M/s. Ashirbad Enterprise, Kolkata v. ITO, Ward - 49(4), Kolkata, Kolkata

ITA 142/KOL/2012 | 2008-2009
Pronouncement Date: 28-09-2016

Appeal Details

RSA Number 14223514 RSA 2012
Assessee PAN AAIFA3009R
Bench Kolkata
Appeal Number ITA 142/KOL/2012
Duration Of Justice 4 year(s) 8 month(s) 2 day(s)
Appellant M/s. Ashirbad Enterprise, Kolkata
Respondent ITO, Ward - 49(4), Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2016
Appeal Filed By Assessee
Bench Allotted A
Tribunal Order Date 28-09-2016
Date Of Final Hearing 19-09-2016
Next Hearing Date 19-09-2016
Assessment Year 2008-2009
Appeal Filed On 25-01-2012
Judgment Text
1 ITA NO. 142/KOL/2012 ASHIRBAD ENTERPRISE. AY 2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI P.M. JAGTAP AM & SHRI K. NARASIMHA C HARY JM] I.T.A NO. 142/KOL/2012 ASSESSMENT YEAR: 2008-09 M/S. ASHIRBAD ENTERPRISE VS. INCOME-TAX OFFICER WD-49(4) KOLKATA (PAN: AAIFA3009R) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 19.09.2016 DATE OF PRONOUNCEMENT: 28.09.2016 FOR THE APPELLANT: SHRI MIRAJ D. SHAH ADVOCAT E FOR THE RESPONDENT: SHRI SALLONG YADEN ADDL. CIT ORDER PER SHRI K. NARASIMHA CHARY JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXII KOLKATA VIDE APPEAL NO. 220/CIT(A)-XXXII/10-11/49(4)/KOL DATED 2 2.09.2011. ASSESSMENT WAS FRAMED BY ITO WARD-49(4) KOLKATA U/S. 143(3) OF T HE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2008-09 VIDE HIS O RDER DATED 31.12.2010. 2. BRIEF FACTS OF THIS CASE ARE THAT THE ASSESSEE IS A SELLER OF COUNTRY SPIRIT. DURING THE RELEVANT YEAR ASSESSEE MADE PURCHASES FROM ONE M/S . BHATTACHARYA BOTTLING PLANT PVT. LTD. (IN SHORT BBPPL). LD. AO MADE ENQUIRIES U/S. 133(6) OF THE ACT FROM BBPPL AND BASING ON THE REPLY RECEIVED FROM THEM FOUND THAT PAYMENT FOR PURCHASES WORTH RS.40 95 282/- WAS MADE IN CASH IN EXCESS OF RS. 20 000/- EACH. THE A O OBSERVED THAT THE ASSESSEE HAD OFFERED NO EXPLANATION AT ALL TO THE SHOW CAUSE NOTICE ISSU ED TO THEM DISALLOWED SUCH PURCHASES U/S. 40A(3) OF THE ACT AND ADDED BACK TO THE INCOME OF T HE ASSESSEE. SO ALSO BASING THE REPLY RECEIVED U/S. 133(6) OF THE ACT FROM M/S. BBPPL THE AO FURTHER OBSERVED THAT IN THE BOOKS OF BBPPL THE SALES TO THE ASSESSEE WERE RS.2 40 99 253/- WHEREAS IN THE ASSESSEES BOOKS THE PURCHASE WAS ENTERED ONLY TO THE TUNE OF RS.2 3 0 40 228/- LEAVING A DIFFERENCE OF RS.10 59 025/-. THE AO FURTHER OBSERVED THAT THE A SSESSEE HAD NOT SHOWN THE STOCK OF ANY SUCH GOODS IN HIS BALANCE SHEET AS SUCH THE AO CON CLUDED THAT THE ASSESSEE MUST HAVE SOLD THESE GOODS OUT OF BOOKS OF ACCOUNT. ON THIS TRANS ACTION THE AO CALCULATED THE SEED CAPITAL AT RS. ONE LAC AND THE GROSS PROFIT AT RS.6.91% AND REACHED TO THE SUM OF RS.73 178/- . HE ADDED THESE TWO AMOUNTS ALSO TO THE INCOME OF THE A SSESSEE. 2 ITA NO. 142/KOL/2012 ASHIRBAD ENTERPRISE. AY 2008-09 3. CHALLENGING THESE FINDINGS THE ASSESSEE CARRIED THE MATTER IN APPEAL AND THE LD. CIT(A) BY WAY OF IMPUGNED ORDER OBSERVED THAT NEITH ER BEFORE THE AO NOR BEFORE HIM THE ASSESSEE OFFERED ANY EXPLANATION DETAILS AND EVIDE NCES IN RESPECT OF THEIR CONTENTION ON THE ADDITIONS EXCEPT STATING THAT THERE IS BUSINESS EXP EDIENCY AND THAT THE AMOUNT OF PURCHASES MADE BY IT FROM M/S. BBPPL WAS RS.2 30 40 228/- ONL Y AND THE ADDITIONS WERE MADE ON PRESUMPTION. OBSERVING SO THE LD. CIT(A) DISMISSE D THE APPEAL ON THESE ASPECTS AND CONFIRMED THE ORDER OF THE AO. 4. CHALLENGING THE SAID FINDINGS OF THE LD. CIT(A) THE AO FILED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS: 1. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (APPEALS)-XXXII/KOLKATA ERRED IN LAW AND WAS NOT JUSTIFIED IN: (A) REDUCING THE ADDITION OF RS.40 55 282/- ONLY BY RS.20 000/- AND CONFIRMING THE BALANCE AMOUNT OF RS. 40 35 282/- WHICH AMOUNT HAS BEEN ADD ED UNLAWFULLY BY THE LD. ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE U/S 40A(3) WITH OUT GIVING DUE AND JUDICIOUS CONSIDERATION TO THE FACTS OF THE CASE AND THE PROVISO TO SECTION 40A(3). (B) CONFIRMING THE ADDITION OF RS.73 178/- UNLAWFUL LY MADE BY THE LD. ASSESSING OFFICER ON ACCOUNT OF ALLEGED UNDISCLOSED PROFIT; (C) CONFIRMING THE ADDITION OF RS.1 00 000/- UNLAWF ULLY MADE BY THE LD. ASSESSING OFFICER ON ACCOUNT OF SEED CAPITAL. 2. FOR THAT WHILE PASSING HIS ORDER THE LD. C.I.T. (APPEALS) DID NOT AT ALL GIVE PROPER AND JUDICIOUS CONSIDERATION TO THE WRITTEN SUBMISSION O F THE APPELLANT FILED BEFORE HIM IN COURSE OF HEARING OF THE APPEAL CASE AND AS SUCH THERE HAS BEEN A MIS-CARRIAGE OF JUSTICE. 5. AT THE TIME OF HEARING LD. AR ARGUED THAT PURSU ANT TO THE RULES FRAMED BY THE STATE GOVERNMENT OF WEST BENGAL THE ASSESSEE HAD TO PAY T HE MONIES TO THE CREDIT OF THE WHOLESALE LICENCEES WHO IS M/S. BBPPL IN THIS CASE AS SUCH THE PROVISIONS OF SECTION 40A(3) OF THE ACT HAVE NO APPLICATION IN VIEW OF TH E BUSINESS EXPEDIENCY. IT IS FURTHER CONTENDED BY HIM THAT RULE 6DD(A)(II) OF THE I. T. RULES 1962 (HEREINAFTER REFERRED TO AS THE RULES) IS APPLICABLE. IT IS SUBMITTED THAT M/S. BBPPL WAS APPOINTED BY THE STATE GOVERNMENT BY WAY OF NOTIFICATION FOR COLLECTION OF COST PRICE BOTTLING CHARGES ETC. AS SUCH THE PAYMENTS MADE TO THE BANK ACCOUNT OF SUCH WHOLESALE LICENCEE SHALL BE TREATED AS PAYMENT MADE TO THE GOVERNMENT AND CONSEQUENTLY DIS ALLOWANCE IS NOT SUSTAINABLE IN VIEW OF THE PAYMENTS UNDER RULE 6DD(B) OF THE RULES WHIC H PROVIDES FOR EXEMPTION WHERE THE PAYMENT WAS MADE TO THE GOVERNMENT. FURTHER CONTEN TION OF THE LD. AR IS THAT THE WHOLESALE LICENCEE APPOINTED BY WAY OF NOTIFICATION SHALL BE TREATED AS AN AGENT OF THE STATE 3 ITA NO. 142/KOL/2012 ASHIRBAD ENTERPRISE. AY 2008-09 GOVERNMENT AND THEY ANSWERED THE DESCRIPTION OF WAR EHOUSE UNDER RULE 2(VII) OF THE WEST BENGAL EXCISE RULES 2005 AS SUCH IT HAS TO BE DEE MED AS A WAREHOUSE SO ESTABLISHED BY THE STATE EXCISE COMMISSIONER AND STATE GOVERNMENT ESTA BLISHMENT AND THE STATE GOVERNMENT RECEIVES THE MONIES FROM THE RETAIL VENDORS ONLY TH ROUGH SUCH WHOLESALE LICENCEE. HENCE THE ASSESSEE FALLS UNDER THE EXCEPTION PROVIDED IN RULE 6DD(K) OF THE RULES. BASING ON THESE CONTENTIONS HE PRAYED BEFORE US TO DELETE TH E ADDITIONS MADE U/S. 40A(3) OF THE ACT. 6. IT IS FURTHER CONTENDED BY THE LD. AR OF THE ASS ESSEE THAT THE THREE CHEQUES ISSUED TO M/S BBPPL WERE DISHONOURED AND SUCH DISHONOUR WAS N OT REFLECTED IN THE BOOKS OF M/S. BBPPL AND SUBSEQUENTLY THERE WAS RECONCILIATION OF THE BANK STATEMENT WHICH IS NOT TAKEN INTO CONSIDERATION BY THE AUTHORITIES BELOW. WHEN THIS DIFFERENCE OF RS.10 59 025/- WAS RECONCILED THE QUESTION OF SEED CAPITAL OR G.P. CAL CULATION THEREON DOES NOT ARISE AT ALL. FOR THESE REASONS HE PRAYED TO DELETE THE ADDITION OF RS.1 73 178/- ALSO. 7. ON THE OTHER HAND THE LD. DR SUBMITTED THAT PAY MENT IN CASH IS NOT A LEGAL TENDER AND THE ASSESSEE IS EXPECTED TO MAKE THE PAYMENTS A S PER LAW. FURTHER THERE WAS NO PROPER EXPLANATION FROM THE ASSESSEE TO THE NOTICES ISSUED TO THEM AS OBSERVED BY THE AUTHORITIES BELOW AS SUCH THE AUTHORITIES ARE JUSTIFIED IN MAK ING THE ADDITIONS. 8. NOW THE POINT THAT ARISES FOR OUR CONSIDERATION IN THIS MATTER IS WHETHER THE AUTHORITIES BELOW ARE JUSTIFIED IN DISALLOWING THE PURCHASE EXPENSES U/S. 40A(3) OF THE ACT AND ALSO ADDING BACK RS.1 73 178/- TO THE INCOME OF THE ASSESSEE ON THE GROUND OF PURCHASE OUT OF BOOKS? 9. THE ASSESSEE IS A RETAIL VENDOR OF COUNTRY LIQUO R WHICH IS AN EXCISABLE COMMODITY. THE SALES AND PURCHASES ARE CONTROLLED BY THE STATE GOVERNMENT AND EARLIER THE RETAIL SELLERS USED TO DEPOSIT THE COST PRICE EXCISE DUTY BOTTLI NG CHARGES ETC. IN THE TREASURY BUT SUBSEQUENTLY THE EXCISE DEPARTMENT BY WAY OF NOTIFI CATION DATED 29.08.2005 CHANGED THE PROCEDURE. AS PER THIS PROCEDURE VIDE CLAUSE 6(2) NO RETAIL VENDOR OF COUNTRY SPIRIT SHALL DEPOSIT DUTY DIRECTLY INTO THE LOCAL TREASURY FOR I SSUE OF COUNTRY SPIRIT TO BE TAKEN BY HIM FROM THE WAREHOUSE CONCERNED BUT THE DUTY COST PR ICE BOTTLING CHARGE IF THERE BE ANY AT THE PRESCRIBED RATE AND OTHER IMPOSITION AS MAY BE PRESCRIBED BY LAW SHALL BE PAID BY THE RETAIL VENDOR TO THE CREDIT OF THE WHOLESALE LICENS EE CONCERNED. THE ASSESSEE CLAIMS THAT THE STATE GOVERNMENT BY WAY OF NOTIFICATION APPOINTED M /S. BBPPL TO BE THE WHOLESALE 4 ITA NO. 142/KOL/2012 ASHIRBAD ENTERPRISE. AY 2008-09 LICENSEE FOR COLLECTING THE COST PRICE EXCISE DUTY BOTTLING CHARGES ETC. HOWEVER IT IS PERTINENT TO NOTE AT THIS JUNCTURE BUT NO SUCH NOTI FICATION IS PRODUCED BEFORE US TO SUSTAIN THIS STATEMENT OF THE ASSESSEE THAT THERE IS ANY SUCH AP POINTMENT. 10. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO RULE 2(VII) OF THE WEST BENGAL EXCISE RULES 2005 WHEREIN THE WAREHOUSE WAS DEFINE D AND SECTION 22 OF THE WEST BENGAL EXCISE ACT WHERE EXCLUSIVE PRIVILEGE OF MANUFACTURE AND SALE OF COUNTRY LIQUOR WAS GRANTED TO SUCH BOTTLING PLANT. HE ALSO TOOK US TO RULE 6DD (B) OF THE INCOME TAX RULES WHEREIN IT WAS STATED THAT WHERE THE PAYMENT IS MADE TO THE GO VERNMENT AND UNDER THE RULES FRAMED BY IT SUCH PAYMENT IS REQUIRED TO BE MADE IN LEGAL TEN DER AND ALSO TO RULE 6DD(K) OF THE RULES WHICH STATES THAT WHERE THE PAYMENT IS MADE BY ANY PERSON TO HIS AGENT WHO IS REQUIRED TO MAKE PAYMENT IN CASH FOR GOODS OR SERVICES ON BEHA LF OF SUCH PERSON. THE LD. AR PLACED RELIANCE ON A DECISION REPORTED IN M/S. AMRAI PACHA I & C.S. SHOP ITA NO. 1251/KOL/2011 DATED 15.01.2014 WHEREIN A COORDINATE BENCH OF THIS TRIBUNAL ON A COMPREHENSIVE CONSIDERATION OF RULE 6(2) OF THE RULES UNDER NOTIF ICATION ISSUED IN CALCUTTA GAZETTE TUESDAY 20 TH SEPTEMBER 2005 AND 6DD(B) OF THE I. T. RULES HELD THAT THE PAYMENTS MADE BY THE ASSESSEE TO THE WHOLESALE LICENSEE FOR PURCH ASE OF COUNTRY SPIRIT ARE PROTECTED BY EXEMPTION IN TERMS OF RULE 6DD(B) OF THE I. T. RULE S. HE FURTHER PLACED RELIANCE ON A DECISION OF A COORDINATE BENCH OF THIS TRIBUNAL IN RAMNAGAR PACHWAI & C.S.(S) SHOP IN ITA NO. 148/KOL/2015 WHEREIN THIS TRIBUNAL CONSIDER ED SIMILAR SET OF FACTS WITH REFERENCE TO RULE 2(VII) OF THE WEST BENGAL EXCISE RULES SECT ION 22 OF THE WEST BENGAL EXCISE ACT RULE 6DD(B) AND RULE 6DD(K) OF THE I. T. RULES IN T HE LIGHT OF THE OBSERVATIONS OF THIS TRIBUNAL IN AMRAI PACHAI & C.S. SHOP SUPRA AND CAM E TO THE CONCLUSION THAT THE CASE OF ASSESSEE IN THAT CASE FALLS UNDER THE EXCEPTION PRO VIDED IN RULE 6DD(B) AND RULE 6DD(K) OF I. T. RULES AND THE DISALLOWANCE MADE U/S. 40A(3) O F THE ACT WAS DELETED. LD. AR SUBMITS THAT THE FACTS IN THE CASE ON HAND ARE IDENTICAL TO THE FACTS OF THE ABOVE CASE. 11. WE HAVE CAREFULLY PERUSED THE RECORD AND FIND T HAT NO NOTIFICATION IN RESPECT OF APPOINTMENT OF M/S. BBPPL AS WHOLESALE LICENCEE IS PLACED BEFORE US TO CONSIDER THE STATUS OF SUCH AN ENTITY WITH REFERENCE TO THE DIFFERENT P ROVISIONS AND CITATIONS PLACED BEFORE US. IT IS NOT POSSIBLE TO REACH ANY CONCLUSION IN THE ABSE NCE OF SUCH EVIDENCE. FURTHER NONE OF THE CONTENTIONS RAISED BEFORE US WERE CANVASSED BEFORE THE AO AND THE AO HAD NO OPPORTUNITY OF CONSIDERING THEM. WE THEREFORE IN THESE CIRCU MSTANCES FEEL IT JUST AND PROPER TO SET 5 ITA NO. 142/KOL/2012 ASHIRBAD ENTERPRISE. AY 2008-09 ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REST ORE THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THEREFORE THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. 12. NOW COMING TO GROUND NO. 1(B) AND (C) THE AO RECORDED IN HIS ORDER THAT THERE IS NO EXPLANATION OFFERED BY THE ASSESSEE ON THE ASPECT O F THE PURCHASE OUT OF RECORD IN SPITE OF OPPORTUNITY PROVIDED TO THEM AS SUCH HE HAD TO PRO CEED IN THE ABSENCE OF ANY EXPLANATION OF THE ASSESSEE TO MAKE THE ADDITIONS ON PRESUMPTIV E BASIS. SO ALSO THE ORDER OF THE LD. CIT(A) READS THAT EVEN BEFORE HIM THE ASSESSEE HAD NOT OFFERED ANY EXPLANATION DETAILS AND EVIDENCE ON THIS ASPECT. HOWEVER BEFORE US THE A SSESSEE PRODUCED BY WAY OF PAPER BOOK VIDE PAGE NO. 87 THE RECONCILIATION STATEMENT OF SA LES FIGURES. SINCE IT WAS NOT PRODUCED BEFORE THE AO AND IT REQUIRES INVESTIGATION BY FOLL OWING THE PROCEDURE UNDER LAW ON THIS ASPECT WE FEEL IT JUST AND PROPER TO SET SIDE THE ORDERS OF THE LOWER AUTHORITIES AND RESTORE THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICA TION AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE DIRECT THE ASSESSEE TO PRODUCE ALL THE MATERIAL BEFORE THE AO AND COOPERATE WITH HIM TO REACH A PROPER AND JUDICI OUS CONCLUSION AND TO ADJUDGE PROPER TAX LIABILITY. THEREFORE THIS GROUND OF APPEAL OF ASS ESSEE IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 13. AT THE TIME OF HEARING BEFORE US THE LD. AR DI D NOT PRESS GROUND NO. 2 AND HENCE THE SAME IS DISMISSED AS NOT PRESSED. 14. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28.09.2016 SD/- SD/- (P. M. JAGTAP) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28TH SEPTEMBER 2016 JD.(SR.P.S.) 6 ITA NO. 142/KOL/2012 ASHIRBAD ENTERPRISE. AY 2008-09 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. ASHIRBAD ENTERPRISE BAGUIATI C. S . SHOP BAGUIATI KOLKATA-700 059. 2 RESPONDENT ITO WARD-49(4) KOLKATA. 3 . THE CIT(A) KOLKATA 4. 5. CIT KOLKATA DR KOLKATA BENCHES KOLKATA / TRUE COPY BY ORDER ASSTT. REGISTRAR .