Razi Ahmed, Kolkata V. ITO, Ward - 32(4), Kolkata , Kolkata

ITA 876/KOL/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8457 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 03-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHESHYAM
• Assessee Lawyers: PREM NARAYN KHANDWAL
• Keywords: Question of law
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH SMC KOLKATA BEFORE SHRI S.S, GODARA, JUDICIAL MEMBER ITA NO.876-877/KOL/2018 ASSESSMENT YEARS:2013-14 & 2014-15 RAZI AHMED 153 PARK STREET, KOLKATA-17 [ PAN NO.ADCPA 3713 ] / V/S . INCOME TAX OFFICER WARD-32(4), 10, MIDDLETON ROW, 2 ND FLOOR,KOLKATA-71 /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI PREM NARAYN KHANDWAL, CA /BY RESPONDENT SHRI RADHESHYAM, CIT-DR /DATE OF HEARING 31-12-2018 /DATE OF PRONOUNCEMENT 31-12-2018 /O R D E R THESE TWO ASSESSEES APPEALS FOR ASSESSMENT YEARS 2013-14 & 2014-15 ARISE FROM THE COMMISSIONER OF INCOME-TAX (APPEALS)-9, KO LKATAS SEPARATE ORDERS; BOTH DATED 08.02.2018 PASSED IN CASE NO.341/CIT(A)-9/WD -32(4)/2015-16/KOL & 128/CIT(A)-9/WD-32(4)/2017-18/KOL AFFIRMING ASSESSI NG OFFICERS IDENTICAL ACTION INVOKING U/S 40A(3) DISALLOWANCE(S) / ADDING CASH PAYMENTS AMOUNTING TO 6,43,530/- AND 2,81,100/- AS WELL AS BACK INTEREST OF 3,546/- IN FORMER ASSESSMENT YEAR; RESPECTIVELY INVOLVING PROCEEDINGS U/S. 143(3 ) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE(S) PERUSED. 2. I NOTICE AT THE OUTSET THAT ASSESSEES FORMER SU BSTANTIVE IDENTICAL GROUND IN BOTH THESE APPEALS CHALLENGES CORRECTNESS OF LOWER AUTHO RITIES ACTION INVOKING SEC.40A(3) DISALLOWANCE (SUPRA) IN RESPECT OF ITS CASH PAYMENT S UTILIZED IN BUSINESS PURCHASES. THERE IS NO DISPUTE ABOUT THIS ASSESSEE TO HAVE ENG AGED IN SALE OF PLASTIC & CHAPPALS. ITA NO. NO.876-877/KOL/2018 AYS 13-14 & 14 -15 RAZI AAHMED VS. ITO WD. 32(4), KOL. PAGE 2 THERE IS FURTHER NO QUARREL ABOUT THE ASSESSEE HAVI NG MADE THE IMPUGNED CASH PAYMENTS OR GENUINENESS THEREOF. THE SOLE ISSUE BEF ORE ME IS THAT THE SAID PAYMENTS ATTRACTS SEC.40A(3) OR NOT. THE REVENUES VEHEMENT CONTENTION BEFORE ME IS THAT THE TAXPAYER HAD MADE PAYMENTS BOTH IN CASH AS WELL AS IN CHEQUE AND ONLY THE FORMER COMPONENT HAS BEEN DISALLOWED IN BOTH LOWER APPELLA TE PROCEEDINGS. IT FAILS TO DISPUTE THE BASIC FACT THAT THE ASSESSEE HAS IN FACT PURCHA SED RUBBER FROM UNORGANIZED RURAL MARKET IN CASH ONLY WHOSE GENUINENESS HAS NOT BEEN CALLED INTO QUESTION IN EITHER OF THE LOWER PROCEEDINGS. HON'BLE GUJARAT HIGH COURTS JUDGMENT IN ANUPAL TELLE SERVICES VS. ITO (2014) 366 ITR 122 (GUJ) HOLDS THA T THE SPECIFIC INSTANCES PRESCRIBED IN RULE 6DD OF THE IT RULES, 1962 ARE NOT TO BE REA D IN A RESTRICTIVE SENSE. HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS. CRESCENT EXPOR T SYNDICATE IN ITA NO.202 OF 2008 DECIDED ON 30.07.2008 ALSO CONCLUDES THAT SEC. 40A( 3) IS NOT ATTRACTED WHEN GENUINENESS OF THE PAYMENT IN ISSUE IS NOT CALLED I NTO QUESTION AS FOLLOWS:- THE LEARNED COUNSEL APPEARING FOR THE APPELLANT ARG UED THAT THE ASSESSEE IS 100% EXPORT ORIENTED FIRM, EXPORTING LEATHER GOODS VIZ. WALLETS AND DIFFERENT TYPES OF BAGS. THE TOTAL EXPORT TURNOVER DURING THE YEAR (FOB VALU E) RS.19,51,73,720/- AND PURCHASES SHOWN AT RS.11,65,97,523/-. OUT OF THE SA ID PURCHASE, THE PURCHASE FROM IS PARTIES AMOUNTING TO RS.83,44,822/- AND THE SELLER COULD NOT BE PRODUCED IN ASSESSMENT, HENCE THE A.O. DISALLOWED THE ENTIRE PU RCHASE AND ADDED RS.83,44,822/-. IN APPEAL, BEFORE THE ID. CIT(A)-XIX, KOLKATA THE A PPELLANT SUBMITTED THAT IT MAINTAINS STOCK BOOK INVENTORISED THE PURCHASE OF L EATHER, LEATHER ISSUED FOR CUTTING, AND ISSUED TO FABRICATOR FINALLY FOR FINISHING THE GOODS AS PER EXPORT ORDER. THE ID. C!T(A) DIRECTED THE A.O TO EXAMINE THOSE BOOKS AND TO SUBMIT THE REMAND REPORT. IN THE REMAND REPORT THE A.O. HAS ADMITTED 'ON VERIFIC ATION OF THE PURCHASE DETAILS, IT IS SEEN THAT THE PURCHASES AMOUNTING TO RS.83,44,822/- MADE FROM DIFFERENT PARTIES ARE ENTERED IN THE STOCK REGISTER AND PUT TO THE VARIOU S STAGES OF MANUFACTURING PROCESS. THE ASSESSEE ALSO PRODUCED BILLS IN RESPECT OF ALL PURCHASE MADE FROM THESE IS PARTIES AND FINALLY THE ID. CIT(A) HAS HELD 'AS REGARDS THE PURCHASE, IT IS SEEN THAT THESE WERE RECORDED IN THE STOCK REGISTER, THEIR CONSUMPTION I S ALSO RECORDED THEREIN, UP TO THE STAGE OF FINAL PRODUCTION. ALL THESE RECORDS ARE AU DITED. THEY ARE PRODUCED BEFORE THE ASSESSING OFFICER FOR EXAMINATION WHO HAD NOT BEEN ABLE TO POINT OUT ANY DEFECT IN IT. UNDER THE CIRCUMSTANCES THE PURCHASES ARE CONSIDERE D TO BE GENUINE'. SO THE PURCHASES HAVE BEEN HELD TO BE GENUINE. IT ALSO APP EARS THAT THE PURCHASES HAVE BEEN HELD TO BE GENUINE BY THE LEARNED CIT (APPEAL) BUT THE LEARNED CIT(APPEAL) HAS INVOKED SECTION 40A(3) FOR PAYMENT EXCEEDING RS.20, 000/- SINCE IT IS NOT MADE BY CROSSED CHEQUE OR BANK DRAFT BUT BY HEARER CHEQUES AND HAS COMPUTED THE PAYMENTS FALLING UNDER PROVISIONS TO SECTION 40A(3) FOR RS.7 8,45,580/- 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 PROCU RED AND IT WOULD HAVE HAMPERED THE SUPPLY OF GOODS WITHIN THE STIPULATED TIME. THE REFORE, THE GENUINENESS OF THE PURCHASE HAS BEEN ACCEPTED BY THE ID. CIT (APPEAL) WHICH HAS ALSO NOT BEEN DISPUTED BY THE DEPARTMENT AS IT APPEARS FROM THE ORDER SO P ASSED BY THE LEARNED TRIBUNAL. IT ITA NO. NO.876-877/KOL/2018 AYS 13-14 & 14 -15 RAZI AAHMED VS. ITO WD. 32(4), KOL. PAGE 3 FURTHER APPEARS FROM THE ASSESSMENT ORDER THAT NEIT HER THE ASSESSING OFFICER NOR THE CIT (APPEAL) HAS DISBELIEVED THE GENUINENESS OF THE TRANSACTION. THERE WAS NO DISPUTE THAT THE PURCHASES WERE GENUINE. ACCORDINGLY, IN OUR OPINION, THE LEARNED TRIBUNAL H AS CORRECTLY CAME TO THE CONCLUSION BY DELETING THE ADDITION OF RS.15,69,1L6 /- UNDER SECTION 40A(3) OF THE ACT. ON THE OTHER GROUND AS IT APPEARS THAT THE CIT (APP EAL) HAS BEEN DIRECTED TO RECONSIDER THE MATTER. IN VIEW OF THAT WE DO NOT TH INK THAT ANY SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS MATTER. HENCE THE APPEAL BE ING ITA NO. 202 OF 2008 IS DISMISSED. I ADOPT THE ABOVE DETAILED REASONING MUTATIS MUTAND IS TO REJECT REVENUES ARGUMENTS IN BOTH ASSESSMENT YEARS SUPPORT THE LOWER AUTHORIT IES ACTION INVOKING THE IMPUGNED DISALLOWANCE(S). 3. THE ASSESSEES FORMER SUBSTANTIVE GROUND IN ITS APPEAL ITA NO.876/KOL/2018 AS WELL AS SOLE SUBSTANTIVE GRIEVANCE IN ITA NO.877 /KOL/2018 IS ACCEPTED. 4. NO. ARGUMENT HAS BEEN RAISED BEFORE ME REGARDING ASSESSEES BANK INTEREST GROUND (SUPRA) IN FORMER ASSESSMENT YEAR. ASSESSEE S FORMER APPEAL ITA NO.877/KOL/2018 IS PARTLY ALLOWED IN ABOVE TERMS AN D LATTER APPEAL ITA NO.877/KOL/2018 IS ALLOWED. ORDERED ACCORDINGLY. ORDER PRONOUNCED IN THE COURT OF THE HEARING ON 31 ST DAY OF MONDAY , DECEMBER, 2018 SD/- (S.S. GODARA) JUDICIAL MEMBE R KOLKATA, *DKP/SR.PS ' - 31/31/2018 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-RAZI AHMED, 153, PARK STREET, KOLKATA-017 2. /REVENUE-ITO WARD-32(4)/ 10, MIDDLETON ROW, 2 ND FLOOR, KOLKATA-71 3. % ' / CONCERNED CIT 4. ' - / CIT (A) 5. ( ++% , % / DR, ITAT, KOLKATA 6. - / GUARD FILE. BY ORDER/ , /TRUE COPY/ / %,