Dipak Kumar Dey, Hooghly V. CIT, KOLKATA-9, Kolkata

ITA 768/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1555 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 29-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOULEN HANGSHING
• Assessee Lawyers: SOMNATH GHOSH ADOVATE
• Section: 40A(3); 143(3); 133(6); 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TR IBUNAL KOLKATA C BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER] I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010 -11 DIPAK KUMAR DEY...... APPELLANT C/O.S.N. GHOSH & ASSOCIATES, ADVOCATES SEBEN BORTHERS LODGE P.O. BUROSHIBTALA P.S. CHINSURAH DIST. HOOGHLY PIN- 712 105 [PAN : ACRPD 8980 B] COMMISSIONER OF INCOME TAX, KOLKATA-9, KOLKATA ..RESPONDENT AAYAKAR BHAWAN DAKSHIN 2, GARIAHAT ROAD (SOUTH) KOLKATA 700 068 APPEARANCES BY: SHRI SOMNATH GHOSH, ADOVATE, APPEARED ON BEHALF OF THE ASSESSEE. SHRI GOULEN HANGSHING, CIT, DR, APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : AUGUST 10, 2017 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 08, 2017 O R D E R PER J. SUDHAKAR REDDY :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. PR. COMMISSIONER OF INCOME TAX-9, KOLKAT A (HEREINAFTER THE LD. CIT), PASSED U/S 263 OF THE INCOME TAX AC T, 1961 (THE ACT), DT. 30/03/2015, FOR THE ASSESSMENT YEAR 201 0-11, ON THE FOLLOWING GROUNDS:- 2 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY 1. FOR THAT NONE OF THE CONDITIONS PRECEDENT FOR T HE EXEMPTION OF JURISDICTION UNDER SECTION 263 (1) OF THE INCOME TAX ACT, 1961 EXISTED AND/OR HAVE BEEN COMPLIED WITH AND/OR FULFILLED ON THE PART OF THE L D. COMMISSIONER OF INCOME TAX, KOLKATA-9 IN THE INSTAN T CASE AND THE ILLEGITIMATE ORDER THUS PASSED IN PURSUANCE TO THE IMPUGNED NOTICE DATED 18022015 ISSUED UNDER SECTION 263 OF THE INCOME TAX ACT, 196 1 SOLELY AND EXCLUSIVELY BASING ON THE INFORMATION PROVIDED BY THE AUDIT PARTY IS AB INITIO VOID, ULTR A VIRES AND EX-FACIE NULL IN LAW. 2. FOR THAT THE IMPUGNED ACTION OF THE LD. COMMISSIONER OF INCOME TAX, KOLKATA-NINE, KOLKATA I N ALLEGING NON-APPLICATION OF MIND ON THE PART OF THE LD. INCOME TAX OFFICER, WARD 3, HALDIA FOR MAKING INADEQUATE ENQUIRIES IN RESPECT OF VIOLATION OF SEC TION 40 A (3) OF THE ACT IS BASED ON EXTRANEOUS PARAMETE RS NOT AMENABLE TO REASON WHICH IS COMPLETELY UNFOUNDE D, UNJUSTIFIED AND UNTENABLE IN LAW. 3. FOR THAT ON A TRUE AND PROPER INTERPRETATION OF THE SCOPE AND AMBIT OF THE PROVISIONS OF SECTION 26 3 (1) OF THE INCOME TAX ACT, 1961, THE LD. COMMISSIONER O F INCOME TAX, KOLKATA 9, KOLKATA ACTED UNLAWFULLY I N DIRECTING THE LD. INCOME TAX OFFICER, WARD 3, HALDI A FOR INVOKING THE PROVISIONS OF SECTION 40 A (3) OF THE ACT WITHOUT SATISFYING THE CONDITIONS LAID DOWN THEREUN DER AND THE ADVERSE FINDING REACHED ON THAT BEHALF IS W HOLLY ILLEGAL, ILLEGITIMATE AND INFIRM IN LAW. 3 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY 2. THE BRIEF FACTS OF THE CASE: THE ASSESSEE, THE PROPRIETOR OF M/S HALDIA FOREIGN LIQUOR OFF SHOP IS ASSESSED TO INCOME TAX WITH THE ITO, WARD 27 (3), HALDIA (EARLIER WARD-3, HALDIA) UNDER THE PAN: ACRPD 8980 B. THIS RETURN FOR THE A.Y.2010-11 DECLARING THEREIN A TOTA L INCOME OF RS. 5,49,500/-WAS FILED BY THE ASSESSEE ON 04-10-2010 I N ITR-4. THE RETURN WAS ACCOMPANIED BY A TAX AUDIT REPORT DATED 24-09-2010 IN FORM NO. 3CD. THE RETURN WAS PROCESSED UNDER SECTIO N 143 (1) ON 15-06-2011. THE ASSESSEES CASE WAS SELECTED MANUAL LY FOR SCRUTINY WITH THE PRIOR APPROVAL OF THE THEN ADDITI ONAL CIT, HALDIA RANGE (NOW RANGE-27). STATUTORY NOTICES WERE DULY I SSUED TO AND SERVED ON THE ASSESSEE BY THE A.O. CLAIMED THE SCRU TINY ASSESSMENT ORDER ON 16-11-2012 UNDER SECTION 143 (3) ON A TOTA L INCOME OF RS. 584,750/-, AS A RESULT OF WHICH AN ADDITIONAL DEMAN D OF RS. 1,17,910/-WAS RAISED AGAINST THE ASSESSEE WHICH WAS INCLUSIVE OF EDUCATION CESS AND INTEREST LEVIED U/S 234B, 234C & 234D. IN THE ASSESSMENT ORDER THE A.O. MADE AN ADDITION OF RS. 5 427/- ON ACCOUNT OF UNEXPLAINED CLOSING BALANCE APPEARING IN THE LEDGER ACCOUNT OF M/S MOHAN MEAKIN LTD. HE ALSO DISALLOWED A SUM OF RS. 4 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY 29,822/- OUT OF VARIOUS EXPENSES DEVOTED TO THE P&L A/C FOR WANT OF VERIFIABLE EVIDENCES. THE A.O. INITIATED PENALTY PROCEEDINGS UNDER SECTION 271 (I)(C) FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME BY THE ASSESSEE. SUBSEQUENT PERUSAL OF THE AS SESSMENT RECORD REVEALED THAT DURING THE RELEVANT YEAR THE A SSESSEE MADE MULTIPLE CASH PAYMENTS OF RS. 20,000/- EACH ON DIFF ERENT DATES TO M/S JOHAR & CO. (WINE SALES) PVT. LTD. 3. AFTER LISTING OUT THE PAYMENTS ABOVE IS 20,000/- IN CASH MADE DURING THE YEAR, A TABULAR FORM, AGGREGATING TO RS. 42,40,000/-, AND AS THOSE PAYMENTS WHICH CONTRAVENED TO SECTION 40A (3) OF THE ACT, THE LD. CIT ISSUED A SHOW CAUSE NOTICE TO THE ASSES SEE AS TO WHY THE PROVISIONS OF SECTION 263 OF THE ACT SHOULD NOT BE INVOKED. THE ASSESSEE SUBMITTED A DETAILED REPLY. THE LD. COMMIS SIONER CONSIDERED THE REPLY AND HELD THAT: A) THE ASSESSEE HAS NOT MADE PAYMENTS TO M/S JOHAR & CO. (WINE SALES) PVT. LTD. AND IN SOME MONTHS AT TIMES T HERE WAS A GAP OF 2 TO 3 DAYS BETWEEN CONSECUTIVE PAYMENTS AND HEN CE THE ARGUMENT OF THE ASSESSEE THAT HE NEVER KEEPS ACCUMU LATED CASH EITHER IN THE SHOP OR IN THE RESIDENCE FOR THE FEAR OF THE ROBBERY, IS INCORRECT. 5 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY B) THE ASSESSEE DID NOT MAKE A SINGLE CASH PAYMENT TO THE LICENSE AGENT DURING THE MONTHS OF JUNE AND DECEMBE R, 2009 AND THE MONTHS OF JANUARY AND MARCH, 2010. IT IS HIGHLY PROBABLE THAT THE ASSESSEE MIGHT HAVE MADE CHEQUE PAYMENTS TO THE WHOLESALER. THUS THE SUBMISSIONS OF THE ASSESSEE ON THE NATURE OF ITS BUSINESS COMPLEX CASH SALES, BUSINESS HOURS DOES NOT PERMIT DEPOSIT OF CASH IN BANK ETC. ARE FACTUALLY INCORRECT. C) NO EVIDENCE IS BROUGHT ON RECORD BY THE ASSESSEE TO PROVE THAT THE M/S JOHAR & CO. (WINE SALES) PVT. LTD. REFU SED TO ACCEPT THE PAYMENTS OF THE ASSESSEE IN CHEQUES. D) AS THE LICENSE AGENT IS A VERY BIG ESTABLISHMENT , IT CANNOT BE BELIEVED THAT IT DOES NOT PREFER PAYMENTS THROUGH C HEQUES. THE ASSESSEE HAS SHOWN THREE OR FOUR CASH PAYMENTS EACH , AMOUNTING TO RS. 20,000/-TO THE LICENSE AGENT THROUGH DIFFERE NT MONEY RECEIPTS. THUS, SPLITTING THE CASH PAYMENTS WAS MAD E WITH AN INTENTION OF CIRCUMVENTING THE PROVISION OF 40 A (3 ) OF THE ACT. THUS, IT PROVES THAT THERE WERE NO EXCEPTIONAL CIRC UMSTANCES AS STIPULATED IN RULE 8DD OF THE INCOME TAX RULES, 196 2. E) HALDIA, WHERE THE ASSESSEES BUSINESS PREMISE IS LOCATED, IS NOT A REMOTE PLACE HAVING NO ACCESS TO BANKING FACI LITIES. 6 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY 4. THE LD. CIT, CONCLUDED THAT THE ASSESSEE HAS VI OLATED THE PROVISIONS OF SECTION 40 A (3) OF THE ACT AND THAT THE AO SHOULD HAVE DISALLOWED THE EXPENDITURE UNDER THE SECTION. OMISSION TO DO SO BY THE ASSESSING OFFICER WAS HELD AS, RESULTING IN THE ASSESSMENT ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF THE REVENUE. HENCE, HE EXERCISED HIS POWERS U/S 263 OF THE ACT, AND REVISED THE ASSESSMENT ORDER PASSED U/S 143(3) AND GAVE SPECIFIC DIRECTIONS TO THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE IS AN APPEAL BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD ISSUED NOTICES UNDER SECTION 133 (6) TO THE SUPPLIES OF FU NDS AND HAS VERIFIED THAT THE PURCHASES, AND THE PAYMENTS MADE BY THE ASSESSEE TO M/S JOHAR & CO. (WINE SALES) PVT. LTD., WHICH IS A TERRITORIAL LICENSED AGENT OF GOVERNMENT OF WEST BE NGAL. HE FILED A PAPER BOOK RUNNING TO 124 PAGES. HE REFERRED TO PAG ES 34 TO 39, WHICH IS, AN AUDIT QUERY AND SUBMITTED THAT THE SHO W CAUSE NOTICE ISSUED BY THE LD. PR. CIT, UNDER SECTION 263 OF THE ACT WAS BASED ON THE OPINION/DIRECTION OF AN AUDIT PARTY AND NOT ON INDEPENDENT APPLICATION OF MIND BY THE LD. PR. CIT. HE ARGUED T HAT THE STATUE REQUIRES THAT THE LD. PR. CIT, APPLIES HIS MIND IND EPENDENTLY TO THE 7 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY INFORMATION RECEIVED FROM THE AUDIT PARTY AND THERE AFTER INDEPENDENTLY CONCLUDE AS TO WHETHER THERE WAS AN E RROR WHICH CAUSED PREJUDICE TO THE INTEREST OF THE REVENUE. FOR THE PROPOSITION THAT THE LD. PR. CIT HAS TO IND EPENDENTLY APPLY HIS MIND, HE RELIED ON THE FOLLOWING CASE LAW S:- JASWINDER SINGH VS. COMMISSIONER OF INCOME TAX (201 2) 150 TTJ (CHD) (UO) 33 JEEWANLAL (1929) LTD. VS. ACIT, 1977 (CAL.) ARABINDA ROY VS. CIT, ITA NO. 1367/KOL/2013, DT. 24 -08-2016 6. HE FURTHER SUBMITTED THAT THE PAYMENTS WERE MADE TO THE TERRITORIAL LICENSED AGENT OF THE WEST BENGAL EXCIS E DEPARTMENT AND THE GENUINENESS OF THE PAYMENTS HAS NEVER BEEN DOUBTED EITHER BY THE ASSESSING OFFICER OR BY THE LD. PR. C IT. HE SUBMITTED THAT BOTH THE PURCHASE AND SALES HAVE BEEN ACCEPTED AS TRUE AND CORRECT BY BOTH THE AUTHORITIES AFTER VERIFICATION. HE RELIED ON THE DECISION OF THE HONOURABLE CALCUTTA HIGH COURT IN T HE CASE OF COMMISSIONER OF INCOME TAX VERSUS CRESCENT EXPORT S YNDICATE, ITA NO. 202 OF 2008, ORDER DT. 30 TH JULY, 2008, FOR THE PROPOSITION THAT, WHEN THE GENUINENESS OF THE PURCHASE WAS NOT IN DIS PUTE, DISALLOWANCE UNDER SECTION 40 A (3) OF THE ACT, CAN NOT BE MADE. HE SUBMITTED THAT THE ASSESSING OFFICER, ON VERIFICATI ON OF THE 8 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY PURCHASES, WAS SATISFIED WITH THE GENUINENESS OF TH E SAME AND HENCE DID NOT MAKE ANY DISALLOWANCE AND IN VIEW OF THE DECISION OF THE HONOURABLE CALCUTTA HIGH COURT IN THE CASE OF CRESCENT EXPORT SYNDICATE (SUPRA), THE VIEW TAKEN IS A PLAUSIBLE VIEW TAKEN BY THE ASSESSING OFFICER AND HENCE THE REVISION BY THE LD. PR. CIT, IS BAD IN LAW. HE RELIED ON THE FOLLOWING CASE LAW:- 1) ANUPAM TELE SERVICE VS. ITO (2014) 366 ITR 122 ( GUJ.) 2) M/S. THE MALABAR INDUSTRIAL CO. VS COMMISSIONER OF INCOME- TAX 243 ITR 83 (SC). 3) CHROMO BUSINESS LTD. VS. DCIT (2004) 82 TTJ (CAL ) 540 4) CIT VS. GREENWORLD CORPORATION (2009) 314 ITR 81 (SC) 5) CIT VS. J.L. MORRISON (2014) 366 ITR 593 (CAL) HE FURTHER RELIED ON THE ORDER OF THE ITAT KOLKATA S DECISION IN THE CASE OF M/S. AMRAI PACHWAI & C.S SHOP VS. D.C.I.T CIRCLE-1 DURGAPUR ITA NO.1251/KOL/2011 A.Y 2008-09, ORDER DT . 15 -01-2014, FOR THE PROPOSITION THAT WHEN PAYMENT IN CASH IS MA DE TO GOVERNMENT LICENSED AGENT WHO HAS BEEN SELECTED UND ER THE RULES FRAMED BY THE GOVERNMENT, FALL WITHIN THE KEN OF RU LE PROVIDED BY THE RULE 6DD OF THE INCOME TAX RULES, 1962, AND HEN CE NO DISALLOWANCE CAN BE MADE. HE PRAYED THAT THE SPECIF IC DIRECTION 9 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY GIVEN BY THE LD. PR. CIT, ARE NOT IN CONSONANCE WIT H THE CASE LAW CITED. HE PRAYED FOR RELIEF. 7. THE LD. DR, ON THE OTHER HAND, OPPOSED THE CONTE NTIONS OF THE ASSESSEE AND SUBMITTED THAT THE INFORMATION RECEIVE D FROM THE AUDIT PARTY WAS MERELY AN INPUT TO THE LD. PR. CIT AND IT IS ONLY ON APPLICATION OF MIND THAT THIS SHOWCAUSE NOTICE UNDE R SECTION 263 OF THE ACT WAS GIVEN TO THE ASSESSEE. HE TOOK THE A SSESSEE THROUGH THE ORDER OF THE LD. PR. CIT PASSED UNDER SECTION 2 63 OF THE ACT AND SUBMITTED THAT A PLAIN READING OF THE SAME DEMONSTR ATES NOT ONLY APPLICATION OF MIND BUT CAREFUL CONSIDERATION OF EA CH AND EVERY SUBMISSION OF THE ASSESSEE. HE READ THE ORDER OF TH E LD. PR. CIT AND SUBMITTED THAT THE SUBMISSION OF THE ASSESSEE WAS F OUND TO BE FACTUALLY INCORRECT. HE RELIED ON THIS ORDER AND SU BMITTED THAT THE ASSESSEE HAS FAILED TO DEMONSTRATE COMMERCIAL EXPED IENCY, EXCEPTIONAL CIRCUMSTANCES UNDER RULE 6DD OF THE INC OME TAX RULES, 1962. HE FURTHER SUBMITTED THAT THE ASSESSEE , BY MAKING DIFFERENT PAYMENTS OF RS. 20,000/- EACH ON THE SAME DATE, TRIED TO CIRCUMVENT THE PROVISIONS OF THE ACT. HE SUBMITTED THAT THE ORDER OF THE LD. PR. CIT BE UPHELD. 10 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY 8. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERAT ION OF THE FACTS OF THE CASE, PERUSING THE PAPERS ON RECORD, O RDERS OF THE AUTHORITIES BELOW AND THE CASE LAWS CITED, WE HOLD AS FOLLOWS:- 8.1. THE ISSUE BEFORE US IS WHETHER THE ASSESSING O FFICER HAS ERRED IN NOT INVOKING THE PROVISIONS OF SECTION 40 A (3) OF THE ACT IN THIS CASE. THERE IS NO DISPUTE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS ISSUED NOTIC ES UNDER SECTION 133 (6) AND CALLED FOR THE INFORMATION FROM M/S JOH AR & CO. (WINE SALES) PVT. LTD., GOPALPUR, ASANSOL, WHICH IS THE TE RRITORIAL LICENSED AGENT OF GOVERNMENT OF WEST BENGAL. IN THE TAX AUDI T REPORT GIVEN IN FORM NO. 3CD, COLUMN 17H RELATING TO EXPENDITURE COVERED UNDER SECTION 40 A (3) IS SHOWN AS NIL. THE GENUI NENESS OF THE PURCHASES ARE NOT DOUBTED. UNDER THESE CIRCUMSTANCE S, WE HAVE TO EXAMINE AS TO WHETHER THE SPECIFIC FINDING OF THE L D. PR. CIT AT PAGE 19 OF HIS ORDER IS SUSTAINABLE. THE SPECIFIC FINDINGS READ AS FOLLOWS: THE AGGREGATE OF CASH PAYMENTS AMOUNTING TO RS. 42,40,000/-, WHICH COMPRISE DAILY CASH PAYMENTS EXCEEDING RS. 20,000/-IS CLEARLY HIT BY THE MISCHIE F OF THE PROVISIONS OF S.40 A (3). THE A.O. SHOULD HAVE DISA LLOWED THIS EXPENDITURE UNDER THE SAID SECTION. OMISSION T O MAKE SUCH DISALLOWANCE HAS RENDERED THE ASSESSMENT 11 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY ORDER ABSOLUTELY ERRONEOUS INSOFAR AS IT IS PREJUDI CIAL TO THE INTEREST OF THE REVENUE.(EMPHASIS OURS) 8.2. THE ABOVE SPECIFIC FINDINGS AND DIRECTION, THE ASSESSING OFFICER IN THE SET ASIDE PROCEEDINGS WOULD NOT HAVE ANY CHOICE BUT TO DISALLOW THE AMOUNT BY INVOKING SECTION 40A(3) O F THE ACT, THOUGHT THE LD. PR. CIT, IN THE LAST PARA OF HIS OR DER DIRECTED THE ASSESSING OFFICER TO GIVE THE ASSESSEE AN OPPORTUNI TY AND RE- ADJUDICATE THE MATTER. 9. NOW, WE EXAMINE EACH OF THE ARGUMENTS OF THE ASS ESSEE. ON THE ISSUE AS TO WHETHER THE LD. PR. CIT HAS APP LIED HIS MIND TO THE INFORMATION FURNISHED BY THE AUDIT PART Y, WE ARE OF THE CONSIDERED OPINION THAT THERE IS APPLICATION OF MIN D. INFORMATION RECEIVED FROM THE AUDIT PARTY IS INFORMATION WHICH CAN BE ACTED UPON. THE INFORMATION IS FACTUAL AND WE FIND NO FAU LT IN THE LD. PR. CIT ISSUING A SHOW CAUSE NOTICE BASED ON SUCH INFOR MATION AND THEREAFTER ADJUDICATING THE ISSUE. HENCE THIS ARGUM ENT OF THE ASSESSEE IS DISMISSED. 9.1. COMING TO THE CASE LAW RELIED UPON BY THE LEAR NED COUNSEL FOR THE ASSESSEE, IN THE CASE OF JASWINDER SINGH (SUPRA) , THE TRIBUNAL HAS CONCLUDED THAT THERE WAS NO APPLICATION OF MIND BY THE LD. PR. CIT. WE HAVE HELD OTHERWISE. 12 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY IN THE CASE OF JEEWANLAL (1929) LTD. VS. ACIT (SUPRA) THE HONBLE CALCUTTA HIGH COURT WAS DEALING WITH THE CA SE WHERE IN IT WAS HELD THAT THE ASSESSING OFFICERS ORDER MERGED WITH THE ORDER OF THE AAC AND AS SUCH THE NOTICE ISSUED FOR REVISION BY THE COMMISSIONER AT THE SUGGESTION OF THE AUDIT PARTY W AS NOT VALID. IN THIS CASE THERE IS NO SUCH SUGGESTION BY THE AUDIT PARTY, ONLY CERTAIN FACTUAL DETAILS WERE BROUGHT OUT BY THE AUDIT PARTY . 10. WE NOW EXAMINE THE SUBMISSIONS OF THE COUNSEL, THAT THE GENUINENESS OF THE PAYMENT HAS NOT BEEN DOUBTED BY THE ASSESSING OFFICER AND HENCE NO DISALLOWANCE WAS MADE UNDER SE CTION 40 A (3) OF THE ACT AND THAT THIS VIEW OF THE ASSESSING OFFI CER IN HIS ORDER U/S 143(3) OF THE ACT, IS A POSSIBLE VIEW AND CONSE QUENTLY NO REVISION U/S 263 OF THE ACT, CAN BE MADE. WE FIND THAT THE HONBLE CALCUTTA HIGH COURT IN TH E CASE OF CRESCENT EXPORT SYNDICATE (SUPRA), HAS HELD AS FOLLOWS:- .UNDER THE CIRCUMSTANCES THE PURCHASES ARE CONSID ERED TO BE GENUINE'. SO THE PURCHASES HAVE BEEN HELD TO BE GENUINE. IT ALSO APPEARS THAT THE PURCHASES HAVE BEEN HELD T O BE GENUINE BY THE LEARNED CIT (APPEAL) BUT THE LEAR NED CIT(APPEAL) HAS INVOKED SECTION 40A(3) FOR PAYMENT EXCEEDING RS.20,000/- SINCE IT IS NOT MADE BY CROSS ED CHEQUE OR BANK DRAFT BUT BY BEARER CHEQUES AND HAS 13 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY COMPUTED THE PAYMENTS FALLING UNDER PROVISIONS TO SECTION 40A(3) FOR RS.78,45,580/- AND DISALLOWED @ 20% THEREON RS.15,69,116/-. IT IS ALSO MADE CLEAR THAT WITHOUT THE PAYMENT BEING MADE BY BEARER CHEQUE THESE GOODS COULD NOT HAVE BEEN PROCURED AND IT WOULD HAVE HAMPERED THE SUPPLY OF GOODS WITHIN THE STIPULATED TIME. THEREFORE, THE GENUINENESS OF THE PURCHASE HAS BEEN ACCEPTED BY THE LD. CIT (APPEAL) WHICH HAS ALSO NOT BEEN DISPUTED BY THE DEPARTMENT AS IT APPEARS FROM THE O RDER SO PASSED BY THE LEARNED TRIBUNAL. IT FURTHER APPEA RS FROM THE ASSESSMENT ORDER THAT NEITHER THE ASSESSING OFF ICER NOR THE CIT (APPEAL) HAS DISBELIEVED THE GENUINENESS OF THE TRANSACTION. THERE WAS NO DISPUTE THAT THE PURCHASE S WERE GENUINE. ACCORDINGLY, IN OUR OPINION, THE LEARNED TRIBUNAL HAS CORRECTLY CAME TO THE CONCLUSION BY DELETING TH E ADDITION OF RS.15,69,116/- UNDER SECTION 40A(3) OF THE ACT. 11. THE DECISION OF THE JURISDICTIONAL HIGH COURT I S BINDING ON US. THE PROPOSITIONS OF LAW LAID DOWN IS THAT, WHEN THE GENUINENESS OF THE PURCHASES WERE NOT IN DISPUTE, THE ADDITION MAD E UNDER SECTION 40 A (3) OF THE ACT, CANNOT BE SUSTAINED. AS ALREAD Y THE GENUINENESS OF THE PURCHASES HAVE NOT BEEN DISPUTED BY THE ASSE SSING OFFICER OR THE LD. PR. CIT. IN FACT THEY HAVE BEEN VERIFIED WI TH THE SELLER AND ACCEPTED AS TRUE AND CORRECT. 14 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY APPLYING THE PROVISIONS OF LAW LAID DOWN IN THE JU DGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, WE HAVE THE NECESSARY HOLD THAT THE VIEW TAKEN BY THE ASSESSING OFFICER, NOT T O INVOKE THE PROVISIONS OF SECTION 40 A (3) OF THE ACT, AS HE FO UND THAT THE PURCHASES MADE WERE GENUINE ON VERIFICATION BY ISSU E OF NOTICES ISSUED U/S 133(6) OF THE ACT, IS A PLAUSIBLE VIEW A ND HENCE THE REVISION MADE BY THE LD. PR. CIT, U/S 263 OF THE AC T, IS BAD IN LAW. THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF SPECTRA SHARES AND SCRIPS PVT. LTD. V. CIT (AP) 354 ITR 35 HAD CONSIDERED A NUMBER OF JUDGEMENTS GIVEN BY VARIOUS COURTS AND CULLED OUT THE PRINCIPLES APPLICABLE TO EXERCISE JU RISDICTION BY THE LD. CIT U/S 263 OF THE ACT, AS FOLLOWS:- A) THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CO NDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUG HT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SEC.263 (1) OF THE ACT. B) EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORD ER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCO ME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN L AW AND IT HAS RESULTED IN LOSS OF REVENUE: OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE 15 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED A S AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. C) TO INVOKE SUO MOTO REVISIONAL POWERS TO REOPEN A CONCLUDED ASSESSMENT UNDER SEC.263, THE COMMISSIONER MUST GIV E REASONS; THAT A BARE REITERATION BY HIM THAT THE OR DER OF THE INCOME TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, WILL NOT SUFFICE; THA T THE REASONS MUST BE SUCH AS TO SHOW THAT THE AND MUST IRRESISTI BLY LEAD TO THE CONCLUSION THAT THE ORDER OF THE INCOME TAX OFF ICER WAS NOT ONLY ERRONEOUS BUT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THUS, WHILE THE INCOME TAX OFFICER IS NOT CALLED UPON TO WRITE AN ELABORATE JUDGMENT GIVING DETAILED REAS ONS IN RESPECT OF EACH AND EVERY DISALLOWANCE, DEDUCTION, ETC., IT IS INCUMBENT UPON THE COMMISSIONER NOT TO EXERCISE HIS SUO MOTO REVISIONAL POWERS UNLESS SUPPORTED BY ADEQUATE REAS ONS FOR DOING SO; THAT IF A QUERY IS RAISED DURING THE COUR SE OF THE SCRUTINY BY THE ASSESSING OFFICER, WHICH WAS ANSWER ED TO THE SATISFACTION OF THE ASSESSING OFFICER, BUT NEITHER THE QUERY NOR THE ANSWER WERE REFLECTED IN THE ASSESSMENT ORDER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER CALLED FOR INTERFERENCE AND REVIS ION. E) THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WIT H A VIEW TO START FISHING AND ROVING INQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED; THAT THE DEPARTMENT CANNOT B E PERMITTED TO BEGIN FRESH LITIGATION BECAUSE OF NEW VIEWS THEY ENTERTAIN ON FACTS OR NEW CIRCUMSTANCE; THAT IF THI S IS 16 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY PERMITTED, LITIGATION WOULD HAVE NO END EXCEPT WHEN LEGAL INGENUITY IS EXHAUSTED F) WHETHER THERE WAS APPLICATION OF MIND BEFORE ALL OWING THE EXPENDITURE IN QUESTION HAS TO BE SEEN; THAT IF THE RE WAS AN INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF G IVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SEC.263 ME RELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER; T HAT IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF A CTION WOULD BE OPEN; THAT AN ASSESSMENT ORDER MADE BY THE INCOME T AX OFFICER CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BE EN WRITTEN MORE ELABORATELY; THERE MUST BE SOME PRIMA FACIE MATERIA L ON RECORD TO SHOW THAT THE TAX WHICH WAS LAWFULLY EXIGIBLE HAS N OT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION, A LESSER TAX THAN WHAT W AS JUST, HAS BEEN IMPOSED. G) THE POWER OF THE COMMISSIONER UNDER SEC.263 (1) IS NOT COMMISSIONER IS ENTITLED TO EXAMINE ANY OTHER RECOR DS WHICH ARE AVAILABLE AT THE TIME OF EXAMINATION BY HIM AND TO TAKE INTO CONSIDERATION EVEN THOSE EVENTS WHICH AROSE SUBSEQU ENT TO THE ORDER OF ASSESSMENT. APPLYING THE PROPOSITIONS OF LAW LAID DOWN TO THE F ACTS OF THIS CASE, WE HAVE TO ACCEPT THE CONTENTIONS OF THE ASSE SSEE. 12. WE ALSO FIND THAT THE PAYMENTS ARE MADE FOR SUP PLIES ALLOTTED TO THE ASSESSEE BY THE TERRITORIAL LICENSED AGENT O F GOVERNMENT OF WEST BENGAL. THE SUBMISSION OF THE ASSESSEE THAT PA YMENTS MADE TO THIS LICENSED TERRITORIAL AGENT IN CASH, DO NOT ATTRACT THE PROVISIONS OF SECTION 40A(3) OF THE ACT, R.W.R. 6DD (B) AND RULE 17 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY 6DD(K) OF THE RULES, ARE SUPPORTED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. AMRAI PACHWAI & C.S SHOP VS. D.C.I.T CIRCLE-1 DURGAPUR, (SUPRA) , WHEREIN IT HAS BEEN HELD AS FOLLOWS:- 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT THE O UTSET A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE AO HAS RECOGNISED THE ASSESSEE'S BUSINESS IN TRADING O F COUNTRY SPIRIT AND COUNTRY LIQUOR. COPY OF FORM OF LICENCE ISSUED BY DURGAPUR MUNICIPAL CORPORATION AND COPY OF FORM III ISSUED BY DEPARTMENT OF EXCISE, GOVT. OF WB WERE AL SO FOUND AT PAGES 177 AND 179 OF THE ASSESSEE'S PAPER BOOK. IN ANY CASE THE VALIDITY OF LICENCE OF THE ASSESSEE TO TRADE IN COUNTRY SPIRIT AND COUNTRY LIQUOR IS NOT THE ISSUE BEFORE US. THE ISSUE IS WHETHER THE PAYMENTS MADE BY THE ASSES SEE FOR THE PURCHASE OF COUNTRY SPIRIT FROM THE TERRITORIAL LICENSEE BOTTLING PLANT, IFB AGRO INDUSTRIES LTD, CITY CENTR E, DURGAPUR, FALLS WITHIN THE EXEMPTION PROVIDED UNDER RULE 6DD(B) OF THE I T RULES 1962. ADMITTEDLY, THE AO HA S RECOGNISED THAT THE PROVISION OF RULE 6DD(B) OF THE IT RULES 1962 IS APPLICABLE IN CASE OF PAYMENTS MADE TO GOVE RNMENT DIRECTLY. THIS IS FOUND IN PAGE 2 OF THE ASSESSMENT ORDER. A PERUSAL OF THE KOLKATA GAZETTE TUESDAY DATED 20TH S EPT 2005 SHOWS THAT THE GOVERNMENT OF WEST BENGAL, DEPARTMENT OF EXCISE HAS ISSUED A NOTIFICATION, WHE REIN THE WAREHOUSE HAS BEEN IDENTIFIED TO MEAN THE WAREHOUSE FOR SUPPLY OF COUNTRY SPIRIT TO THE RETAIL VENDORS, EST ABLISHED AT CONVENIENT PLACES BY THE COMMISSIONER AT THE EXPENS E OF THE STATE GOVERNMENT, OR AT THE EXPENSE OF A PERSON TO 18 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY WHOM THE EXCLUSIVE PRIVILEGE OF SUPPLYING OR SELLIN G COUNTRY SPIRIT BY WHOLESALE HAS BEEN GRANTED U/S. 22 OF THE ACT OF A LICENSED WHOLESALE VENDOR OF COUNTRY SPIRIT. FURTHE R, IT HAS BEEN SPECIFICALLY IDENTIFIED THAT THE AUTHORISED REPRESENTATIVE OF THE WHOLESALE LICENSEE SHALL REAL IZE THE NECESSARY AMOUNT OF DUTY, COST PRICE AND BOTTLING C HARGE, IF THERE BE ANY, AT THE PRESCRIBED RATE AND SUCH OTHER IMPOSITION, AS MAY BE PRESCRIBED BY LAW, FROM THE R ETAIL VENDOR TO WHOM THE COUNTRY SPIRIT IS TO BE ISSUED F ROM THE CONCERNED WAREHOUSE. IT IS ALSO SPECIFICALLY MENTIO NED IN SECTION (2) OF THE SAID NOTIFICATION THAT NO RETAIL VENDOR OF COUNTRY SPIRIT SHALL DEPOSIT DUTY DIRECT INTO THE L OCAL TREASURY FOR ISSUE OF COUNTRY SPIRIT TO BE TAKEN BY HIM FROM THE WAREHOUSE CONCERNED, WHICH CLEARLY SHOWS THAT T HE WAREHOUSE IS FOR THE SUPPLY OF THE COUNTRY LIQUOR, SPECIFICALLY, THE WAREHOUSE IS UNDER THE DIRECT CON TROL AND CUSTODY OF THE STATE GOVT. THE STATE GOVERNMENT HAS CLOSED ITS DOORS IN SO FAR AS THE LOCAL TREASURY IS CONCER NED AND THE PAYMENT FOR THE PURCHASE OF COUNTRY SPIRIT OR COUNT RY LIQUOR HAS TO BE MADE TO THE WAREHOUSE, RUN BY THE GOVERNMENT. THIS SHOWS THAT ANY PAYMENT MADE TO THE WAREHOUSE WHICH IS UNDER THE DIRECT CONTROL OF THE STATE GOVERNMENT. IS A PAYMENT MADE DIRECTLY TO THE GOVERNMENT. ONCE, THIS IS ACCEPTED THEN THE PROVISI ONS OF RULE 6DD(B) OF THE I T RULE 1962 WHICH CLEARLY SPELLS OUT THAT THE PAYMENT MADE TO THE GOVERNMENT IN LEGA L TENDER UNDER THE RULES FRAMED BY THE GOVERNMENT, IS EXEMPTED FROM THE RIGOURS OF SECTION 40A(3) OF THE A CT. 19 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY HERE, IT IS NOTICED THAT THE PAYMENTS MADE BY THE ASSESSEE FOR PURCHASE OF COUNTRY SPIRIT AND COUNTRY LIQUOR IS TO THE GOVERNMENT AS PER THE NOTIFICATION ISSUED BY THE GOVERNMENT AND IS IN LEGAL TENDER SPECIFIED BY THE NOTIFICATION. IN THE CIRCUMSTANCES , WE ARE OF THE VIEW THAT THE PAYMENT MADE BY THE ASSESS EE FOR THE PURCHASE OF COUNTRY LIQUOR AND COUNTRY SPIR IT FROM THE TERRITORIAL LICENSED BOTTLING PLANT, IFB A GRO INDUSTRIES LTD, CITY CENTRE, DURGAPUR IS PROTECTED BY THE EXEMPTION IN TERMS OF RULE 6DD (B) OF THE I.T R ULES 1962. IN THE CIRCUMSTANCES, THE ADDITION AS MADE BY THE AO AND AS CONFIRMED BY THE LD. CIT (A) BY INVOK ING THE PROVISIONS OF SECTION 40 A (3) OF THE ACT AND 1961 STANDS DELETED. NO CONTRARY DECISION IS BROUGHT TO OUR NOTICE BY T HE LD. DR. APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THIS DECISION TO THE FACTS OF THE CASE, WE HAVE TO HOLD THAT THE CON CLUSION IS DRAWN BY THE LD. PR. CIT, DIRECTING THAT THE ASSESSING OF FICER TO MAKE A DISALLOWANCE UNDER SECTION 40 A (3) OF THE ACT, IS BAD IN LAW. THE PAYMENTS MADE IN CASH ARE PROTECTED BY THE EXEMPTIO N IN TERM OF RULE 6DD(B) OF THE INCOME TAX RULES, 1962, AS HELD IN THE ABOVE CASE. HENCE THE REVISION IS BAD IN LAW ON THIS GROU ND ALSO. 20 I.T.A. NO. 768/KOL/2015 ASSESSMENT YEAR: 2010-11 DIPAK KUMAR DEY 14. IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT T HE REVISIONARY ORDER PASSED UNDER SECTION 263 OF THE ACT BY THE LE ARNED PR. CIT, DT. 30/03/2015, IS BAD IN LAW. HENCE, WE CANCEL THE SAM E. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. KOLKATA, THE 8 TH DAY OF SEPTEMBER, 2017. SD/- SD/- [S.S. VISWANETHRA RAVI] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :08.09.2017 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. DIPAK KUMAR DEY C/O. S.N. GHOSH & ASSOCIATES, ADVOCATES SEBEN BORTHERS LODGE P.O. BUROSHIBTALA P.S. CHINSURAH DIST. HOOGHLE PIN- 712 105 2. COMMISSIONER OF INCOME TAX, KOLKATA-9, KOLKATA AAYAKAR BHAWAN DAKSHIN 2, GARIAHAT ROAD (SOUTH) KOLKATA 700 068 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT, KOLKATA BENCHES