M S Shibpur Pachai Shop Burdwan v. Ito Wd 1 4 Asansol Asansol

I T A No 859 Kol 2016 Assessment Year 2010 2011 Page 1 Of 5 In The Income Tax Appellate Tribunal Kolkata D Bench Kolkata Before Shri P M Jagtap Accountant Member And Shri S S Viswanethra Ravi Judicial Member I T A No 859 Kol 2016 Assessment Year 2010 2011 M S Shibpur Pachai Shop Appellant Vill P O Shibpur Dist Burdwan 713 330 Pan Aamfs 4463 P Vs Income Tax Officer Respondent Ward 1 4 Asansol Sahana Building Chelidanga Asansol 713 304 Appearances By Shri U Dasgupta Advocate For The Assessee Shri Arindam Bhattacharjee Additional Cit D R F Or The Department Date Of Concluding The Hearing December 13 2017 Date Of Pronouncing The Order December 20 2017 O R D E R Per Shri P M Jagtap Accountant Member This Appeal Filed By The Assessee Is Directed Again St The Order Dated 22 02 2016 Passed By The Ld Commissioner Of Income Tax Appeals Asansol For The Assessment Year 2010 11 And The Sol Itary Issue Involved Therein Relates To The Disallowance Of Rs 35 46 695 Made By The Assessing Officer And Confirmed By The Ld Cit Appe Als Under Section 40 A 3 Of The Income Tax Act 1961 2 The Assessee In The Present Case Is A Partnershi P Firm Which Is Engaged In The Business Of Trading In Country Spiri T And Pachwai The Return Of Income For The Under Consideration Was Fi Led By It On 21 09 2010 Declaring Total Income Of Rs 11 881 A S Noticed By The Assessing Officer During The Course Of Assessment P Roceedings The Assessee Had Made Purchases Of Rs 35 46 695 From M S Asansol Bottling Packing Co Pvt Limited And Payments Ag Ainst The Same Were I T A No 859 Kol 2016 Assessment Year 2010 2011 Page 2 Of 5 Made By Depositing Cash Directly In The Bank Accoun T Of M S Asansol Bottling Packing Co Pvt Limited In The Sums Exc Eeding Rs 20 000 According To The Assessing Officer The Said Paymen Ts Were Made By The Assessee In Contravention Of Section 40 A 3 Of The Income Tax Act 1961 And Since The Assessee Could Not Explain Any Except Ional Circumstances As Specified Under Rule 6 Dd Of Income Tax Rules 1962 For Making Such Payments In Cash He Made A Disallowance Of Rs 35 4 6 695 Under Section 40 A 3 Of The Act 3 The Disallowance Made By The Assessing Officer U Nder Section 40 A 3 Was Challenged By The Assessee In The Appeal Filed Before The Ld Cit Appeals And Since The Submission Made By The A Ssessee In Support Of Its Case On The Issue Was Not Found Acceptable B Y Him The Ld Cit Appeals Proceeded To Confirm The Disallowance Made By The Assessing Officer Under Section 40 A 3 Aggrieved B Y The Order Of The Ld Cit Appeals The Assessee Has Preferred This Appea L Before The Tribunal 4 We Have Heard The Arguments Of Both The Sides An D 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 40 A 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 40 A 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 I T A No 859 Kol 2016 Assessment Year 2010 2011 Page 3 Of 5 Would Be Relevant To Go Into The Definition Of Ware House As Provided Under The State Excise Rules 2005 As Bel Ow 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 859 Kol 2016 Assessment Year 2010 2011 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 6 Dd 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 6 Dd 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 6 Dd 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 859 Kol 2016 Assessment Year 2010 2011 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 6 Dd 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 We 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 40 A 3 Of The Act 6 In The Result The Appeal Of The Assessee Is All Owed Order Pronounced In The Open Court On December 20 2017 Sd Sd S S Viswanethra Ravi P M Jagtap Judicial Member Accountant Member Kolkata The 20 Th Day Of December 2017 Copies To 1 M S Shibpur Pachai Shop Vill P O Shibpur Dist Burdwan 713 330 2 Income Tax Officer Ward 1 4 Asansol Sahana Building Chelidanga 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