Sri Malay Mondal, Burdwan v. I.T.O Wd - 2(2),Asansol, Asansol

ITA 903/KOL/2013 | 2008-2009
Pronouncement Date: 28-09-2016

Appeal Details

RSA Number 90323514 RSA 2013
Assessee PAN ALLEM2361A
Bench Kolkata
Appeal Number ITA 903/KOL/2013
Duration Of Justice 3 year(s) 5 month(s) 5 day(s)
Appellant Sri Malay Mondal, Burdwan
Respondent I.T.O Wd - 2(2),Asansol, Asansol
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2016
Appeal Filed By Assessee
Bench Allotted B
Tribunal Order Date 28-09-2016
Date Of Final Hearing 28-07-2016
Next Hearing Date 28-07-2016
Assessment Year 2008-2009
Appeal Filed On 23-04-2013
Judgment Text
ITA NO. 903/KOL/13 SRI MALAY MONDAL 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH KOLKATA BEFORE SHRI WASEEM AHMED ACCOUNTANT MEMBE R AND SHRI S.S.VISWANETHRA RAVI JUDICIAL MEMBER I.T.A. NO. 903/KOL/2013 A.Y: 2008-09 SRI MALAY MONDAL VS. INCOME TAX OFFICER PAN: ALLEM 2361A WARD 2(2) AS ANSOL (APPELLANT) (RESPONDENT) APPEARANCES BY: SHRI K.K. KHEMKA ADVOCATE AR SHRI P.K. CHAKRABORTY JCIT SR.DR DATE OF HEARING : 28-07- 2016 DATE OF PRONOUNCEMENT : 28-09-2016 O R D E R SHRI S.S. VISWANETHRA RAVI JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 22-02-2013 PASSED BY THE COMMISSIONER OF INCO ME TAX(APPEALS) DURGAPUR FOR THE ASSESSMENT YEAR 2008 -09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. FOR THAT LD. COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN LAW AS WELL AS ON FACTS THE ADDITION U/S. 40A(3) RS.24 30 692/- 2. FOR THAT YOUR APPELLANT CRAVES LEAVE TO TAKE/AME ND ANY OTHER ADDITIONAL/ALTERNATIVE GROUND/GROUNDS OF APPEAL BEF ORE OR AT THE TIME OF HEARING OF THIS APPEAL. ITA NO. 903/KOL/13 SRI MALAY MONDAL 2 3. THE ONLY ISSUE IN THIS APPEAL TO BE DECIDED IS A S TO WHETHER THE CIT-A IS JUSTIFIED TO CONFIRM THE ADDITION MADE BY THE AO U/SEC 40A(3) OF THE ACT IN THE CIRCUMSTANCES OF THE ACT. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE IS AN INDIVIDUAL FILED HIS RETURN OF INCOME ELECTRONIC ALLY ON 29-09- 2008 DECLARING TOTAL INCOME AT RS.64 931/-. UNDER S CRUTINY NOTICES U/S. 143(2) AND 142(1) OF THE ACT WERE ISSU ED. IN RESPONSE TO WHICH THE LD.AR OF THE ASSESSEE APPEARED AND FI LED THE COPIES OF DOCUMENTS AND PRODUCED BOOKS OF ACCOUNT FOR VERI FICATION. 5. THE AO CONDUCTED AN ENQUIRY U/S. 133(6) OF THE A CT WHERE HE FOUND THAT THE ASSESSEE HAS PURCHASED COUNTRY SP IRIT FROM M/S. ASANSOL BOTTLING & PACKAGING CO. PVT. LTD AND CASH PAYMENTS TOWARDS SUCH PURCHASES EXCEEDED RS.20 000/- MADE ON DIFFERENT DATES DURING THE YEAR UNDER CONSIDERATION ON BEING ASKED FOR EXPLANATION THE ASSESSEE EXPLAINED AS UNDER: I AM CARRYING ON THE BUSINESS OF TRADING OF COUNTRY LIQUOR BEER RUM AND WHISKEY ETC IN THIS REGARDS I AM TO STATE THAT I PURCHASED COUNTRY LIQUOR FROM ASANSOL BOTTLING & PACKAGING CO. PVT. LTD. THE ONLY AUTHORIZED BOTTLE R IN ASANSOL BY THE EXCISE DEPARTMENT. THE BOTTLING PLANT WILL S UPPLY THE GOODS ONLY AFTER THE ENCASHMENT OF THE CHEQUE OR DE MAND DRAFT AS SUCH THEY HAVE INSTRUCTED TO DEPOSIT THE T OTAL PRICE OF THE REQUIRED BOTTLES OF COUNTRY LIQUOR INCLUDING TC S (TAX COLLECTED AT SOURCE) IN THEIR BANK ACCOUNT AND FURN ISH THE DEPOSIT SLIP TO THEM AND TO LIFT THE BOTTLES OF COU NTRY LIQUOR FROM THEIR PLANT. IN THIS REGARD 1 AM TO STATE THAT I HAVE DEPOSITED THE AMOUNT IN SBI ASANSOL IN THE ACCOUNT OF ASANSOL BOTTLING & PACKAGING CO. PVT. LTD. THE PAY IN SLIP IS PRODUCED BEFORE THE BOTTLING PLANT FOR LIFTING THE GOODS FROM THEM. AS THEY ARE THE ONLY AUTHORIZED BOTTLER IN ASANSOL FOR BOTTLING AND SUPPLY OF COUNTRY LIQUOR TO AUTHORIZED EXCISE V ENDORS AND FOR BUSINESS EXIGENCY AS LAID DOWN IN THE ACT. I HAVE DEPOSITED THE AMOUNT IN THEIR BANK ACCOUNT AND FURN ISHED THE DEPOSIT SLIP TO THE BOTTLING PLANT AND LIFTED THE G OODS FROM ITA NO. 903/KOL/13 SRI MALAY MONDAL 3 THEM. IT WILL NOT BE OUT OF PLACE TO MENTION THAT P ERIODICAL STOCK IS CHECKED BY THE EXCISE DEPARTMENT AND I HAV E TO KEEP SUFFICIENT STOCK OF COUNTRY LIQUOUR AS PRESCRIBED B Y THEM AND IN CASE MY STOCKS FALLS SHORT OF THE PRESCRIBED LIM IT THEN THE DEPARTMENT IMPOSES PENALTY UPON ME FOR THE FAULT. MORE OVER IN TRADING OF COUNTRY LIQUOR MY NET EARNI NG RANGES FROM 1 % TO 1.25% AND MY MAJOR PORTION OF THE PROFI T IS LOCKED IN THE FORM OF DEDUCTION OF T.C.S LEAVING WI TH ME MINIMUM CASH FOR PURCHASE OF GOODS AND MEETING OF D AY TO DAY EXPENSES WHICH FORCES ME TO DEPOSIT THE CASH IN THE BANK ACCOUNT OF THE BOTTLING PLANT INSTEAD OF DEPOSITING THE CASH IN MY BANK ACCOUNT AND OBTAINING DEMAND DRAFT FOR PURC HASING OF GOODS. THE BOTTLING PLANT WILL SUPPLY ME GOODS A FTER ENCASHMENT OF CHEQUE OR DEMAND DRAFT AS SUCH WE AR E FORCED TO DEPOSIT THE CASH IN THE BANK ACCOUNT OF THE BOTT LING PLANT AND LIFTING GOODS AS QUICK AS POSSIBLE TO AVOID BLO CKAGE OF CAPITAL AND PENALTY BY EXCISE DEPARTMENT. THE MAIN COMPONENT OF PURCHASE PRICE DEPOSITED BY ME IN THE BANK ACCOUNT OF ASANSOL BOTTLING & PACKAGING CO. PVT. LT D IS 70% IN THE FORM OF EXCISE DUTY VAT AND T.C.S AND THE BALA NCE 30% IS COST OF LIQUOR. SEC 40A(3) WAS ORIGINALLY INSERTED BY THE FINANCE A CT 1968 WITH EFFECT FROM 1 ST APRIL 1969 AND AMENDMENT IN 1996 AND 2007. THE OBJECTIVE OF SEC 40A(3) REQUIRING SUCH PA YMENT TO BE MADE BY CROSSED CHEQUE OR DRAFT AS REPEATEDLY ST RESSED BY THE COURTS AS FOR EXAMPLE IN WALFORD TRANSPORT (E ASTERN INDIA) VS. C.I.T. 240 ITR PAGE 902 (GOUHATI) AS U NDER:- 'FROM A PERUSAL OF THE DECISION OF DIFFERENT HIGH C OURTS REFERRED TO ABOVE IT CLEARLY EMERGES THAT THE PURP OSE OF SEC 40A(3) OF THE ACT. IS NOT TO PENALIZE THE ASSESSEE FOR MAKING CASH PAYMENT OF AN AMOUNT OF RS.2500/- OR ABOVE. TH E PURPOSE IS ONLY PREVENTIVE AND TO CHECK EVASION OF TAX AND FLOW OF UNACCOUNTED MONEY OR TO CHECK TRANSACTION W HICH ARE NOT GENUINE AND MAY BE PUT AS CAMOUFLAGE TO EVADE T AX BY SHOWING THE FICTITIOUS OR FALSE TRANSACTION. THE AS SESSE RELIED ON THE DECISION OF THE TRIBUNAL IN SRI RENUKESWARA RICE MILLS VS. ITO REPORTED IN 93 TTJ (BANG) 912 6. CONSIDERING THE ABOVE SUBMISSIONS OF THE ASSESSE THE AO WAS OF THE VIEW THAT THE TOTAL PURCHASES AND THE PA YMENTS MADE THEREON TO M/S. ASANSOL BOTTLING & PACKAGING C O.PVT.LTD IN CASH EXCEEDED RS.20 000/-. ACCORDINGLY HE DISAL LOWED AN ITA NO. 903/KOL/13 SRI MALAY MONDAL 4 AMOUNT OF RS.24 30 692/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE U/S. 40A(3) OF THE ACT. 7. AGGRIEVED BY SUCH ASSESSMENT ORDER PASSED U/S. 1 43(3) OF THE ACT THE ASSESSEE PREFERRED AN APPEAL BEFORE TH E CIT-A AND REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND R ELIED ON TWO DECISIONS OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF GIRDHARILAL GOENKA REPORTED IN 179 ITR 122 AND THE HONBLE SUPREME COURT IN THE CASE OF ATTAR SINGH GURMUKH SI NG REPORTED IN 191 ITR 667(SC). THE ASSESSEE HAS ALSO RAISED AN ALTERNATIVE PLEA THAT THE AO DID NOT DETERMINE THE CORRECT PROFIT ON THE IMPUGNED DISALLOWANCE WHICH WAS MADE /CALCULATED ON THE ENTIRE PURCHASE COST. THE CIT-A WAS OF THE VIEW THAT ON THE AFORESAID DECISIONS OF THE HONBLE CALCUTTA HIGH COURT AND HONBLE SUPREME COURT HAVE RENDERED ON OLD PROVISIONS OF SECTION 40A(3) OF THE ACT AND CONFIRM ED THE DISALLOWANCE MADE BY THE AO ON THIS COUNT. 8. AGGRIEVED BY SUCH ORDER OF THE CIT-A NOW THE AS SESSEE IS IN APPEAL BY RAISING THE ABOVE MENTIONED GROUNDS. 9. BEFORE US THE LD.AR SUBMITS THAT THE PRESENT ISS UE IS SQUARELY COVERED BY THE ORDER DATED 01-06-2016 PASS ED BY THE C BENCH KOLKATA TRIBUNAL IN THE CASE OF PRABIR K R. MALLIK VS. ITO IN ITA NO.1603/KOL/2011 FOR THE AY 2008-09. 10. IN REPLY THE LD. DR SUBMITS THAT RULE 6DD OF THE IT RULES 1962 CAME INTO FORCE W.E.F 1-4-1995 BY THE FINANCE ACT 1995. RULE 6DD IS AVAILABLE TO AN INSTITUTION ETC AND TH E ASSESSEE ITA NO. 903/KOL/13 SRI MALAY MONDAL 5 DOES NOT COME INTO SPECIFIC CRITERIA AS CONTEMPLATE D IN RULE 6DD OF THE I.T RULES 1962. IN SUPPORT OF HIS ARGUMENTS/CONTENTIONS HE ALSO PLACED HIS RELIANCE O N THE DECISION OF HONBLE HIGH COURT OF CALCUTTA IN THE C ASE OF CRESCENT EXPORT SYNDICATE . 11. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. BASING ON THE SUBMISSIONS OF T HE LD.AR WE FIND THAT THE C BENCH KOLKATA TRIBUNAL IN THE CASE OF PRABIR KR. MALLIK VS. ITO IN ITA NO.1603/KOL/2011 F OR THE AY 2008-09 PASSES ORDER DATED 01-06-2016 ON SIMILAR AN D IDENTICAL ISSUE. LET US EXAMINE THE FACTS OF THE CA SE THEREIN ARE THAT ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINE SS OF COUNTRY LIQUOR. DURING THE YEAR ASSESSEE HAS MADE THE PURCHASE FRO M TWO PARTIES MAINLY - ASANSOL BOTTLING AND PACKAGING COMPANY PRI VATE LTD AND SOME PURCHASES WERE ALSO MADE FROM IFB AGRO INDUSTRIES L TD. AGAINST THE AFORESAID PURCHASES ASSESSEE HAS MADE THE PAYMENT I N CASH BY DEPOSITING MONEY DIRECTLY TO THE BANK ACCOUNT OF TH E AFORESAID COMPANIES. THE AO HELD THAT THE PAYMENT MADE BY THE ASSESSEE IN CASH HAS CLEARLY VIOLATED THE PROVISIONS OF SECTION 40(A )(3) OF THE ACT AND DISALLOWED OF 2 15 47 820/- AND ADDED IT TO THE TO TAL INCOME OF THE ASSESSEE. THE LD CIT(A) CONFIRMED THE ACTION OF AO. BEFORE THE TRIBUNAL THE LD.AR OF THE ASSESSE THEREIN CONTENDE D THAT THE ASSESSEE IS AUTHORIZED RETAILER AGENT (FRANCHISE) O F COUNTRY SPRIT OF WEST BENGAL GOVERNMENT UNDER BENGAL EXCISE ACT & RULES. THE PAYMENTS WERE MADE BY WAY OF DEPOSIT OF CASH DIRECTLY IN THE BANK A/C OF WHOLESALER AGENT OF WEST BENGAL GOVERNMENT IN TERMS OF CALCUTT A GAZETTE NOTIFICATION NO 188-EX/0/R-4/2000 DT. 23/02/2000 T HE ENTIRE PAYMENT IS THEREFORE TO WEST BENGAL GOVERNMENT (THR OUGH ITA NO. 903/KOL/13 SRI MALAY MONDAL 6 AUTHORIZED WHOLESALER AGENT) WHO IS ' PRINCIPAL ' IN THIS CASE. THE ASSESSEE WAS REQUIRED AND FORCED TO PAY THE COST OF MATERIAL (WINE) ONLY BY WAY OF DEPOSIT OF MONEY IN CASH TO THE BANKER OF AUTHORIZED WHOLESALER AGENT OF WB. GOVERNMENT IFB AGRO INDUST RIES LTD CITY CENTRE DURGAPUR - 713216 AND ASANSOL BOTTLING & PA CKAGING PVT LTD. P.O. KALLACH - 713340 BURDWAN. THEREFORE IT IS CL EAR THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DECISION THER EON IS APPLICABLE AND COVERED BY THE DECISION OF TRIBUNAL SUPRA. THE RELEVANT PORTION OF WHICH REPRODUCED HEREIN BELOW : 9. BEFORE US LD. AR FILED PAPER BOOK WHICH IS RUNNI NG INTO PAGES FROM 1 TO 196 AND SUBMITTED THAT THE ASSESSEE IS AUTHORIZED RETAI LER AGENT (FRANCHISE) OF COUNTRY SPRIT OF WEST BENGAL GOVERNMENT UNDER BENGAL EXCISE ACT & RULES. THE PAYMENTS WERE MADE BY WAY OF DEPOSIT OF CASH DIRECTLY IN THE BANK A/C OF WHOLESALER AGENT OF WEST BENGAL GOVERNMENT IN TERMS OF CALCUTTA GAZETTE NOTIFICATION NO 188-EX/0/R- 4/2000 DT. 23/02/2000 THE ENTIRE PAYMENT IS THEREF ORE TO WEST BENGAL GOVERNMENT (THROUGH AUTHORIZED WHOLESALER AG ENT) WHO IS ' PRINCIPAL ' IN THIS CASE. THE ASSESSEE WAS REQUIRED AND FORC ED TO PAY THE COST OF MATERIAL (WINE) ONLY BY WAY OF DEPOSIT OF MONEY IN CASH TO THE BANKER OF AUTHORIZED WHOLESALER AGENT OF WB. GOVERNMENT IFB AGRO INDUST RIES LTD CITY CENTRE DURGAPUR - 713216 AND ASANSOL BOTTLING & PACKAGING PVT LTD. P.O. KALLACH - 713340 BURDWAN. THE WHOLESALER AGENT OF WB GOVT. SUPPLIED PRINTED PAYING SLIPS OF HIS BANK WHEREIN HIS NAME AND BANK A/C NO. WAS PRINTED IN SOME PAYING SLIP EVEN QUANTITIES SUPPLIES WITH RATE HAS BEEN MENTIONED ON THE BACK OF THE PAYING SLIP. IN THE INVOICE ISSUED THE SUPPLIER HAS SPECIFICALLY ME NTIONED THE AMOUNT OF BANK DEPOSIT AND CASH RECEIVED COLUMN WAS REMAINED BLANK (SEE COPIES PAPER BOOK PAGE 14 TO 196. THE ITO HAS VERIFIED THE ENTIRE PUR CHASE FROM THE WHOLESALER AGENT AND THE SUPPLIER HAS CONFIRMED THE TOTAL SALES MADE BY THEM TO THE ASSESSEE IFB AGRO INDUSTRIES LTD. HAVING PAN. AAACI6487L BANK A/ E. NO. 10306876975 SBI CITY CENTRE DURGAPUR AND AXIS BANK DURGAPUR A/E. N O. 21301020001645 EXCISE NO. 19200052155 CST NO. 19200052252 VAT NO. 19200 052058 TAN NO. CALL01584C. AND ASANSOL BOTTLING & PACKAGING PVT. L TD HAVING PAN. AAECA2535R BANK A/E. - SBI ASANSOL CST NO. 6940 (B.A)C VAT N O. BA/13650 TAN NO. CALA05758E. THE ENTIRE MATERIAL PURCHASED AND SOLD AS AN AGENT & FRANCHISE OF WB. GOVERNMENT SUBJECT TO STRICT CHECKING BY THE ST ATE EXCISE AUTHORITY WHO PUT THEIR STAMP AND SEAL ON STOCK REGISTER MAINTAINED ( SEE COPIES AT PAGE NO. 14 TO 196 PAPER BOOK ). EVEN TCS U/S. 206C OF THE I.T. ACT HAS BEEN COLL ECTED BY THE WHOLESALE AGENT AND PAID TO CENTRAL GOVT. WHICH HAS BEEN FILED BEFORE THE ITO FOR CLAIMING TAX CREDIT. (TAN NO: OF THE PARTY CALL0L58 4G / 59(2)) AND CALA05758E/59(2) THE WHOLESALER AGENT OF W.B. GOVT. IS CLEAR FROM TCS CERTIFICATE ISSUED. THE PROVISION OF SECTION 40A(3) WAS INTRODUCED IN THE ACT BY FINANCE ACT 1968. AS PER THE EXPLANATORY NOTE PARA -73 THE PROVISION IS DESIGNED TO COUNTER EVASION OF TAX THROUGH CLAIMS FOR EXPENDITU RE SHOWN TO HAVE BEEN INCURRED IN CASH WITH A VIEW TO FRUSTRATING PROPER INVESTIGATIO N BY THE DEPARTMENT AS TO THE IDENTITY OF THE PAYEE AND THE REASONABLENESS OF THE PAYMENT. EARLIER ALSO RULE 6DD WAS ENACTED WHICH READS AS UNDER:- ITA NO. 903/KOL/13 SRI MALAY MONDAL 7 'IN ANY OTHER CASE WHERE THE ASSESSEE SATISFIED THE INCOME TAX OFFICER THAT THE PAYMENT COULD NOT BE MADE BY A CROSS CHEQUE DRA WN ON A BANK OR BY A CROSS CHEQUE BANK DRAFT- A) DUE TO EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES FOR B) BECAUSE PAYMENT IN THE MANNER IN AFORESAID WAS NOT PRACTICABLE WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYEE HAVING REGARD TO THE NATURE OF THE TRANSACTION AND THE NECESSITY FOR EXPEDITIOU S SETTLEMENT THEREOF AND ALSO FURNISHES EVIDENCE TO THE SATISFACTION OF THE INCOME TAX OFFICER AS TO THE GENUINENESS OF THE PAYMENT AND THE IDENTITY OF THE PAYEE' 2. THE LAW AMENDED AND FOLLOWING PROVISIONS WERE IN TRODUCED BY THE FINANCE ACT 2007 W.E.F. 1.4.2008 AND EXPLANATORY NO TES THERE UNDER PROVIDES 'PROVIDED THAT NO DISALLOWANCES SHALL BE M ADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSI NESS OR PROFESSION UNDER THIS SUB-SECTION WHERE ANY PAYMENT IN A SUM E XCEEDING 20000- RUPEES IS MADE OTHERWISE THAN BY AN ACCOUNT PAYEE C HEQUE DRAWN ON A BANK OR PAYEE BANK DRAFT IN SUCH CASES AND UNDER S UCH CIRCUMSTANCES AS MAY BE PRESCRIBED HAVING REGARD TO THE NATURE AND EXTENT OF BANKING FACILITIES AVAILABLE CONSIDERATIONS OF BUSINESS EX PEDIENCY AND OTHER RELEVANT FACTORS'. INTEREPRETATIN OF LAW' ....................... THE COMMA - WEBSTERS NEW W ORLD DICTIONARY - OXFORD (SEE PAPER BOOK PAGE NO 251 (1) THE USE OF 'COMMA' 1. USE A COMMA TO SEPARATE AND INTRODUCTORY CLAUSE OR PHASE FROM A MAIN CLAUSE. 9. USE A COMMA TO SEPARATE WORDS PHRASES AND CLAU SES IN THE SERIES. 10. USED A COMMA TO SET OFF ABSOLUTE AND PARENTHETI CAL ELEMENTS IN THE SENTENCE. 12. USE A COMMA OR COMMAS TO SET OFF NON-RESTRICTIV E PHARASES OR CLAUSES FROM THE REST OF SENTENCE. 16. USE A COMMA AFTER TERMS THAT INTRODUCE A SERIE S OR AN EXAMPLE. FIRSTLY 3. AFTER READING THE ORIGINAL ENACTMENT AND SUBSEQU ENT AMENDMENT AND AFTER READING THE FINANCE MINISTER'S EXPLANATORY NO TE THE FOLLOWINGS SHOULD BE REQUIREMENT TO ALLOW - CASH PAYMENT WITHIN MEANI NG OF SECTION 40A(3). (A) IDENTITY OF THE PAYEE (B) REASONABLENESS OF THE PAYMENT (C) CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ITA NO. 903/KOL/13 SRI MALAY MONDAL 8 (D) THE ACT AS INTRODUCED IN 1968 READ WITH RULES 6 DD REQUIRES TO EXEMPT THE PROVISION OF SECTION 40A(3) IF CASH PAYMENT IS DUE TO GENUINE DIFFICULTY AND THE EVIDENCE THEREOF IS PRODUCED AT THE TIME OF ASSESSMENT. THIS RULE 6DDJ WAS INCORPORATED IN ACT ITSELF BY FINANCE ACT 2007 BY USING THE WORD CONSIDERATIONS OF BUSINESS EXPENDIENCY AND OTHER R ELEVANT FACTORS. (A) CIRCUMSTANCES AS PRESCRIBED IN THE RULE. (B) EXTENT OF BANKING FACILITY AVAILABLE. (C) CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS. THE INTENTION OF THE ACT IS VERY CLEAR BY THE FACT THAT THE ACT HAS NOT USED THE WORD' AND' WHICH DENOTES THAT CUMULATIVE CONDI TIONS ARE NOT REQUIRED TO BE FULL FILLED. THE ABSENCE OF THE WORD 'AND' IMPLIES THAT THE ACT HAS GIVEN' ALTERNATIVE INDEPENDENT CONDITIONS ( I.E. ANYONE OF THE CONDITION GIVEN IN THE ACT NEEDS TO BE FULFILLE D TO CLAIM EXEMPTION FROM OPERATION OF SEE. 40A(3) OF THE ACT AND NOT TH E CUMULATIVE CONDITION. IN THIS CASE THE CONDITION' CONSIDERATIO N OF BUSINESS EXPEDIENCY & OTHER RELEVANT FACTORS' HAS BEEN FULLY SATISFIED WHICH ENTITLE THE ASSESSEE TO CLAIM EXEMPTION OF OPERATION OF SEE . 40A(3) OF THE I. T. ACT. SECONDLY 4A. IN THIS CASE THE ASSESSEE HAS BEEN ABLE TO PROO F (A) IDENTITY OF THE PAYEE WHOLESALER AGENT OF WB. GOVT. HAVING IFB AGR O INDUSTRIES LTD HAVING PAN NO: AAACI6487L BANK A/E. NO: 10306876975 WITH SBI CITY CENTRE DURGAPUR EXCISE REGN. NO: 19200052155 VAT NO: 19200052058 CST NO: 19200052252 TAN NO: CALL01584 C AND ASANSOL BOTTLING & PACKAGING PVT LTD. PAN NO. AAECA2535R BA NK A/C. WITH SBI ASANSOL VAT NO. BA/13650 CST NO. 6940 (BA)C TAN NO. CALA0578E AND ALSO REASONABLENESS OF THE PAYMENT. (B) AS PRIC E IS DETERMINED BY THE WEST BENGAL GOVT. AND IS SUBJECT TO CHECK BY THE EX CISE AUTHORITIES. (C) PAYMENT HAS BEEN MADE BY THE ASSESSEE DIRECTLY TO T HE SUPPLIERS BANK A/E. ON THE PRINTED STATIONERY SUPPLIED BY THE WHOL ESALER AGENT OF W.B. GOVT. IFB AGRO INDUSTRIES LTD. AND ASANSOL BOTTLING & PACKAGING PVT. LTD. WHICH IS THE PROOF THE CONSIDERATION OF THE BUSINES S EXPEDIENCY. 4B. THE ITO HAS VERIFIED THE TOTAL TRANSACTION FROM THE SUPPLIERS BY ISSUE OF NOTICE U/S. 133(6) OF THE ACT AND GOT REPLY THER ETO CONFIRMING THE ENTIRE TRANSACTION AND ALSO THE FACT OF BANK DEPOSI T THROUGH ITS BILL. THIRDLY 5A. THE PAYMENTS BY WAY OF DEPOSIT OF CASH DIRECTLY IN THE BANK A/C OF THE WHOLESALER AGENT OF WEST BENGAL GOVERNMENT IN TERMS OF CALCUTTA GAZETTE NOTIFICATION NO. 188-EX/0/R-4/2000 DT. 23/02/2000. THE PAYMENTS MADE IS THEREFORE OTHERWISE COVERED UNDER RULE 6DD(B) O F THE I. T. RULES TO WHICH PROVISIONS OF SEC. 40A(3) ARE INAPPLICABLE. 5. IN THIS CONNECTION ATTENTION IS DRAWN TO CALCUT TA GAZETTE AS UNDER: ITA NO. 903/KOL/13 SRI MALAY MONDAL 9 '5(1) - THE RETAIL VENDER OR SHALL SUBMIT TO THE WH OLESALE LICENSEE THROUGH EXCISE OFFICER IN CHARGE OF THE WAREHOUSE A DEMAND FOR ISSUE OF COUNTY SPRIT ' 5(2) NO RETAIL VENDER OF COUNTRY SPRIT SHALL DEPOSI T DUTY DIRECT INTO THE LOCAL TREASURY FOR ISSUE OF COUNTRY SPIRIT R DUTY C OST PRICE BOTTLING CHARGE SHALL BE PAID BY THE RETAIL VENDER TO THE CREDIT OF THE WHOLESALE LICENSEE CONCERNED. 5(3) THE WHOLESALE LICENSEE SHALL REALISE THE NECES SARY AMOUNT TO DUTY COST PRICE AND BOTTLING CHARGE AND SHALL DEBIT THE AMOUNT OF DUTY FOR THE ISSUE FROM THE PERSONAL LEDGER ACCOUNT . THE AU THORIZED REPRESENTATIVE SHALL THEN SUBMIT REQUISITION TO THE EXCISE OFFICER IN CHARGE OF A WAREHOUSE. 5B RULE 6DD(B) OF I. T. RULES WHERE THE PAYMENT IS MADE TO THE GOVERNMENT AND UND ER THE RULES FRAMED BY IT' SUCH PAYMENT IS REQUIRED TO BE MADE I N LEGAL TENDER. 5D. THE ENTIRE PAYMENT IS THEREFORE TO PRINCIPAL WEST BENGAL GOVERNMENT THROUGH ITS WHOLESALE AGENT. THE RELATIO NSHIP BETWEEN THE ASSESSEE (FRANCHISE AUTHORISED RETAILER) AND W.B. G OVERNMENT (THE SUPPLIER) ACTING UNDER BENGAL EXCISE RULES THROUGH ITS AUTHORISED WHOLESALER LICENSEE (AGENT) BOTH DE FACTO AND DE J URE IS ONE OF ' PRINCIPAL ' AND ' AGENT '. THE RETAILER AT ALL TIMES ACTING ONLY FOR AND AL L BEHALF OF THE SUPPLIER (WB. GOVERNMENT) AS LINK ONL Y IN THE SUPPLY CHAIN AND THUS THE PAYMENTS BY IT TO THE PRINCIPAL - SU PPLIER ARE ONLY IN TERMS OF AND IN PURSUANCE OF GAZETTE NOTIFICATION. THE QU ESTION OF NO SEPARATE PAYMENT BEING MADE BY THE PAYEE - PRINCIPAL (WB GO VERNMENT) TO THE PAYER - RETAILERS I.E. TOWARDS REMUNERATION OR COMM ISSION ETC ARISES. PROVISIONS OF SEC. 40A(3) THEREFORE ARE NOT APPLI CABLE TO THIS CASE UNDER RULE 6DD(B) ALSO. 10. ON THE OTHER HAND THE LD. DR VEHEMENTLY SUPPORT ED THE ORDER OF THE LOWER AUTHORITIES. 11. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AFTER EXAMINING ON THE FACTS O F THE CASE AND HEARING THE RIVAL CONTENTIONS OF BOTH THE PARTIES WE FIND T HAT THE AO HAS DISALLOWED THE PURCHASES WHERE THE PAYMENT WAS EXCE EDING MORE THAN RS. 20 000/- IN ACCORDANCE WITH THE PROVISION OF SE CTION 40A(3). IN OUR VIEW THIS ISSUE NEEDS TO BE ADJUDICATED FROM DIFFER ENT DIMENSIONS AS ENUMERATED BELOW : 1) WHAT WERE THE PROVISIONS OF SECTION 40A(3) THEN APP LICABLE FOR THE ASSESSMENT YEAR 2008-09. 2) THE PURPOSE OF INTRODUCTION OF THE SECTION 40A(3) I N THE INCOME TAX ACT. 3) CASE LAWS OF VARIOUS COURTS. THE PROVISIONS OF THE SECTION 40A(3) OF THE ACT THE N APPLICABLE FOR THE ASSESSMENT YEAR 2008-09 READS AS UNDER : ITA NO. 903/KOL/13 SRI MALAY MONDAL 10 40A.(1) (2). (3)(A) WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH PAYMENT IS MADE IN A SUM EXCEEDING TWENTY THOUSAND RUPEES OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT NO DEDUCTION SHALL BE ALLOWED IN RESPEC T OF SUCH EXPENDITURE; (3)(B)WHERE AN ALLOWANCE HAS BEEN MADE IN THE ASSES SMENT FOR ANY YEAR IN RESPECT OF ANY LIABILITY INCURRED BY THE AS SESSEE FOR ANY EXPENDITURE AND SUBSEQUENTLY DURING ANY PREVIOUS YE AR ( HEREINAFTER REFERRED TO AS SUBSEQUENT YEAR ) THE ASSESSEE MAKES PAYMENT IN RESPECT THEREOF OTHERWISE THAN ANY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT THE PAYMENT SO MADE SH ALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME-TAX AS INCOME OF THE SUBSEQUEN T YEAR IF THE AMOUNT OF PAYMENT EXCEEDS TWENTY THOUSAND RUPEES: PROVIDED THAT NO DISALLOWANCE SHALL BE MADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR P ROFESSION UNDER THIS SUB-SECTION WHERE ANY PAYMENT IN A SUM EXCEEDING TW ENTY THOUSAND RUPEES IS MADE OTHERWISE THAN BY AN ACCOUNT PAYEE C HEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT IN SUCH CASES AND UNDER SUCH CIRCUMSTANCES AS MAY BE PRESCRIBED HAVING REGARD T O THE NATURE AND EXTENT OF BANKING FACILITIES AVAILABLE CONSIDERATI ONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS. AFTER READING THE PROVISIONS OF SECTION 40A(3) WE F IND THAT CERTAIN EXCEPTIONS HAVE BEEN PROVIDED WHICH WERE THEN APPLI CABLE FOR THE ASSESSMENT YEAR 2008-09 AND ONE OF THEM IS WITH REG ARD TO THE BUSINESS EXPEDIENCY OF THE ASSESSEE. FROM THE SUBMISSION OF THE ASSESSEE WE FIND THAT THE ASSESSEE WAS THE ONLY AUTHORIZED DEALER IN ASANSOL FOR THE SUPPLY OF COUNTRY LIQUOR AND AUTHORIZED EXCISE VENDORS. TH E ASSESSEE CAN TAKE THE DELIVERY OF THE GOODS ONLY AFTER DEPOSITING THE PAYMENT WITH THE COMPANY. THE ASSESSEE WAS TO KEEP SUFFICIENT STOCK OF COUNTRY LIQUOR AS PRESCRIBED BY THE EXCISE DEPARTMENT AND IN CASE STO CK FALLS SHORT OF THE PRESCRIBED LIMIT OTHERWISE THE DEPARTMENT USED TO I MPOSE PENALTY. THEREFORE THE ASSESSEE AVOIDED THE PROCESS OF DEPOS ITING THE CASH IN HIS BANK ACCOUNT AND THEREAFTER GETTING THE DEMAND DRAF T IN THE NAME OF THE COMPANY IN ORDER TO KEEP THE STOCK WITHIN THE PRESC RIBED LIMIT AT ALL THE TIMES. IT IS ALSO IMPORTANT TO NOTE THAT THE COMPAN Y WAS ALSO NOT ACCEPTING THE ACCOUNT PAYEE CHEQUE OF THE ASSESSEE AS IT WILL TAKE COUPLE OF DAY TIME IN CLEARANCE. SO IN OUR CONSIDERED VIEW THE EXCEPTION PROVIDED IN THE PROVISIONS OF SECTION 40A(3) WITH REGARD TO THE BUSINESS EXPEDIENCY THEN APPLICABLE FOR THE ASSESSMENT YEAR 2008-09 IS MET BY THE ASSESSEE. ITA NO. 903/KOL/13 SRI MALAY MONDAL 11 11.1 THE PROVISION OF SECTION 40A(3) WAS INSERTED B Y THE FINANCE ACT 1968. THE PURPOSE FOR BRINGING THE SECTION WAS MENT IONED IN THE EXPLANATORY NOTE PARA 73 WHICH READ AS UNDER : IT WILL BE PERTINENT TO GO INTO THE INTENTION BEHIN D INTRODUCTION OF PROVISIONS OF SECTION 40A(3) OF THE ACT AT THIS JUN CTURE. WE FIND THAT THE SAID PROVISION WAS INSERTED BY FINANCE ACT 1968 WIT H THE OBJECT OF CURBING EXPENDITURE IN CASH AND TO COUNTER TAX EVASION. TH E CBDT CIRCULAR NO. 6P DATED 06.07.1968 REITERATES THIS VIEW THAT THIS PROVISION IS DESIG NED TO COUNTER EVASION OF A TAX THROUGH CLAIMS FOR EXPE NDITURE SHOWN TO HAVE BEEN INCURRED IN CASH WITH A VIEW TO FRUSTRATING PR OPER INVESTIGATION BY THE DEPARTMENT AS TO THE IDENTITY OF THE PAYEE AND REASONABLENESS OF THE PAYMENT. 11.2 IN THIS REGARD IT IS PERTINENT TO GET INTO THE FOLLOWING DECISIONS ON THE IMPUGNED SUBJECT:- ATTAR SINGH GURMUKH SINGH VS ITO REPORTED IN (1991) 191 ITR 667 (SC) SECTION 40A(3) OF THE INCOME-TAX ACT 1961 WHICH PROVIDES THAT EXPENDITURE IN EXCESS OF RS.2 500 (RS.10 000 AFTER THE 1987 AMENDMENT) WOULD BE ALLOWED TO BE DEDUCTED ONLY IF MADE BY A C ROSSED CHEQUE OR CROSSED BANK DRAFT (EXCEPT IN SPECIFIED CASES) IS N OT ARBITRARY AND DOES NOT AMOUNT TO A RESTRICTION ON THE FUNDAMENTAL RIGHT TO CARRY ON BUSINESS. IF READ TOGETHER WITH RULE 6DD OF THE INCOME-TAX RULES 1962 IT WILL BE CLEAR THAT THE PROVISIONS ARE NOT INTENDED TO RESTR ICT BUSINESS ACTIVITIES. THERE IS NO RESTRICTION ON THE ASSESSEE IN HIS TRAD ING ACTIVITIES. SECTION 40A(3) ONLY EMPOWERS THE ASSESSING OFFICER TO DISAL LOW THE DEDUCTION CLAIMED AS EXPENDITURE IN RESPECT OF WHICH PAYMENT IS NOT MADE BY CROSSED CHEQUE OR CROSSED BANK DRAFT. THE PAYMENT B Y CROSSED CHEQUE OR CROSSED BANK DRAFT IS INSISTED UPON TO ENABLE THE A SSESSING AUTHORITY TO ASCERTAIN WHETHER THE PAYMENT WAS GENUINE OR WHETHE R IT WAS OUT OF INCOME FROM UNDISCLOSED SOURCES. THE TERMS OF SECTI ON 40A(3) ARE NOT ABSOLUTE. CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLUDED. GENUINE AND BONA FIDE TRANSACTION S ARE NOT TAKEN OUT OF THE SWEEP OF THE SECTION. IT IS OPEN TO THE ASSESSE E TO FURNISH TO THE SATISFACTION OF THE ASSESSING OFFICER THE CIRCUMSTA NCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED IN SECTION 40A(3) WAS NOT PRACTICABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYE E. IT IS ALSO OPEN TO THE ASSESSEE TO IDENTIFY THE PERSON WHO HAS RECEIVED TH E CASH PAYMENT. RULE 6DD PROVIDES THAT AN ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENT OF PAYMENT BY A CROSSED CHEQUE OR CROSSED BANK DRAFT I N THE CIRCUMSTANCES SPECIFIED UNDER THE RULE. IT WILL BE CLEAR FROM THE PROVISIONS OF SECTION 40A(3) AND RULE 6DD THAT THEY ARE INTENDED TO REGUL ATE BUSINESS TRANSACTIONS AND TO PREVENT THE USE OF UNACCOUNTED MONEY OR REDUCE THE CHANCES TO USE BLACK MONEY FOR BUSINESS TRANSACTION S. CIT VS CPL TANNERY REPORTED IN (2009) 318 ITR 179 ( CAL) THE SECOND CONTENTION OF THE ASSESSEE THAT OWING T O BUSINESS EXPEDIENCY OBLIGATION AND EXIGENCY THE ASSESSEE H AD TO MAKE CASH PAYMENT FOR PURCHASE OF GOODS SO ESSENTIAL FOR CARR YING ON OF HIS BUSINESS WAS ALSO NOT DISPUTED BY THE AO. THE GEN UINITY OF TRANSACTIONS ITA NO. 903/KOL/13 SRI MALAY MONDAL 12 RATE OF GROSS PROFIT OR THE FACT THAT THE BONA FIDE OF THE ASSESSEE THAT PAYMENTS ARE MADE TO PRODUCERS OF HIDES AND SKIN AR E ALSO NEITHER DOUBTED NOR DISPUTED BY THE AO. ON THE BASIS OF TH ESE FACTS IT IS NOT JUSTIFIED ON THE PART OF THE AO TO DISALLOW 20% OF THE PAYMENTS MADE U/S 40A(3) IN THE PROCESS OF ASSESSMENT. WE THEREFORE DELETE THE ADDITION OF RS. 17 90 571/- AND GROUND NO.1 IS DECIDED IN FA VOUR OF THE ASSESSEE. CIT VS CRESCENT EXPORT SYNDICATE IN ITA NO. 202 OF 2008 DATED 30.7.2008 JURISDICTIONAL HIGH COURT DECISION IT ALSO APPEARS 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 I S 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.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 THE SE GOODS COULD NOT HAVE BEEN PROCURED AND IT WOULD HAVE HAMPERED THE S UPPLY OF GOODS WITHIN THE STIPULATED TIME. THEREFORE THE GENUINEN ESS 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 ORDER SO PASS ED BY THE LEARNED TRIBUNAL. IT FURTHER APPEARS FROM THE ASSESSMENT OR DER THAT NEITHER THE ASSESSING OFFICER NOR THE CIT(APPEAL) HAS DISBELIEV ED THE GENUINENESS OF THE TRANSACTION. THERE WAS NO DISPUTE THAT THE PURC HASES WERE GENUINE. ANUPAM TELE SERVICES VS ITO IN (2014) 43 TAXMANN.CO M 199 (GUJ) SECTION 40A(3) OF THE INCOME-TAX ACT 1961 READ W ITH RULE 6DD OF THE INCOME-TAX RULES 1962 BUSINESS DISALLOWANCE CA SH PAYMENT EXCEEDING PRESCRIBED LIMITS (RULE 6DD(J)-ASSESSMENT YEAR 2006-07 ASSESSEE WAS WORKING AS AN AGENT OF TATA TELE SERVI CES LIMITED FOR DISTRIBUTING MOBILE CARDS AND RECHARGE VOUCHERS P RINCIPAL COMPANY TATA INSISTED THAT CHEQUE PAYMENT FROM ASSESSEES CO-OPE RATIVE BANK WOULD NOT DO SINCE REALIZATION TOOK LONGER TIME AND SUCH PAYMENTS SHOULD BE MADE ONLY IN CASH IN THEIR BANK ACCOUNT IF ASSESS EE WOULD NOT MAKE CASH PAYMENT AND MAKE CHEQUE PAYMENTS ALONE IT WOU LD HAVE RECEIVED RECHARGE VOUCHERS DELAYED BY 4/5 DAYS WHICH WOULD S EVERELY AFFECT ITS BUSINESS OPERATION ASSESSEE THEREFORE MADE CASH PAYMENT WHETHER IN VIEW OF ABOVE NO DISALLOWANCE UNDER SECTION 40A (3) WAS TO BE MADE IN RESPECT OF PAYMENT MADE TO PRINCIPAL - HELD YES [PARAS 21 TO 23] [ IN FAVOUR OF THE ASSESSEE ] SRI LAXMI SATYANARAYANA OIL MILL VS CIT REPORTED IN (2014) 49 TAXMANN.COM 363 (ANDHRA PRADESH HIGH COURT) SECTION 40A(3) OF THE INCOME-TAX ACT 1961 READ W ITH RULE 6DD OF THE INCOME-TAX RULES 1962 BUSINESS DISALLOWANCE CA SH PAYMENT EXCEEDING PRESCRIBED LIMIT (RULE 6DD) ASSESSEE MA DE CERTAIN PAYMENT OF PURCHASE OF GROUND NUT IN CASH EXCEEDING PRESCRI BED LIMIT ASSESSEE SUBMITTED THAT HER MADE PAYMENT IN CASH BECAUSE SEL LER INSISTED ON THAT AND ALSO GAVE INCENTIVES AND DISCOUNTS FURTHER S ELLER ALSO ISSUED CERTIFICATE IN SUPPORT OF THIS WHETHER SINCE ASSE SSEE HAD PLACED PROOF OF PAYMENT OF CONSIDERATION FOR ITS TRANSACTION TO SEL LER AND LATER ADMITTED PAYMENT AND THERE WAS NO DOUBT ABOUT GENUINENESS OF PAYMENT NO ITA NO. 903/KOL/13 SRI MALAY MONDAL 13 DISALLOWANCE COULD BE MADE UNDER SECTION 40A(3) H ELD YES [PARA 23] [ IN FAVOUR OF THE ASSESSEE] CIT VS SMT. SHELLY PASSI REPORTED IN (2013) 350 ITR 227 (P&H) IN THIS CASE THE COURT UPHELD THE VIEW OF THE TRIBU NAL IN NOT APPLYING SECTION 40A(3) OF THE ACT TO THE CASH PAYMENTS WHEN ULTIMATELY SUCH AMOUNTS WERE DEPOSITED IN THE BANK BY THE PAYEE. 11.3 IT IS PERTINENT TO NOTE THAT THE PRIMARY OBJ ECT OF ENACTING SECTION 40A(3) WERE TWO FOLDS FIRSTLY PUTTING A CHECK ON TRADING TRANSACTIONS WITH A MIND TO EVADE THE LIABILITY TO TAX ON INCOME EARNED OUT OF SUCH TRANSACTION AND SECONDLY TO INCULCATE THE BANKING HABITS AMONGST THE BUSINESS COMMUNITY. APPARENTLY THIS PROVISION WAS DIRECTLY RELATED TO CURB THE EVASION OF TAX AND INCULCATING THE BANKING HABITS. THEREFORE THE CONSEQUENCE WHICH WERE TO BE FALLEN ON ACCOUNT OF NON-OBSERVATION OF SECTION 40A(3) MUST HAVE NEXUS TO THE FAILURE OF SU CH OBJECT. THEREFORE THE GENUINENESS OF THE TRANSACTIONS BEING FREE FROM VICE OF ANY DEVICE OF EVASION OF TAX IS RELEVANT CONSIDERATION. WITH REGA RD TO THE PURPOSE OF BRINGING THE PROVISIONS OF SECTION THERE IS NO DOUB T ABOUT THE IDENTITY OF THE PARTY. THE LD. AR HAS DIRECTLY DEPOSITED THE CA SH IN THE ACCOUNT OF THE COMPANIES AND HAS PRODUCED THE SALES BILLS OF THE C OMPANY. THE AO HAS ALSO VERIFIED THE TRANSACTIONS FROM THE COMPANIES B Y ISSUING NOTICE UNDER SECTION 133(6) OF THE ACT. SO IN THE INSTANT CASE THERE IS NO EVASION OF TAX BY CLAIMING THE BOGUS EXPENDITURE IN CASH. 12. THE BENCH DEALING WITH THE ISSUE THEREIN CONSI DERED THE REASONS TO WHICH CIRCULAR NO:6P DT:06-07-1968 HAS B EEN ISSUED BY THE CBDT AND BASING ON WHICH THE BENCH OBSERVED THE MAIN OBJECTIVE OF THE ISSUANCE OF THE ABOVE CIRCULAR WAS TO COUNTER TAX EVASION AND THAT IF THE IDENTITY OF THE PAYEE AND R EASONABLENESS OF THE TRANSACTION IS PROVED THEN THE OBJECTIVE OF TH E SAID CIRCULAR IS ACHIEVED. WE FIND THAT THE FACTS IN THE PRESENT CAS E THE OTHER PARTY WHO IS SAID TO BE AGENT RECEIVING AMOUNTS ON BEHALF OF GOVERNMENT OF WEST BENGAL IDENTITY OF THE PAYEE IS ONE AND THE SAME IN THE PRESENT CASE WHEREIN THE BENCH SUPRA EXAMINED THE DETAILS OF IDENTITY AND REASONABLENESS OF TRANSACTI ONS BESIDES THE BENCH SUPRA ALSO DISCUSSED THE PROVISION OF SECTION 40A(3) OF THE ACT IN DETAIL IN ITS PRA-11 OF THE ORDER SUPRA. ITA NO. 903/KOL/13 SRI MALAY MONDAL 14 13. THE BENCH ALSO READ DOWN THE DECISIONS OF HONB LE SUPREME COURT IN THE CASE OF ATTAR SINGH GURMUKH SINGH VS ITO REPORTED IN (1991) 191 ITR 667 (SC) HONBLE JURISD ICTIONAL HIGH COURT IN THE CASES OF CIT VS CPL TANNERY REPORTED IN (2009) 318 ITR 179 (CAL) AND CIT VS CRESCENT EXPORT SYNDICATE IN ITA NO. 202 OF 2008 DATED 30.7.2008 AND HONBLE HIGH CPURT OF GUJARAT IN THE CASE OF ANUPAM TELE SERVICES VS ITO REPORTED IN (2014) 43 TAXMANN.COM 199 (GUJ) AND HONBLE HIGH COURT ANDHRA PRADESH IN THE CASE OF SRI LAXMI SATYANARAYANA OIL MILL VS CIT REPORTED IN (2014) 49 TAXMANN.COM 363 AND HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CA SE OF CIT VS SMT. SHELLY PASSI REPORTED IN (2013) 350 ITR 227 (P&H). THE HONBLE COURTS ABOVE WAS PLEASES TO OBSERVE THAT THE REVENUE DID N OT DOUBT AND DISPUTE THE TRANSACTIONS OF THE PARTIES THEREIN AND HONBLE SUPREME COURT HELD THAT THE PROVISIONS OF SECTION 40A(3) AND RULE 6DD OF THE RULES ARE INTENDED TO REGULATE BUSINESS TRANSACTIONS AND TO P REVENT THE USE OF UNACCOUNTED MONEY OR REDUCE THE CHANCES TO USE BLAC K MONEY FOR BUSINESS TRANSACTIONS. 14. IN THE LIGHT OF OBSERVATIONS OF HONBLE SUPREME COURT AND HONBLE HIGH COURT ABOVE AND IN VIEW OF THE FINDING OF THE C BENCH THAT THE ASSESSEE DIRECTLY DEPOSITED THE CASH IN THE ACCOUNT OF THE ASANSOL BOTTLING & PACKAGING CO.PVT.LTD AND HAS PRODUCED TH E SALES BILLS IN THE ASSESSMENT PROCEEDINGS AND THE AO ALSO VERIFIED THE TRANSACTIONS UNDER SECTION 133(6) OF THE ACT. THEREFORE WE ARE OF THE VIEW THAT THE ISSUE IN THE CASE PRABIR KUMAR MULLICK IS INDENTICLE TO THE CASE ON HAND AND IS COVERED BY THE ORDER DT:01-06-2016 PASSED BY C BE NCH IN ITA 1603/KOL/2011. THUS SOLE GROUND RAISED BY THE ASSE SSEE IS ALLOWED. ITA NO. 903/KOL/13 SRI MALAY MONDAL 15 15. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED ORDER PRONOUNCED IN THE OPEN COURT ON 28 SEPTEMBER 2016 SD/- SD/- WASEEM AHMED S.S.VISWANETH RA RAVI ACCOUNTANT MEMBER JUDICIAL MEM BER DATED:28/09/2016 1. THE APPELLANT/ ASSESSEE: SRI MALAY MONDAL VILL: PARIRA P.O MAJIRA DIST:BURDWAN 713330. 2 . THE RESPONDENT/ DEPARTMENT; THE INCOME TAX OFFICER WARD 2(2) ASANSOL-713301. 3. CIT 4. CIT(A) 5. THE DEPARTMENTAL REPRESENTATIVE 6. GUARD FILE TRUE COPY ** PRADIP SPS BY ORDER ASSISTANT REGI STRAR INCOME TAX APPELLATE TRIBUNAL KOLKAT A BENCHES KOLKATA COPY OF THE ORDER FORWAR DED TO : -