JMB Rice Mill Pvt. Ltd, Bhadrak V. ACIT, Balasore

ITA 418/CTK/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0786 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 26-11-2010
• Court: TRIBUNAL
• Department Lawyers: S K DASH
• Assessee Lawyers: G NAIKR KAR ARS
• Keywords: Set aside
• Section: 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 418/CTK/2010 / ASSESSMENT YEAR 2006 - 07 JMB RICE MILL PVT.LTD., AT: RAHANJ, P.O. TISALPUR, DIST.BHADRAK 756 111 PAN: AADCM 6337 Q - - - VERSUS - ASST.COMMISSIONER OF INCOME - TAX, BALASORE CIRCLE, BALASORE. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI G.NAIK/R.KAR, ARS / FOR THE RESPONDENT: / SHRI S.K.DASH, DR / ORDER . . . , , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) DT.27.9.2010 FOR THE ASSESSMENT YEAR 2006 - 07 IN THE CASE OF THE ASSESSEE. 2. THE SOLE IS SUE RAISED BY THE ASSESSEE IN THIS APPEAL CHALLENGED THE CONFIRMATION OF ADDITION OF RS.14,63,366 U/S.40A(3) OF THE INCOME - TAX ACT,1961 MORE SO IN THE LIGHT OF THE PAYMENTS IN QUESTIONS WERE MADE FOR PURCHASE OF AGRICULTURAL PRODUC T S. 3. BOTH PARTIES WERE HEARD REGARDING THE ISSUE AND ITS LEGAL IMPLICATION. 4. THE LEARNED AR OF THE ASSESSEE WHILE CANVASSING THE ISSUE BEFORE THE TRIBUNAL HAS BROUGHT ATTENTION OF THE TRIBUNAL TO CLAUSES (F), (I) AND (L) OF RULE 6DD OF THE INCOME - TAX RULES,1962. HE CONTENDED THAT THE SAID RULE CATEGORICALLY MENTIONED THAT S.40A(3) OF THE I.T.ACT IS NOT ATTRACTED IN RESPECT OF CASH PAYMENTS MADE FOR PURCHASE OF PADDY EVEN THROUGH THE AGENTS FROM AGRICULTURISTS . HE FURTHER SUBMITTED THAT THE ASSESSEE BEING A MILLER IT HAS TO I.T.A.NO. 418/CTK/2010 2 PU RCHASE PADDY FROM THE AGRICULTURISTS THROUGH ITS AGENTS AND MAKING THE PAYMENTS ALSO THROUGH ITS AGENTS AND ALL THE PURCHASES ARE IN ACCORDANCE WITH THE RULES LAID DOWN BY THE CONCERNED STATE GOVERNMENT REGARDING THE PROCUREMENT OF PADDY FOR MILLING PURPOS ES. THE ASSESSEE GIVES LUMP SUM AMOUNTS TO ITS AGENTS, WHO IN THEIR TURN GO TO THE SHANDIES OF THE CONCERNED VILLAGES AND PURCHASE THE PADDY DIRECTLY FROM THE AGRICULTURISTS BY MAKING PAYMENTS UNDER PROPER RECEIPTS FROM THEM. THE DEPARTMENT HAS NOT DISPUTE D THESE FACTUAL ASPECTS ANYWAY IN THE IMPUGNED ORDERS. THEREFORE, BY APPLYING THE PROVISIONS CONTAINED IN CLAUSES (F),(I) AND (L) OF RULE 6DD OF THE I.T.RULES,1962 THE PAYMENTS MADE BY THE ASSESSEE THROUGH THE AGENTS TO THE AGRICULTURISTS FOR PURCHASE OF P ADDY FROM THEM WILL NOT COME WITHIN THE SCOPE OF SECTION 40A(3) OF THE I.T.ACT. BUT THE LOWER AUTHORITIES GROSSLY ERRED IN BRINGING TO TAX THE IMPUGNED PAYMENTS UNDER THE PROVISIONS OF SECTION 40A(3). ACCORDINGLY, THE IMPUGNED ORDERS PASSED BY THE LOWER AU THORITIES ARE NOT SUSTAINABLE FOR LEGAL SCRUTINY AND BE SET ASIDE. 5. CONTRARY TO THIS THE LEARNED DR HAS VEHEMENTLY OPPOSED THE APPEAL OF THE ASSESSEE CONTENDING INTER ALIA THAT THE ASSESSEE HAS NOT PRODUCED ANY MATERIAL TO SHOW THAT THE PAYMENTS IN QUEST ION ARE TO THE AGRICULTURISTS AND FOR THE PURPOSE OF PURCHASING OF AGRICULTURAL PRODUCES. IN THAT VIEW OF THE MATTER, THE LOWER AUTHORITIES ARE WELL WITHIN THEIR POWERS TO APPLY THE PROVISIONS OF SECTION 40A(3) OF THE I.T.ACT AND ACCORDINGLY, THE IMPUGNED ORDERS ARE NOT INFIRM IN ANY WAY REQUIRING ANY INTERFERENCE. ACCORDINGLY HE SOUGHT FOR DISMISSAL OF THE APPEAL OF THE ASSESSEE BY UPHOLDING THE IMPUGNED ORDER . 6. ON CAREFUL ANALYSIS OF THE MATERIAL FACTS RELATING TO THE ISSUE IN THE LIGHT OF THE ABOVE SUB MISSIONS OF BOTH THE PARTIES AS WELL AS THE PROVISIONS CONTAINED IN SECTION 40A(3) OF THE I.T.ACT AND CLAUSES (F), (I) AND (L) OF THE I.T.A.NO. 418/CTK/2010 3 I.T.RULES,1962, IT IS FOUND THAT NOWHERE IN THE IMPUGNED ORDERS, THE DEPARTMENT HAS DISPUTED THE PAYMENTS IN QUESTION TO T HE AGRICULTURISTS THROUGH THE AGENTS OF THE ASSESSEE BUT SIMPLY OBSERVED THAT THE PAYMENTS WERE OVER AND ABOVE RS.20,000 AND THEREFORE HIT BY PROVISIONS OF SECTION 40A(3) OF THE I.T.ACT. THOUGH THE ASSESSEE HAS CLAIMED THE APPLICATION OF CLAUSES (F), (I) AND (L) OF RULE 6DD OF THE I.T.RULES IT IS FOUND THAT THE APPLICATION OF THE PROVISIONS CONTAINED SECTION 40A(3) TO THE PAYMENTS IN QUESTION DO NOT SUSTAIN FOR LEGAL SCRUTINY, MORE SO IN THE LIGHT OF THE DECISIONS OF HONBLE HIGH COURT OF RAJASTHAN RENDERE D IN THE CASE OF KANTILAL PURSHOTTAM & CO., V. CIT (19 86) 53 CTR (RAJ) 19, OF ITAT, BA NGALORE BENCH IN THE CASE OF SRI RENUKESWAR RICE MILL V. ITO (2005) 93 TTJ (BANG) 912, WHEREIN IT WAS HELD THAT THE DISALLOWANCE OF PAYMENTS IN EXCESS OF PRESCRIBED LIMIT MENTIONED IN SECTION 40A(3) IS NOT PERMITTED AS THERE IS EXEMPTION OF SECTION IN RULE 6DD OF THE I.T. RULES. ACCORDINGLY, WE FIND THAT THE ISSUE RAISED BY THE ASSESSEE IS MERITORIOUS AND IT IS HEREBY ACCEPTED AND THE IMPUGNED ORDER OF THE LEARNED CIT(A) IS HEREBY SET ASIDE BY ALLOWING THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 15.02.2011 S D/ - S D/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER. ( ) DAT E: 15 TH FEBRUARY, 2011 ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 418/CTK/2010 4 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : JMB RICE MILL PVT.LTD., AT: RAHANJ, P.O. TISAL PUR, DIST.BHADRAK 756 111 2 / THE RESPONDENT: 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY