THE GOVERNMENT AS PER THE NOTIFICATION ISSUED BY THE GO VERNMENT AND IS IN LEGAL TENDER SPECIFIED BY THE NOTIFICATION. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE PAYMENT MADE BY THE ASSESSEE F OR THE PURCHASE OF COUNTRY LIQUOR AND COUNTRY SPIRIT FROM THE TERRITOR IAL LICENSEE BOTTLING PLANT, IFB AGRO INDUSTRIES LTD, CITY CENTRE, DURGAP UR IS PROTECTED BY THE EXEMPTION IN TERMS OF RULE 6DD(B) OF THE I.T RU LES 1962. IN THE CIRCUMSTANCES, THE ADDITION AS MADE BY THE AO AND A S CONFIRMED BY THE LD.CIT(A) BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE I.T ACT 1961 STANDS DELETED. 6.1 AS IT IS NOTICED THAT THE ISSUE IS SQUARELY COV ERED BY THE SAID DECISIONS OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL, WHEREIN BOTH OF US ARE PARTY, RESPECTFULLY FOLLOWING THE SAID DECISIONS OF THE CO-ORDINATE BENCH OF THIS TRI BUNAL, THE FINDING OF THE LD.CIT(A) ON THIS ISSUE STANDS CONFIRMED. THE GROUNDS RAISED BY THE R EVENUE ARE LIABLE TO BE DISMISSED. 7. IN THE RESULT, THE REVENUES APPEAL IN ITA NO.2 255/KOL/2013 FOR THE ASSESSMENT YEAR 2010-11 STANDS DISMISSED AS STATED ABOVE. 5 / 6 /' 7 8 THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT 21/0 2/2014 SD/- SD/- ** PRADIP SPS ( . , ! ) ( ABRAHAM P.GEORGE, ACCOUNTANTMEMBER ( 1 & ' , ! ) ( GEORGE MATHAN, JUDICIAL MEMBER ) ( (( ( 2 2 2 2 ) )) ) DATE21/2/2014 ITA NO.2255/KOL/13-SRI SANKAR DAS 5 5 1 +..9 :94; / COPY OF THE ORDER FORWARDED TO: 1. . &* / THE APPELLANT : I.T.O, W 2(1), SAHOO BHAWAN, KS HUDIRAM NAGAR, PO MIDNAPORE, PASCHIM MIDNAPORE-721101. 2 +,&* / THE RESPONDENT- SRI SANKAR DAS, KHAKURDA, BELD A, KHARAGPUR, PASCHIM MIDNAPORE 721 424. 3 4. . .5' / THE CIT, .5' ( )/ THE CIT(A) 5 . #<.7 +.' / DR, KOLKATA BENCH 6 . GUARD FILE . ,9 +./ TRUE COPY, 5'// BY ORDER, $ /ASSTT REGISTRAR