M/s Kumar Bazar Pachwai & C. S. Shop, Burdwan v. ITO, Ward-3(1), Asansol, Asansol

ITA 201/KOL/2014 | 2008-2009
Pronouncement Date: 04-10-2016

Appeal Details

RSA Number 20123514 RSA 2014
Assessee PAN AAGFK3028C
Bench Kolkata
Appeal Number ITA 201/KOL/2014
Duration Of Justice 2 year(s) 7 month(s) 29 day(s)
Appellant M/s Kumar Bazar Pachwai & C. S. Shop, Burdwan
Respondent ITO, Ward-3(1), Asansol, Asansol
Appeal Type Income Tax Appeal
Pronouncement Date 04-10-2016
Appeal Filed By Assessee
Bench Allotted SMC
Tribunal Order Date 04-10-2016
Date Of Final Hearing 31-08-2016
Next Hearing Date 31-08-2016
Assessment Year 2008-2009
Appeal Filed On 05-02-2014
Judgment Text
I.T.A. NO. 201/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA A(SMC) BENCH KOLKATA BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER I.T.A. NO. 201/KOL/ 2014 ASSESSMENT YEAR: 2008-2009 M/S. KUMAR BAZAR PACHWAI & C.S. SHOP .............. .............APPELLANT B.C. ROAD KUMAR BAZAR RANIGANJ [PAN: AAGFK 3028 C] -VS.- INCOME TAX OFFICER ................................ ...............................RESPONDENT WARD-3(1) ASANSOL PARMAR BUILDING G.T. ROAD ASANSOL-713 304 APPEARANCES BY: SHRI U. DASGUPTA A.R. FOR THE ASSESSEE SHRI VIJAYENDRA KUMAR JCIT D.R. FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : AUGUST 31 2016 DATE OF PRONOUNCING THE ORDER : OCTOBER 04 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) ASANSOL DATED 25.11.2013 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE DISA LLOWANCE OF RS.42 94 790/- MADE BY THE ASSESSING OFFICER AND CO NFIRMED BY THE LD. CIT(APPEALS) UNDER SECTION 40A(3) OF THE ACT. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN COUNTRY LIQUO R AND PACHWAI. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS FILED BY IT ON 29.09.2008 DECLARING TOTAL INCOME OF RS.20 160/-. A S NOTICED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS THE ASSESSEE-FIRM HAD MADE TOTAL PURCHASES OF RS.41 39 771/- AGAINST WHICH THE PAYMENTS WERE MADE BY WAY OF CASH IN THE SUMS E XCEEDING RS.20 000/- WHICH HAD BEEN DIRECTLY DEPOSITED IN TH E BANK ACCOUNT OF THE CONCERNED SUPPLIER M/S. ASANSOL BOTTLING & PACKING CO. PVT. LIMITED. I.T.A. NO. 201/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 2 OF 5 ACCORDING TO THE ASSESSING OFFICER THE SAID PAYMEN TS WERE MADE BY THE ASSESSEE IN CONTRAVENTION OF SECTION 40A(3) OF THE INCOME TAX ACT 1961 AND SINCE THE ASSESSEE COULD NOT EXPLAIN ANY EXCEPT IONAL CIRCUMSTANCES AS SPECIFIED UNDER RULE 6DD OF INCOME TAX RULES 1962 FOR MAKING SUCH PAYMENTS HE MADE A DISALLOWANCE OF RS. 42 94 790/- UNDER SECTION 40A(3) FOR A.Y. 2008-09. 3. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U NDER SECTION 40A(3) IN THE YEAR UNDER CONSIDERATION WAS CHALLENG ED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND SI NCE THE SUBMISSIONS MADE BY THE ASSESSEE IN SUPPORT OF ITS CASE ON THE ISSUE WAS NOT FOUND ACCEPTABLE BY HIM THE LD. CIT(APPEALS) PROCEEDED T O CONFIRM THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 40A(3) IN THE YEAR UNDER CONSIDERATION. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS) THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE T RIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE ISSUE INVOLVED IN THIS APPEAL OF THE ASSESSEE RELATING TO THE DISALLOWANCE UNDER SECTION 40A(3) IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS DECISIONS OF THIS TRIBUNAL. IN ONE OF SUCH CASES NAMELY M/S. AMRAI PACHWAI & C.S. SHOP DECIDED BY THE TRIBUNAL V IDE ITS ORDER DATED 15.01.2014 PASSED IN ITA NO. 1251/KOL/2011 PAYMENT S WERE MADE BY THE ASSESSEE AGAINST PURCHASES MADE FROM THE SAME P ARTY NAMELY M/S. ASANSOL BOTTLING & PACKING CO. PVT. LIMITED BY DEP OSITING THE CASH DIRECTLY IN THE BANK ACCOUNT OF THE SAID SUPPLIER I N THE SUMS EXCEEDING RS.20 000/- AND THE DISALLOWANCE MADE FOR THE SAME UNDER SECTION 40A(3) WAS DELETED BY THE TRIBUNAL FOR THE FOLLOWIN G REASONS GIVEN IN PARAGRAPHS NO. 21 & 22 OF ITS ORDER:- 21. WE FIND THAT M/S. ASANSOL BOTTLING & PACKAGING CO. PVT. LTD. IS A BOTTLING PLANT CUM WAREHOUSE UNDER R ULE 2(VII) OF THE WEST BENGAL EXCISE RULES 2005 WITH PRIVILEG E GRANTED U/S 22 OF THE BENGAL EXCISE ACT 1909. AT THIS JUNC TURE IT WOULD BE RELEVANT TO GO INTO THE DEFINITION OF WARE HOUSE AS PROVIDED UNDER THE STATE EXCISE RULES 2005 AS BEL OW:- I.T.A. NO. 201/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 3 OF 5 WAREHOUSE UNDER RULE 2(VII) OF THE W.B. EXCISE RULES 2005 MEANS THE WAREHOUSE FOR SUPPLY OF COUN TRY SPIRIT TO RETAIL VENDORS ESTABLISHED AT CONVENIENT PLACES BY THE COMMISSIONER AT THE EXPENSE OF THE STATE GOVERN MENT OR AT THE EXPENSE OF A PERSON TO WHOM THE EXCLUSIVE PR IVILEGE OF SUPPLYING OR SELLING COUNTRY SPIRIT BY WHOLESALE HA S BEEN GRANTED UNDER SECTION 22 OF THE ACT OR OF A LICENS ED WHOLESALE VENDOR OF COUNTRY SPIRIT. THE ABOVE DEFINITION MAKES IT CLEAR THAT THE 'WAREH OUSE' REFERRED TO UNDER THE STATE EXCISE RULES IS UNDER T HE DIRECT CONTROL AND AUTHORITY OF THE COMMISSIONER OF STATE EXCISE BECAUSE IT IS ESTABLISHED BY THE COMMISSIONER OF ST ATE EXCISE AND AS SUCH IS A STATE GOVERNMENT ESTABLISHMENT. IT IS ALSO PERTINENT TO NOTE THAT THE EXPENDITURE IN RELATION TO SUCH WAREHOUSE IS BORNE BY THE STATE GOVERNMENT OR BY TH E LICENSEE TO WHOM THE EXCLUSIVE PRIVILEGE IS GRANTED U/S 22 OF THE BENGAL EXCISE ACT 1909. HENCE THERE COULD BE N O DOUBT THAT THE WAREHOUSE IS ESTABLISHED BY THE STATE EXCI SE COMMISSIONER. HENCE IT COULD BE SAFELY CONCLUDED TH AT THE WAREHOUSE SO ESTABLISHED BY THE STATE EXCISE COMMIS SIONER IS A STATE GOVERNMENT ESTABLISHMENT. IT WOULD ALSO BE PERTINENT TO NOTE THAT THE SAID WAREHOUSE HAS BEEN SPECIFICALLY ESTABLISHED FOR SUPPLY OF COUNTRY SPIR IT TO RETAIL VENDORS (ASSESSEE HEREIN) ONLY AND NOT TO ANYBODY E LSE. IT WOULD BE PERTINENT TO LOOK INTO THE DEFINITION O F 'WHOLESALE LICENSEE' AS PER RULE 2(VIII) OF THE EXC ISE RULES 2005 AS BELOW.- RULE 2(VIII) - 'WHOLESALE LICENSEE' MEANS THE WHOLE SALE VENDOR OF COUNTRY SPIRIT TO WHOM LICENCE HAS BEEN G RANTED IN WEST BENGAL EXCISE 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 MANUFA CTURE AND SALE OF COUNTRY LIQUOR OR INTOXICATING DRUGS - (1) THE STATE GOVERNMENT MAY GRANT TO ANY PERSON O N SUCH CONDITIONS AND FOR SUCH PERIOD AS IT MAY THINK FIT THE EXCLUSIVE PRIVILEGE - (A) OF MANUFACTURING OR SUPPLYING BY WHOLESALE OR (B) OF MANUFACTURING AND SUPPLYING BY WHOLESALE O R (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 I.T.A. NO. 201/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 4 OF 5 ANY COUNTRY LIQUOR OR INTOXICATING DRUG WITHIN ANY SPECIFIED LOCAL AREA: PROVIDED THAT PUBLIC NOTICE SHALL BE GIVEN TO THE I NTENTION TO GRANT ANY SUCH EXCLUSIVE PRIVILEGE. AND THAT ANY OB JECTIONS MADE BY ANY PERSON RESIDING WITHIN THE AREA AFFECTE D SHALL BE CONSIDERED BEFORE AN EXCLUSIVE PRIVILEGE IS GRAN TED. (2) NO GRANTEE OF ANY PRIVILEGE UNDER SUB-SECTION ( 1) SHALL EXERCISE THE SAME UNLESS OR UNTIL HE HAS RECEIVED A LICENSE IN THAT BEHALF FROM THE COLLECTOR OR THE EXCISE COMMIS SIONER. HENCE IT COULD BE SAFELY CONCLUDED THAT M/S. ASANSO L BOTTLING & PACKAGING CO. PVT LTD (BOTTLING PLANT) IS A WAREH OUSE WITHIN THE MEANING OF RULE 2(VII) OF THE EXCISE RUL ES 2005 AND SAID WAREHOUSE IS A STATE GOVERNMENT ESTABLISHM ENT ESTABLISHED AND CONTROLLED BY THE EXCISE COMMISSION ER. IT WOULD BE RELEVANT TO REPRODUCE RULE 6DD(B) OF THE I T RULES AT THIS JUNCTURE;- (B) WHERE THE PAYMENT IS MADE TO THE GOVERNMENT AND UNDER THE RULES FRAMED BY IT SUCH PAYMENT IS REQUIRED TO BE MADE IN LEGAL TENDER. IN THE INSTANT CASE THE ASSESSEE (RETAIL VENDOR) H AD MADE CASH PAYMENTS FOR PURCHASE OF COUNTRY SPIRIT BY DEP OSITING CASH DIRECTLY INTO THE BANK ACCOUNT OF M/S ABPL AS PER RULE 6(2) OF THE EXCISE RULES 2005 IT HAS TO BE CONSTR UED AS PAYMENT MADE TO THE STATE GOVERNMENT AUTHORITY AND ACCORDINGLY FALLS UNDER THE EXCEPTION PROVIDED IN R ULE 6DD(B) OF THE IT RULES. 22. IT IS NOT IN DISPUTE THAT M/S ASANSOL BOTTLING & PACKAGING CO. PVT LTD HAVE BEEN GRANTED LICENCE TO ACT AS A WHOLESALER FOR SUPPLY OF COUNTRY LIQUOR TO THE RETA IL VENDOR AS PER THE REGULATIONS OF THE EXCISE DEPARTMENT GO VERNMENT OF WEST BENGAL. AT THE COST OF REPETITION WE WOULD LIKE TO STATE THAT THE SAID REGULATION MANDATED THE PAYMENT S TO BE MADE DIRECTLY INTO THE BANK ACCOUNT OF THE SAID WHO LESALE 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 SAME. HENCE IT COULD BE SAFEL Y CONCLUDED THAT THE SAID WHOLESALE LICENSEE HAD ACTE D AT THE INSTANCE OF THE STATE GOVERNMENT. ONCE THIS IS SO THEN THE SAID WHOLESALE LICENSEE COULD BE CONSTRUED AS AN AG ENT OF THE STATE GOVERNMENT. FOR THE SAKE OF CONVENIENCE THE RELEVANT RULE IS REPRODUCED HEREUNDER:- RULE 6DD(K) - WHERE THE PAYMENT IS MADE BY ANY PERS ON TO HIS AGENT WHO IS REQUIRED TO MAKE PAYMENT IN CASH FOR G OODS OR SERVICES ON BEHALF OF SUCH PERSON. I.T.A. NO. 201/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 5 OF 5 THE PAYMENT MADE BY THE ASSESSEE RETAIL VENDOR TO T HE PRINCIPAL GOVERNMENT OF WEST BENGAL THROUGH ITS WH OLESALE AGENT. THE RELATIONSHIP BETWEEN THE ASSESSEE (AUTHO RIZED RETAILER) AND GOVERNMENT OF WEST BENGAL (THE SUPPLI ER) ACTING UNDER WEST BENGAL EXCISE RULES THROUGH ITS AUTHORISED WHOLESALER LICENSEE (AGENT) BOTH DEFACT O AND DEJURE IS ONE OF 'PRINCIPAL' AND 'AGENT'. WE HOLD THAT THE ASSESSEE RETAIL VENDOR HAD MADE PAYMENT TO THE SAID AGENT (WHOLESALE LICENSEE) WOULD FALL UNDER THE EXCEPTION PROVIDED IN RULE 6DD(K) OF THE RULES. 5. AS THE ISSUE INVOLVED IN THE PRESENT APPEAL AS W ELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THE CASE OF M/S. AMRAI PACHWAI & C.S. SHOP (SUPRA) I RESPECTFULLY FOLLOW THE DECISION RENDERED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE SAI D CASE AND DELETE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONF IRMED BY THE LD. CIT(APPEALS) UNDER SECTION 40A(3) OF THE ACT. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 04 2 016. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA THE 4 TH DAY OF OCTOBER 2016 COPIES TO : (1) M/S. KUMAR BAZAR PACHWAI & C.S. SHOP C/O. SABYASACHI GUPTA 46 C.R. ROAD RANIGANJ BURDWAN-713 347 (2) INCOME TAX OFFICER WARD-3(1) ASANSOL PARMAR BUILDING G.T. ROAD ASANSOL-713 304 (3) COMMISSIONER OF INCOME TAX(APPEALS) ASANSOL; (4) COMMISSIONER OF INCOME TAX- (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES KOLKATA LAHA/SR. P.S.