Dihika Pachwai Shop, Burdwan V. ITO, Wd-2(4), Asansol, Burdwan

ITA 291/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4404 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 21-09-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 18-02-2014
• Court: TRIBUNAL
• Assessee Lawyers: PAYEL VERMA
• Section: 40A(3)

Judgement Text

I.T.A. NO. 291/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. NO. 291/KOL/ 2014 ASSESSMENT YEAR: 2010-2011 DIHIKA PACHWAI SHOP,............................... ...............................APPELLANT VILL. DIHIKA, P.O. SURYANAGAR, DIST. BURDWAN-713 361 [PAN: AACFD 2103 P] -VS.- INCOME TAX OFFICER,................................ ...............................RESPONDENT WARD-2(4), ASANSOL, PARMAR BUILDING, APCAR GARDEN, G.T. ROAD (WEST), P.O. ASANSOL-713 304, DIST. BURDWAN APPEARANCES BY: SHRI A.K. CHAKRABORTY, ADVOCATE, SHRI N.K. CHAKRABO RTY, ADVOCATE & MISS PAYEL VERMA, A.R., FOR THE ASSESSEE SHRI SALLONG YADEN, ADDL. CIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : SEPTEMBER 21, 201 6 DATE OF PRONOUNCING THE ORDER : OCTOBER 04, 2016 O R D E R PER SHRI P.M. JAGTAP, A.M. .: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), ASANSOL DATED 17.12.2013 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE DISA LLOWANCE OF RS.56,76,743/- MADE BY THE ASSESSING OFFICER AND CO NFIRMED BY THE LD. CIT(APPEALS) UNDER SECTION 40A(3) OF THE ACT. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM, WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN COUNTRY SPIRI T AND PACHWAI. THE I.T.A. NO. 291/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 2 OF 7 RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS FILED BY IT ON 27.09.2010 DECLARING TOTAL INCOME OF RS.40,890/-. A S NOTICED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE ASSESSEE-FIRM HAD MADE TOTAL PURCHASES OF RS.82,65, 484/- FROM M/S. ASANSOL BOTTLING & PACKING CO. PVT. LIMITED DURING THE YEAR UNDER CONSIDERATION AND AGAINST THE SAID PURCHASES, PAYME NT TO THE EXTENT OF RS.56,76,743/- WAS MADE BY DEPOSITING CASH DIRECTLY IN THE BANK ACCOUNT OF M/S. ASANSOL BOTTLING & PACKING CO. PVT. LIMITED IN THE SUMS EXCEEDING RS.20,000/-. ACCORDING TO THE ASSESSING OFFICER, TH E SAID PAYMENTS WERE MADE BY THE ASSESSEE IN CONTRAVENTION OF SECTION 40 A(3) OF THE INCOME TAX ACT, 1961 AND SINCE THE ASSESSEE COULD NOT EXPL AIN ANY EXCEPTIONAL CIRCUMSTANCES AS SPECIFIED UNDER RULE 6DD OF INCOME TAX RULES, 1962 FOR MAKING SUCH PAYMENTS, HE MADE A DISALLOWANCE OF RS. 56,76,743/- UNDER SECTION 40A(3) OF THE ACT. 3. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U NDER SECTION 40A(3) WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND SINCE THE SUBMISSIONS MADE BY THE ASSESSEE IN HIS SUPPORT ON THIS ISSUE WAS NOT FOUND ACCEPTABLE BY H IM, THE LD. CIT(APPEALS) PROCEEDED TO CONFIRM THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(3) FOR THE FOLL OWING REASONS GIVEN IN PARAGRAPHS NO. 6, 7 & 8 OF HIS IMPUGNED ORDER:- 6. IN REGARD TO RELIANCE TO PARAGRAPH 4 OF THE ORD ER OF HON. INCOME TAX APPELLATE TRIBUNAL IN M/S ARPITA TRADERS VS ITO WARD-2 COOCH BEHAR IN ITA NO.1542/KOI/2012 IT CAN B E SEEN THAT IT IS NOT A DECISION ON LAW. IT NARRATES A COM PULSIVE SITUATION. A PART OF VERY SAME ORDER IS BEING RELIE D UPON BY ME. IN PARAGRAPH 5 IT IS STATED THAT 'WHEN THE GOVERNME NT MAKES IS COMPULSORY TO PAY IN CASH'. WHETHER A COMPULSION EX ISTS OR NOT IS MATTER OF FACT AND COMPULSION IS A PRE-REQUISITE TO BE PROVED. THE APPELLANT IS DUTY BOUND TO EXPLAIN THE COMPULSI ON. IN OTHER WORDS ON FACTS AND CIRCUMSTANCES OF CASE M/S. ARPIT A TRADERS MAY HAVE ESTABLISHED COMPULSION, BUT WHAT IS NEEDED IS THAT COMPULSION IS ESTABLISHED BY THE A APPELLANT ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF APPELLANT. IF SO ESTAB LISHED THEN NATURALLY BENEFITS (SUBJECT TO MEETING ANY OTHER SP ECIFIED CONDITIONS) OF RULE 600 WILL FOLLOW. HERE THE APPEL LANT HAS FAILED TO PROVE THAT THERE IS A RULE BY WHICH HE HA S TO PAY THE BOTTLING PLANT BY CASH. NO RULE EXISTS (EVEN WEST B ENGAL EXCISE I.T.A. NO. 291/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 3 OF 7 (SUPPLY OF COUNTRY SPIRIT ON PAYMENT OF DUTY) RULES , 2005 DOES NOT MAKE COMPULSION TO PAY BY CASH TO THE COMPANY F ROM WHERE SPIRIT IS PURCHASED) AND HERE PAYMENT IS MADE TO A COMPANY HAVING DISTINCT IDENTITY AND PAN AND NOT GOVERNMENT . 7. THE AUTHORIZED REPRESENTATIVE ALSO SUBMITTED THA T THE DECISION OF THE HONBLE ITAT, SPECIAL BENCH, KOLKAT A HAS IN ITO, WARD-1, MURSHIDABAD VS.- M/S. KENARAM SAHA AND SUB HASH SAHA IN ITA NO. 1545/KOL/2007 FOR AY 2004-05 WAS IN FAVOUR OF APPELLANT. THIS IS INCORRECT. THE RELEVANT PARAG RAPH READS '80. IN VIEW OF THE ABOVE, IN OUR OPINION, THE ASSE SSEE WILL GET THE EXEMPTION FROM THE RIGOURS OF SECTION 40A(3) IF HE IS ABLE TO ESTABLISH THAT HIS CASE FALLS WITHIN ANY OF THE CLAUSES OF (A) TO (M) OF RULE 6DD. THE BURDEN WOULD BE UPON THE AS SESSEE TO ESTABLISH UNDER WHICH PARTICULAR CLAUSE HIS CASE FA LLS'. THEREFORE THE DECISION NEEDS NO EXPLANATION. IT MAK ES IT AMPLY CLEAR: THAT THE ONUS IS ON ASSESSEE TO ESTABLISH TH E SAME SUB CLAUSE UNDER WHICH HIS CASE FALLS. THE INFERENCE TH AT THE INTENTION OF HON. INCOME TAX APPELLATE TRIBUNAL IS TO GRANT EXEMPTION UNDER RULE 6DD(B) IS NOT CORRECT. HENCE T HE RELIANCE OF APPELLANT ON THE DECISION OF HONBLE INCOME TAX APPELLATE TRIBUNAL REFERRED TO HERE HELPS HIS CAUSE IN NO MAN NER. 8. UPON GOING THROUGH THE SUBMISSION, I FIND THAT N O CASE IS MADE OUT TO PROVE THAT ANY OF SUB-RULES OF RULE 6DD APPLIES. FOR APPLYING RULE 6DD(B) MANDATE THAT CASH PAYMENT IS COMPULSORY IS TO BE PROVED. FOR APPLYING RULE 6DD(K ), NOT ONLY THE MANDATE THAT CASH PAYMENT IS COMPULSORY IT TO B E PROVED BUT ALSO THAT THE BOTTLING PLANT, WHICH AS I HAD AL READY STATED IS A PRIVATE COMPANY WITH DISTINCT STATUS AND PAN, IS AGENT OF GOVERNMENT. JUST BECAUSE TAX IS COLLECTED AND REMIT TED TO GOVERNMENT THE PRIVATE COMPANY DOES NOT BECOME GOVE RNMENT FOR ANY PURPOSE. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE ISSUE INVOLVED IN THIS APPEAL OF THE ASSESSEE RELATING TO THE DISALLOWANCE UNDER SECTION 40A(3) IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS DECISIONS OF THIS TRIBUNAL. IN ONE OF SUCH CASES, NAMELY M/S. AMRAI PACHWAI & C.S. SHOP DECIDED BY THE TRIBUNAL V IDE ITS ORDER DATED 15.01.2014 PASSED IN ITA NO. 1251/KOL/2011, PAYMENT S WERE MADE BY THE ASSESSEE AGAINST PURCHASES MADE FROM THE SAME P ARTY, NAMELY M/S. I.T.A. NO. 291/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 4 OF 7 ASANSOL BOTTLING & PACKING CO. PVT. LIMITED BY DEP OSITING THE CASH DIRECTLY IN THE BANK ACCOUNT OF THE SAID SUPPLIER I N THE SUMS EXCEEDING RS.20,000/- AND THE DISALLOWANCE MADE FOR THE SAME UNDER SECTION 40A(3) WAS DELETED BY THE TRIBUNAL FOR THE FOLLOWIN G REASONS GIVEN IN PARAGRAPHS NO. 21 & 22 OF ITS ORDER:- 21. WE FIND THAT M/S. ASANSOL BOTTLING & PACKAGING CO. PVT. LTD. IS A BOTTLING PLANT CUM WAREHOUSE UND ER RULE 2(VII) OF THE WEST BENGAL EXCISE RULES, 2005 W ITH PRIVILEGE GRANTED U/S 22 OF THE BENGAL EXCISE ACT, 1909. AT THIS JUNCTURE, IT WOULD BE RELEVANT TO GO INTO T HE DEFINITION OF WAREHOUSE AS PROVIDED UNDER THE STATE EXCISE RULES, 2005, AS BELOW:- WAREHOUSE, UNDER RULE 2(VII) OF THE W.B. EXCISE RULES, 2005, MEANS THE WAREHOUSE FOR SUPPLY OF COUN TRY SPIRIT TO RETAIL VENDORS, ESTABLISHED AT CONVENIENT PLACES BY THE COMMISSIONER AT THE EXPENSE OF THE STATE GOVERNMENT, OR AT THE EXPENSE OF A PERSON TO WHOM T HE EXCLUSIVE PRIVILEGE OF SUPPLYING OR SELLING COUNTRY SPIRIT BY WHOLESALE HAS BEEN GRANTED UNDER SECTION 22 OF T HE ACT, OR OF A LICENSED WHOLESALE VENDOR OF COUNTRY S PIRIT. THE ABOVE DEFINITION MAKES IT CLEAR THAT THE 'WAREH OUSE' REFERRED TO UNDER THE STATE EXCISE RULES IS UNDER T HE DIRECT CONTROL AND AUTHORITY OF THE COMMISSIONER OF STATE EXCISE BECAUSE IT IS ESTABLISHED BY THE COMMISSIONER OF STATE EXCISE AND AS SUCH IS A STATE GOVERNMENT ESTABLISHMENT. IT IS ALSO PERTINENT TO N OTE THAT THE EXPENDITURE IN RELATION TO SUCH WAREHOUSE IS BORNE BY THE STATE GOVERNMENT OR BY THE LICENSEE TO WHOM THE EXCLUSIVE PRIVILEGE IS GRANTED U/S 22 OF T HE BENGAL EXCISE ACT, 1909. HENCE THERE COULD BE NO DO UBT THAT THE WAREHOUSE IS ESTABLISHED BY THE STATE EXCI SE COMMISSIONER. HENCE IT COULD BE SAFELY CONCLUDED TH AT THE WAREHOUSE SO ESTABLISHED BY THE STATE EXCISE COMMISSIONER IS A STATE GOVERNMENT ESTABLISHMENT. I T WOULD ALSO BE PERTINENT TO NOTE THAT THE SAID WAREH OUSE HAS BEEN SPECIFICALLY ESTABLISHED FOR SUPPLY OF COU NTRY 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 EXC ISE RULES 2005 AS BELOW.- I.T.A. NO. 291/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 5 OF 7 RULE 2(VIII) - 'WHOLESALE LICENSEE' MEANS THE WHOLE SALE VENDOR OF COUNTRY SPIRIT TO WHOM LICENCE HAS BEEN GRANTED IN WEST BENGAL 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 - GRANT OF EXCLUSIVE PRIVILEGE OF MANUFA CTURE AND SALE OF COUNTRY LIQUOR OR INTOXICATING DRUGS - (1) THE STATE GOVERNMENT MAY GRANT TO ANY PERSON, O N SUCH 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, O R (C) OF SELLING, BY WHOLESALE OR RETAIL. OR (D) OF MANUFACTURING OR SUPPLYING BY WHOLESALE AND SELLING RETAIL, OR (E) OF MANUFACTURING AND SUPPLYING BY WHOLESALE AND SELLING RETAIL, ANY COUNTRY LIQUOR OR INTOXICATING DRUG WITHIN ANY SPECIFIED LOCAL AREA: PROVIDED THAT PUBLIC NOTICE SHALL BE GIVEN TO THE INTENTION TO GRANT ANY SUCH EXCLUSIVE PRIVILEGE. AN D THAT ANY OBJECTIONS MADE BY ANY PERSON RESIDING WITHIN T HE AREA AFFECTED SHALL BE CONSIDERED BEFORE AN EXCLUSI VE PRIVILEGE IS GRANTED. (2) NO GRANTEE OF ANY PRIVILEGE UNDER SUB-SECTION ( 1) SHALL EXERCISE THE SAME UNLESS OR UNTIL HE HAS RECE IVED A LICENSE IN THAT BEHALF FROM THE COLLECTOR OR THE EX CISE COMMISSIONER. HENCE IT COULD BE SAFELY CONCLUDED THAT M/S. ASANSO L BOTTLING & PACKAGING CO. PVT LTD (BOTTLING PLANT) I S A WAREHOUSE WITHIN THE MEANING OF RULE 2(VII) OF THE EXCISE RULES 2005 AND SAID WAREHOUSE IS A STATE GOVERNMENT ESTABLISHMENT, ESTABLISHED AND CONTROLLE D BY THE EXCISE COMMISSIONER. IT WOULD BE RELEVANT TO REPRODUCE RULE 6DD(B) OF THE IT RULES AT THIS JUNCT URE;- (B) WHERE THE PAYMENT IS MADE TO THE GOVERNMENT AND , UNDER THE RULES FRAMED BY IT, SUCH PAYMENT IS REQUI RED TO BE MADE IN LEGAL TENDER. I.T.A. NO. 291/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 6 OF 7 IN THE INSTANT CASE, THE ASSESSEE (RETAIL VENDOR) H AD MADE CASH PAYMENTS FOR PURCHASE OF COUNTRY SPIRIT B Y DEPOSITING CASH DIRECTLY INTO THE BANK ACCOUNT OF M /S ABPL AS PER RULE 6(2) OF THE EXCISE RULES 2005 , IT HAS TO BE CONSTRUED AS PAYMENT MADE TO THE STATE GOVERNMEN T AUTHORITY AND ACCORDINGLY FALLS UNDER THE EXCEPTION PROVIDED IN RULE 6DD(B) OF THE IT RULES. 22. IT IS NOT IN DISPUTE THAT M/S ASANSOL BOTTLING & PACKAGING CO. PVT LTD HAVE BEEN GRANTED LICENCE TO ACT AS A WHOLESALER FOR SUPPLY OF COUNTRY LIQUOR TO THE RETAIL VENDOR AS PER THE REGULATIONS OF THE EXCISE DEPARTM ENT, GOVERNMENT OF WEST BENGAL. AT THE COST OF REPETITIO N, WE WOULD LIKE TO STATE THAT THE SAID REGULATION MANDAT ED THE PAYMENTS TO BE MADE DIRECTLY INTO THE BANK ACCO UNT OF THE SAID WHOLESALE LICENSEE BY THE RETAIL VENDOR (I.E ASSESSEE HEREIN) FOR STRICT AND EFFECTIVE REGULATIO N OF THE COUNTRY LIQUOR AND FOR PREVENTION OF SPURIOUS STOCK S AND BLACK MARKETING TRANSACTIONS FROM THE SAME. HENCE I T COULD BE SAFELY CONCLUDED THAT THE SAID WHOLESALE LICENSEE HAD ACTED AT THE INSTANCE OF THE STATE GOVERNMENT. ONCE THIS IS SO, THEN THE SAID WHOLESAL E LICENSEE COULD BE CONSTRUED AS AN AGENT OF THE STAT E GOVERNMENT. FOR THE SAKE OF CONVENIENCE, THE RELEVA NT RULE IS REPRODUCED HEREUNDER:- RULE 6DD(K) - WHERE THE PAYMENT IS MADE BY ANY PERS ON TO HIS AGENT WHO IS REQUIRED TO MAKE PAYMENT IN CAS H FOR GOODS 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 AGENT. THE RELATIONSHIP BETWEEN THE ASSES SEE (AUTHORIZED RETAILER) AND GOVERNMENT OF WEST BENGAL (THE SUPPLIER) ACTING UNDER WEST BENGAL EXCISE RULE S THROUGH ITS AUTHORISED WHOLESALER LICENSEE (AGENT), BOTH DEFACTO AND DEJURE, IS ONE OF 'PRINCIPAL' AND 'AGENT'. WE HOLD THAT THE ASSESSEE RETAIL VENDOR HAD MADE PAYMENT TO THE SAID AGENT (WHOLESALE LICENSEE) WOUL D FALL UNDER THE EXCEPTION PROVIDED IN RULE 6DD(K) OF THE RULES. 5. AS THE ISSUE INVOLVED IN THE PRESENT APPEAL AS W ELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THE CASE OF M/S. AMRAI PACHWAI & C.S. SHOP (SUPRA), WE RESPECTFULLY FOLLOW THE DECISION RENDERED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE SAI D CASE AND DELETE THE I.T.A. NO. 291/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 7 OF 7 DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONF IRMED BY THE LD. CIT(APPEALS) UNDER SECTION 40A(3) OF THE ACT. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 04, 2 016. SD/- SD/- (K. NARASIMHA CHARY) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT ME MBER KOLKATA, THE 4 TH DAY OF OCTOBER, 2016 COPIES TO : (1) DIHIKA PACHWAI SHOP, VILL. DIHIKA, P.O. SURYANAGAR, DIST. BURDWAN-713 361 (2) INCOME TAX OFFICER, WARD-2(4), ASANSOL, PARMAR BUILDING, APCAR GARDEN, G.T. ROAD (WEST), P.O. ASANSOL-713 304, DIST. BURDWAN (3) COMMISSIONER OF INCOME TAX(APPEALS), ASANSOL; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.