Aditya Kumar Samanta, Howrah V. DCIT, C ircle- 47, Kolkata, Kolkata

ITA 513/KOL/2010

• Counselvise Citation: 51323514 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2011
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 12-03-2010
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: J M THARD
• Section: 40A(3); 143(3)

Judgement Text

1 , C , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- C, KOL KATA [ . . . . . . . . , ,, , . . . . . .. . ! ! ! ! , ' ] BEFORE SHRI B.R.MITTAL, JUDICIAL MEMBER & SRI S.V.MEHROTRA, ACC OUNTANT MEMBER # # # # / ITA NO. 513 (KOL) OF 2010 $%& '( / ASSESSMENT YEAR 2006-07 ADITYA KUMAR SAMANTA HOWRAH. (PAN-ALSPS2173B) DY. COMMISSIONER OF INCOME-TAX, CIRCLE-47, KOLKATA. (+, / APPELLANT ) - % - - VERSUS - (/0+,/ RESPONDENT ) +, 1 2 / FOR THE APPELLANT: / SRI J.M. THARD /0+, 1 2 / FOR THE RESPONDENT: / SRI S.K. ROY 3 / ORDER ( . . . . . . . . ), (B.R.MITTAL), JUDICIAL MEMBER : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE OR DER OF LD. C.I.T.(A)-XXX, KOLKATA DATED 18/01/2010 FOR ASSESSMENT YEAR 2006-0 7. THE ASSESSEE HAS RAISED SEVERAL GROUNDS WHICH ARE ALL DIRECTED AGAINST DISA LLOWANCE OF 20% OF THE AMOUNT PAID IN CASH U/S. 40A(3) OF THE ACT. 2. THE ASSESSEE IS A WHOLESALE DEALER OF RICE. TH E ASSESSEE FILED HIS RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION SHOWING TOTAL I NCOME OF RS.6,28,480/-, WHICH WAS ASSESSED IN ASSESSMENT FRAMED U/S. 143(3) OF TH E ACT AT RS.10,10,63,203/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. OBSE RVED THAT THE ASSESSEE HAD ENTERED INTO TRANSACTIONS WITH VARIOUS PARTIES WHERE PAYMEN TS EXCEEDING RS.20,000/- IN EACH CASE WERE MADE IN CASH AND NOT THROUGH ACCOUNT PAYE E CHEQUE/DRAFT, THE DETAILS OF WHICH ARE AS UNDER :- (A) M/S. MAHALAKSHMI RICE MILL RS. 4,04,400 (B) M/S. SREEMA RICE MILL RS. 1,99,300 (C) M/S.BALICHAK LAKSHMI NARAYAN RICE MILL RS. 95,000 (D) M/S. G.G.AGRO PRODUCTS PVT. LTD. RS. 5,3 4,400 (E) M/S. SURJAKANTA RICE MILL RS. 1,85,000 (F) M/S. ANANDMOYEE RICE MILL RS. 2,84,500 (G) M/S. BHADRESWAR RICE MILL RS. 95,000 RS.21,73,600/- 2 THE ASSESSEE STATED BEFORE THE A.O. THAT IT HAD PUR CHASED RICE FROM THE ABOVE PARTIES FOR THE FIRST TIME AND THEY HAD INSISTED FOR CASH P AYMENTS AGAINST SALE OF GOODS. THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND SATISFACT ORY BY THE A.O. HE, ACCORDINGLY, DISALLOWED THE EXPENDITURE AT 20% ON PURCHASE OF RI CE FROM THE AFORESAID PARTIES TOTALLING TO RS.21,73,600/-, WHICH CAME TO RS.4,34, 720/- AND ADDED THE SAME TO THE ASSESSEES TOTAL INCOME U/S. 40A(3) OF THE ACT. 3. ON APPEAL, LD. C.I.T.(A) UPHELD THE DISALLOWANC E BY OBSERVING AS UNDER :- THE APPELLANT IS A DEALER IN RICE. THE APPELLANT P URCHASED RICE FROM VARIOUS PARTIES FOR WHICH CASH PAYMENT IS MADE. THE APPELLANT CONT ENDS THAT FOR THE PURCHASE OF AGRICULTURAL PRODUCTS RULE 6DD APPLIES. THE APPELL ANT PURCHASED RICE FROM OTHER DEALERS AND NOT FROM THE FARMERS DIRECTLY. THE PUR CHASES MADE FROM OTHER DEALERS ARE NOT COVERED BY THE RULE 6DD. FURTHER, THE PROVISIO NS OF SECTION 40A(3) ARE INTRODUCED TO CURB THE PAYMENT OF CASH FOR PURCHASE . SINCE THE APPELLANT HAS CONTRAVENED THE PROVISIONS OF SECTION 40A(3), DISAL LOWANCE OF 20% OUT OF CASH PURCHASE MADE IN EXCESS OF RS.20,000/- IS MANDATORI LY DISALLOWABLE. THE ISSUE REGARDING THE GENUINENESS OF THE PAYMENT AND IDENTI TY OF THE PARTIES DOES NOT EXCLUDE SUCH PAYMENTS FOR DISALLOWANCE. THE A.O. IS CORREC T AS PER LAW IN APPLYING PROVISIONS OF SECTION 40A(3) IN DISALLOWING 20% OF THE CASH PA YMENTS MADE IN CONTRAVENTION OF THE SECTION. THE A.O.S ACTION IS CORRECT AND IS U PHELD. HENCE THIS APPEAL BY THE ASSESSEE. 4. AT THE TIME OF HEARING BEFORE US, THE LD. A/R R EFERRED PAGE-1 OF THE PAPER BOOK, WHICH CONTAINS THE LIST OF 8 PARTIES TO WHOM THE AS SESSEE HAS MADE THE CASH PAYMENTS, THE DETAILS OF WHICH ARE AS UNDER :- SL.NO. NAME & ADDRESS OF PARTIES VAT NO. AMOUNT 1. M/S. PALLISREE RICE MILL, 19840296096 3 ,76,000 VILL & PO-LUTINIA, PS- SABANG, DIST. PASCHIM MEDINIPUR. 2. M/S. MAHALAKSHMI RICE MILL 19840060095 4 ,02,600 VILL & PO-BALLICHAK, DIST. PASCHIM MEDINIPUR. 3. M/S. SREMA RICE MILL, 19841260082 1,99, 300 KABILPUR, PO-DEBRA BAZAR, PASCHIM MEDINIPUR. 4. M/S.BALLICHAK LAKSHMI NARAYAN RICE P.LTD. 1 9840006066 95,000 PO & VILL.BALLICHAK, DIST. PASCHIM MEDINIPUR. 5. M/S. G.G. AGRO PRODUCTS PVT. LTD. 1949062 9138 5,34,000 VI.. JOALBHANGA, BINPUR, DIST. PASCHIM MEDINIPUR. 6. M/S. SURJYAKANTA RICE MILL 19790340029 1,85,000 JAMALPUR, DIST. BURDWAN. 7. M/S. ANANDAMOYEE RICE MILL 19735653078 2 ,84,000 VILL. NANDANPUR, DIST. BURDWAN. 3 8. M/S. BHADRESWAR RICE MILL 19793169034 95,000 VILL & PO-PARAJ, GOLSI, DIST. BURDWAN. THE LD. A/R SUBMITTED THAT IN RESPECT OF FIRST FOUR PARTIES OF THE ABOVE LIST, PAYMENTS MADE WERE LESS THAN RS. 20,000/- IN CASH AT A TIME AND, THEREFORE, PROVISIONS OF SEC. 40A(3) OF THE ACT WILL NOT APPLY. TO SUBSTANTIATE HIS SUBMISSION, THE LD. A/R REFERRED PAGES 3 & 4 OF THE PAPER BOOK, WHICH GIVE THE DETAI LS OF THE BREAK-UP OF THE AMOUNT PAID AT A TIME. IN RESPECT OF OTHER TWO PARTIES, I. E. PARTIES AT SL. NOS. 6 & 7 OF THE ABOVE LIST, THE LD. A/R SUBMITTED THAT THE ABOVE PARTIES ARE LOCATED AT A PLACE WHERE THERE WAS NO BANKING FACILITY AVAILABLE AT THE RELEVANT TIME. HE SUBMITTED THAT IN VIEW OF CLAUSE (H) OF RULE 6DD OF THE RULES, NO DISALLOWANCE IS TO BE MADE WHEN THE PAYMENT IN CASH OF RS.20,000/- AT A TIME OR MORE IS PAID. TO SUBST ANTIATE HIS SUBMISSION, THE LD. A/R ALSO FILED AN AFFIDAVIT OF THE ASSESSEE. HE FURTHE R SUBMITTED THAT THE MATTER COULD BE RESTORED TO THE A.O. TO ASCERTAIN THE FACTUAL ASPEC TS. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT HE HAS NO OBJECTION I F THE MATTER IS RESTORED TO THE A.O. TO FIND THE FACTUAL ASPECTS THAT AT THE PLACES WHER E THESE PARTIES ARE LOCATED, THERE WAS NO BANKING FACILITY AVAILABLE AT THE RELEVANT TIME. 4.1. HOWEVER, IN RESPECT OF REMAINING TWO PARTIES, I.E. PARTIES MENTIONED AT SL. NOS. 5 & 8 OF THE ABOVE LIST, THE LD. A/R ADMITTED THAT THE CASH PAYMENT EXCEEDING RS.20,000/- WAS MADE TO THEM. HOWEVER, HE SUBMITTE D THAT THE TRANSACTIONS WERE GENUINE AND THE ASSESSEE ENTERED INTO THE BUSINESS WITH THE SAID PARTIES FOR THE FIRST TIME AND THE SAID PARTIES DID NOT AGREE TO SELL GOO DS ON CREDIT BASIS. THE LD. A/R PLACED RELIANCE ON THE FOLLOWING THREE CASES :- CIT VS. CPL TANNERY [318 I.T.R. 179 (CAL)] CIT VS. RAJANPAL AUTOMOBILES [320 I.T.R. 185 (ALL .)] DECISION OF ITAT, KOLKATA BENCH IN THE CASE OF BR ITANNIA INDUSTRIES LTD. [ORDER DATED 28/6/2004 IN ITA NOS. 541 & 601/KOL/ 2001, A.Y. 1997-98]. 5. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, SUPPORTED THE ORDER OF LD. C.I.T.(A) AND SUBMITTED THAT THE DECISIONS RELI ED UPON BY THE LD. A/R, REFERRED TO ABOVE, ARE NOT RELEVANT TO THE FACTS OF THE ASSESSE ES CASE. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW. TH E DECISIONS CITED BY THE ASSESSEE, VIZ., CIT VS. RAJA PAL AUTOMOBILES (SUPRA) AND I.T. A.T. DECISION DATED 28/6/2004 IN 4 ITA NOS. 541 & 601/KOL/2001 (SUPRA), ARE NOT RELEVA NT TO THE FACTS OF THE CASE AS THESE DECISIONS RELATE TO THE ASSESSMENT YEARS PRIOR TO T HE AMENDMENT MADE IN SEC. 40A(3) READ WITH RULE 6DD OF I.T. RULES, 1962. IN RESPECT OF OTHER DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. CPL TANN ERY (SUPRA), WE OBSERVE THAT THE HONBLE HIGH COURT DELETED THE ADDITION BY CONSIDER ING THAT THE ASSESSEE IS ENTITLED TO GET THE BENEFIT OF RULE 6DD(F)(II) OF THE RULES. T HE SAID CLAUSE OF RULE 6DD IS NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE . MOREOVER, THE ASSESSEE HAS ADMITTEDLY MADE THE CASH PAYMENTS EXCEEDING RS.20,0 00/- AT A TIME TO THE PARTIES MENTIONED AT SL. NOS. 5 & 8 ABOVE, VIZ., M/S. G.G. AGRO PRODUCTS PVT. LTD. AND M/S. BHADRESWAR RICE MILL AGGREGATING TO RS. 5,34,000/- AND RS.95,000/- RESPECTIVELY. IN VIEW OF ABOVE, WE HOLD THAT THE A.O. IS JUSTIFIED T O APPLY SEC. 40A(3) OF THE ACT AND AS SUCH DISALLOWANCE @ 20% OF RS.5,34,000/- AND RS.95, 000/- WHICH COMES TO RS.1,06,800/- AND RS.19,000/- RESPECTIVELY AGGREGAT ING TO RS.1,25,800/- HAS BEEN RIGHTLY UPHELD BY THE LD. C.I.T.(A). ACCORDINGLY, G ROUNDS OF APPEAL TAKEN BY THE ASSESSEE ON THIS ISSUE ARE ALLOWED IN PART. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN PART. 3 '4 5 4% 6 7 THIS ORDER IS PRONOUNCED IN OPEN COURT ON 28.07.2011 SD/- SD/- ( . . . . . .. . ! ! ! ! ) ' ( . . . . . . . . ) (S.V.MEHROTRA) , ACCOUNTANT MEMBER (B.R.MITTAL) , JUDICIAL MEMBER ( (( (8' 8' 8' 8') )) ) DATE: 28 -07-2011 3 1 /$$9 :9';- COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT : ADITYA KR. SAMANTA, 60/6, BAJE SHIBPUR ROAD, HOWRAH-711 102 2 /0+, / THE RESPONDENT : D.C.I.T., CIRCLE-47, KOLKATA. 3. $3% () : THE CIT(A) XXX, KOLKATA. 4. $3%/ THE CIT, KOL - 5 . ?$6 /$% / DR, ITAT, KOLKATA BENCHES, KOLKATA 6 . GUARD FILE . 09 /$/ TRUE COPY, 3%4/ BY ORDER, (DKP) @ A /DY/ASSTT. REGISTRAR .