ITO, Wd-1(2), Asansol, Asansol V. M/s Bolkunda Pachwai (S) C.S Shop, Burdwan

ITA 762/KOL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6608 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 18-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Section: 40A(3); 2

Judgement Text

1 ITA NO.762/KOL/2017 M/S BOLKUNDA PACHWAI (S) C.S.SH OP A.Y.2013-14 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH D KOL KATA [BEFORE HONBLE SHRI P.M.JAGTAP, AM & SHRI S.S.VI SWANETHRA RAVI, JM ] ITA NO.762/KOL/2017 ASSESSMENT YEAR : 2013-14 I.T.O., WARD-1(2) -VERSUS- M/S BOLKUNDA PACHWAI ( S)CS SHOP KOLKATA KOLKATA (PAN: AAAAB 2700 K) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI A.BHATTACHARJEE, ADDL. CIT FOR THE RESPONDENT: NONE DATE OF HEARING : 12.04.2018. DATE OF PRONOUNCEMENT : 27.06.2018. ORDER PER S.S.VISWANETHRA RAVI, JM THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 17.01.2017 PASSED BY C.I.T-(A)-ASANSOL FOR A.Y.2013-14. 2. THE ONLY ISSUE TO BE DECIDED IS AS TO WHETHER TH E CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO HOLDING THE CASH PAYMENTS M ADE TO M/S ASANSOL BOTTLING AND PACKAGING CO. LTD IS NOT A VIOLATION OF SECTION 40A(3) OF THE INCOME TAX ACT, 1961 (ACT). 3. THE LD. DR RELIED ON THE ORDER OF THE AO. THE LD . AR SUBMITS THAT THE ISSUE IN HAND IS COVERED BY THE DECISION OF THIS TRIBUNAL IN ASSE SSEES OWN CASE FOR A.Y.2008-09 AND 2009-10 PASSED BY THE COORDINATE BENCH OF THIS TRIBUNAL. THE LD. AR REFERRED TO THE RELEVANT PORTION IN CIT(A)S ORDER AND ARGUED T HAT CASH PAYMENTS MADE TO M/S. ASANSOL BOTTLING AND PACKAGING CO.LTD IS A WAREHOU SE UNDER RULE 2 (VII) OF WEST BENGAL EXCISE RULE 2005 AND THE ADDITION MADE BY TH E AO ON ACCOUNT OF VIOLATION OF 2 ITA NO.762/KOL/2017 M/S BOLKUNDA PACHWAI (S) C.S.SH OP A.Y.2013-14 SECTION 40A(3) OF THE ACT IS NOT MAINTAINABLE AND C IT(A) RIGHTLY DELETED BY PLACING RELIANCE ON THE ORDER OF THIS TRIBUNAL IN ASSESSEE S OWN CASE. 4. HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. WE FIND THAT THE CIT(A) BY PLACING RELIANCE IN ASSESSEES O WN CASE IN ITA NO.165 & 166/KOL/2014 FOR A.Y.2008-09 AND 2009-10 DELETED TH E ADDITION MADE BY THE AO U/S 40A(3) OF THE ACT. THE RELEVANT PORTION OF THE IMPU GNED ORDER IS REPRODUCED HEREIN BELOW :- DECISION- THE ASSESSEE HAS RELIED ON THE DECISION OF THE JURI SDICTIONAL TRIBUNAL IN THEIR OWN CASE IN ITA NOS. 165 & 166/KOL/2011 FOR THE ASSESSM ENT-YEARS 2008-09 & 2009- 10. IN THIS CASE THE HON'BLE TRIBUNAL HAS DISCUSSED THE ISSUE OF CASH PURCHASE MADE BY THE ASSESSEE FROM ASANSOL BOTTLING & PACKAG ING CO. PVT. LTD. THE HON'BLE TRIBUNAL HAS HELD AS UNDER.- WE FIND THAT M/S ASANSOL BOTTLING & PACKAGING CO. PVT. LTD. IS A BOTTLING PLANT CUM WAREHOUSE UNDER RULE 2(VII) OF THE WEST BENGAL EXCISE RULES 2005 WITH PRIVILEGE GRANTED UNDER SECTION 22 OF THE BENGAL EX CISE ACT, 1909. AT THIS JUNCTURE, IT WOULD BE RELEVANT TO GO INTO THE DEFIN ITION OF WAREHOUSE AS PROVIDED UNDER [HE STATE EXCISE RULES 2005 AS BELOW : WAREHOUSE , UNDER RULE 2 (VII) OF THE W.B.EXCISE RULES 2015, MEANS THE WAREHOUSE FOR SUPPLY OF COUNTRY SPIRIT TO RETAIL VE NDORS, ESTABLISHED AT CONVENIENT PLACES BY THE COMMISSIONER AT THE EXPENS E OF THE STATE GOVERNMENT, OR AT THE EXPENSE OF A PERSON TO WHOM THE EXCLUSIVE PRIVILEGE OF PACKING OR SELLING COUNTRY SPIRIT BY WHOLESALE HAS BEEN GRANTE D UNDER SECTION 22 OF THE ACT, OR OF A WHOLESALE VENDOR OF COUNTRY SPIRIT. THE ABOVE DEFINITION MAKES IT CLEAR THAT THE WAREH OUSE REFERRED TO UNDER THE STATE EXCISE RULES IS UNDER THE DIRECT CONTROL AND AUTHORITY OF THE COMMISSIONER OF STATE EXCISE BECAUSE IT IS ESTABLISHED BY THE ST ATE GOVERNMENT OR BY THE LICENSEE TO WHOM THE EXCLUSIVE PRIVILEGE IS GRANTED UNDER SECTION 22 OF THE BENGAL EXCISE ACT, 1909. HENCE THERE COULD BE NO DO UBT THAT THE WAREHOUSE IS ESTABLISHED BY THE STATE EXCISE COMMISSIONER. HENCE IT COULD BE SAFELY CONCLUDED THAT THE WAREHOUSE SO ESTABLISHED BY THE STATE EXCISE COMMISSIONER IS A STATE GOVERNMENT ESTABLISHMENT. IT WOULD ALSO BE PERTINENT TO NOTE THAT THE SAID WAREHOUSE HAS BEEN SPECIFICALLY ESTABLISHED FO R SUPPLY OF COUNTRY SPIRIT TO RETAIL VENDORS (ASSESSEE HEREIN) ONLY AND NOT TO AN YBODY ELSE. 3 ITA NO.762/KOL/2017 M/S BOLKUNDA PACHWAI (S) C.S.SH OP A.Y.2013-14 IT WOULD BE PERTINENT TO LOOK INTO THE DE FINITION OF WHOLESALE LICENSEE AS PER RULE 2(VIII) OF THE EXCISE RULES 2005 AS BELOW :- RULE 2 (VIII)- WHOLESALE LICENSEE MEANS THE WHOLE SALE VENDOR OF COUNTRY SPIRIT TO WHOM LICENCE HAS BEEN GRANTED IN WEST EXC ISE 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 MANUFACT URE AND SALE OF COUNTRY LIQUOR OR INTOXICATING DRUGS. (1)THE STATE GOVERNMENT MAY GRANT TO ANY PERSON, ON SUCH CONDITIONS AND FOR SUCH PERIOD AS IT MAY THINK FIT, THE EXCLUSIVE PRIV ILEGE (A) OF MANUFACTURING, OR SUPPLYING BY WHOLESALE, OR (B) OF MANUFACTURING, AND BY SUPPLYING BY WHOLESALE , OR (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 SPECIFIC LOCAL AREA; PROVIDED THAT PUBLIC NOTICE SHALL BE GIVEN TO THE I NTENTION TO GRANT ANY SUCH EXCLUSIVE PRIVILEGE, AND THAT ANY OBJECTIONS MADE B Y ANY PERSON RESIDING WITH THE 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 RECEIVED A LICENSE IN THAT B EHALF FROM THE COLLECTOR OR THE EXCISE COMMISSIONER. HENCE IT COULD BE SAFELY CONCLUDED THAT MLS ASANSOL BOTTLING & PACKAGING CO. PVT. LTD. (BOTTLING PLANT) IS A WAREHOUSE WITHIN TH E MEANING OF RULE 2(VII) OF THE EXCISE RULES 2005 AND SAID WAREHOUSE IS A STATE GO VERNMENT ESTABLISHMENT, ESTABLISHED AND CONTROLLED BY THE EXCISE COMMISSION ER. IT WOULD BE RELEVANT TO REPRODUCE RULE RULE 6DD(B) OF THE IT RULES AT THIS JUNCTURE. (B) WHERE THE PAYMENT IS MADE TO THE GOVERNMENT AND , UNDER THE RULES FRAMED BY IT, SUCH PAYMENT REQUIRED TO BE MADE IN LEGAL TENDE R. IN THE INSTANT CASE, THE ASSESSEE (RETAIL VENDOR) H AD MADE CASH PAYMENTS FOR PURCHASE OF COUNTRY SPIRIT BY DEPOSITING CASH DIREC TLY INTO THE BANK ACCOUNT OF M/S ABPL AS PER RULE 6(2) OF THE EXCISE RULES 2005, IT IS TO BE CONSTRUED AS PAYMENT MADE TO THE STATE GOVERNMENT AUTHORITY AND ACCORDINGLY FALLS UNDER THE EXCEPTION PROVIDED IN RULE RULE 6DD(B) OF THE IT RU LES. 4 ITA NO.762/KOL/2017 M/S BOLKUNDA PACHWAI (S) C.S.SH OP A.Y.2013-14 IT IS NOT IN DISPUTE THAT M/S ASANSOL BOTTLING & PA CKAGING CO. PVT. LTD. HAVE BEEN GRANTED LICENCE ACT AS A 'WHOLESALER FOR SUPPL Y OF COUNTRY LIQUOR TO THE RETAIL VENDOR AS PER THE REGULATIONS OF THE EXCISE DEPARTMENT, GOVERNMENT OF WEST BENGAL. AT THE COST OF REPETITION, WE WOULD LI KE TO STATE THAT THE SAID REGULATION MANDATED THE PAYMENTS TO BE MADE DIRECTL Y INTO THE BANK ACCOUNT OF THE SAID WHOLESALE LICENSEE BY THE RETAIL VENDOR (I .E. ASSESSEE .HEREIN) FOR STRICT AND EFFECTIVE REGULATION OF THE COUNTRY LIQUOR AND FOR PREVENTION OF SPURIOUS STOCKS AND BLACK MARKETING TRANSACTIONS FROM THE SA ME. HENCE IT COULD BE RELY CONCLUDED THAT THE SAID WHOLESALE LICENSEE HAD ACTE D 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 STATE GOVERNMENT. FOR THE SAKE O F CONVENIENCE, THE RELEVANT RULE IS REPRODUCED HEREUNDER:- RULE RULE 6DD(K)-WHERE THE PAYMENT IS MADE BY ANY P ERSON TO HIS AGENT WHO IS REQUIRED TO MAKE PAYMENT IN CASH FOR GOODS OR SERVI CES ON BEHALF OF SUCH PERSON. THE PAYMENT MADE BY THE ASSESSEE RETAIL VENDOR TO THE PRINCIPAL, GOVERNMENT OF WEST BENGAL THROUGH ITS WHOLESALE AGENT. THE RELATI ONSHIP BETWEEN THE ASSESSEE (AUTHORIZED RETAILERE) AND GOVERNMENT OF WEST BENGA L (THE SUPPLIER) ACTING UNDER WEST BENGAL EXCISE RULES THROUGH ITS AUTHORIS ED WHOLESALER LICENSEE (AGENT), BOTH DE FACTO AND DEJURE, IS ONE OF PRINC IPAL AND AGENT . WE HOLD THAT THE ASSESSEE RETAIL VENDOR HAD MADE PAYMENT TO THE SAID AGENT (WHOLESALE LICENSEE) WOULD FALL UNDER THE EXCEPTION PROVIDED I N RULE RULE 6DD(K) OF THE RULES. THE LD. AUTHORISED REPRESENTATIVE HAD ADVANCED ANOT HER ARGUMENT THAT THE PAYMENT IS MADE BY THE ASSESSEE TO STATE BANK OF IN DIA AND ACCORDINGLY THE SAME WOULD FALL UNDER THE EXCEPTION PROVIDED IN RULE RUL E 6DD(A) OF THE RULES. WE FIND THAT THE ASSESSEE HAD MADE PAYMENTS ONLY TO TH E CUSTOMER OF STATE BANK INDIA AND NOT TO STATE BANK OF INDIA. HENCE THE AS SESSEES CASE DOES NOT FALL UNDER THE EXCEPTION PROVIDED IN RULE RULE 6DD (A) O F THE RULES. WE HOLD FROM THE AFORESAID FINDINGS THAT THE ASSESS EE'S CASE FALLS UNDER THE EXCEPTIONS PROVIDED IN RULE 6DD(B) AND RULE RULE 6D D(K) OF THE RULES. IN. VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES AND RESPE CTFULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HAVE NO HESI TATION IN DELETING THE DISALLOWANCE MADE UNDER SECTION 40A(3) OF THE ACT. ACCORDINGLY THE GROUND NO. 2 RAISED BY THE ASSESSEE FOR BOTH THE YEARS UNDER A PPEAL IS ALLOWED. I AM OF THE OPINION THAT THE ISSUE UNDER CONSIDERA TION IS COVERED BY THE DECISION OF JURISDICTIONAL TRIBUNAL. THE FACTS OF THE IMPUGN ED CASE IS SAME IN THIS YEAR ALSO. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF JURISDICTIONAL ITAT IN ASSESSEE'S OWN CASE THE APPEAL OF THE ASSESSEE IS H EREBY ALLOWED. THE DISALLOWANCE MADE BY THE A.O UNDER SECTION 40A(3) O F RS, 87,77,162/- IS HEREBY DELETED. 5 ITA NO.762/KOL/2017 M/S BOLKUNDA PACHWAI (S) C.S.SH OP A.Y.2013-14 5. IN VIEW OF THE ABOVE WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. O RDER PRONOUNCED IN THE OPEN COURT ON 27.06.2018. SD/- SD/- [P.M.JAGTAP] [ S.S.VISWANETHRA RAVI ] ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED : 27.06.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.M/S BOLKUNDA PACHWAI (S) C.S.SHOP, VILL-BOLKUNDA, P.O.SAMDI, DIST. BURDWAN- 713354. 2. I.T.O., WARD-1(2), ASANSOL. 3. C.I.T.(A)-ASANSOL 4. C.I.T.-ASAN SOL 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHES