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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: Sri J. Sudhakar Reddy, Hon’ble]
Assessment Year: 2012-13 Munshi Mini Rice Mill……………....…...………..……………………………………….…….……...Appellant C/o. S.N. Ghosh & Associates, Advocates “Seven Brothers’ Lodge” P.O. Buroshibtala P.S. Chinsurah Dist. Hooghly PIN- 712 105 [PAN : AARFM 5059 Q] Income Tax Officer, Ward-2(2), Kolkata………………………………..………………..…. Respondent Aayakar Bhawan G.T. Road, Khadina More P.O., Chinsurah P.S. Chinsurah Dist. Hooghly PIN – 712 101 Appearances by: Shri Somnath Ghosh, Advocate, appeared on behalf of the assessee. Shri Sanjoy Mukherjee, Addl. CIT, DR appearing on behalf of the Revenue. Date of concluding the hearing : December 28th, 2017 Date of pronouncing the order : January 19th, 2018
O R D E R Per J. Sudhakar Reddy :-
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals)-6, Kolkata, (hereinafter the ‘ld. CIT (A)’), passed u/s 250 of the Income Tax Act, 1961 (the ‘Act’), dt. 13/06/2017, for the Assessment Year 2012-13.
The assessee is a partnership firm and runs a rice-mill. The sole issue before us, is as to whether the Assessing Officer was right in disallowing an amount of Rs.12,61,200/-, being purchases of paddy from 23 persons, u/s 40A(3) of the Act, on the ground that they are not agriculturists. Before the Assessing Officer, the assessee submitted as follows:-
Assessment Year: 2012-13 Munshi Mini Rice Mill
"............. In pursuance to its activities as a manufacturer, it purchased paddy, which is an agricultural produce, from the farmers and agents. The assessee had purchased paddy from 23 persons, who are mainly farmers and also acted as agents for procuring paddy for the assessee from other farmers. It was, under these circumstances, your Honour misconceived that the payments for purchases having been made in cash are inadmissible in view of the provision S. 40A(3) of the Act. There is no doubt that or dispute as to the fact that paddy is an agricultural commodity and the cost of purchase of paddy are either disbursed directly to farmers or through agents in cash and accordingly, a cogoint reading of Rules 6DD(e)(i) alongwith 6DD(K) of the Income Tax Rule. 1962 would exclude the payments made therefore from the rigours of S. 40A(3) of the Act……..”
The Assessing Officer held that, it cannot be concluded that the sellers of paddy to the assessee, as per the statement of purchase, are the originally cultivators, growers and producers of such item, but simple middlemen. He held that the assessee failed to substantiate his claim that Rule 6DD(e)(i) along with Rule 6DD(K) of the Income Tax Rules, 1962 (the ‘Rules’), applies to the facts of the case.
3.1. On appeal, the ld. First Appellate Authority held as follows:-
“During the appellate proceedings, the appellant has vaguely referred to a certificate given by a Gram Panchayet but neither does it appear that such a certificate was furnished during the assessment proceedings, nor has the appellant elaborated on the contents of such certificate claimed to be available with the appellant with regard to the specific sellers of paddy to the appellant. The absence of any material on record to satisfactorily establish the appellant's claim that the payments were made to cultivators, growers or producers of paddy or licensed agents, make the exceptions provided under Rule 6DD(e)(i) and Rule 6DD(k) inapplicable to the appellant's case. Accordingly, the case laws cited are also distinguishable
Assessment Year: 2012-13 Munshi Mini Rice Mill on the facts of the case. Hence, the disallowance of Rs. 12,61,200/- is confirmed.”
Before me, the assessee produced a copy of this certificate issued by the Panchayat Pradhan of Gram Bhastara-Hooghly, that these 23 people are agriculturists and submitted that this certificate was filed before the Assessing Officer as well as the ld. CIT(A). Evidence of the same is produced before me. Based on this certificate, it was argued that all these 23 persons were agriculturists and that the Assessing Officer as well as the ld. CIT(A), were factually wrong in holding otherwise without any contrary evidence.
The ld. D/R, strongly disputed this certificate and submitted that these 23 people reside in 8 different villages and were not from the same Gram Panchayat. He submitted that banking facility was available in all the Gram Panchayats. He supported the order of the Revenue Authorities by arguing that the assessee has not discharged the burden of proof that lay on him that the purchases were made from agriculturists.
5.1. In reply, the ld. Counsel for the assessee, submitted that the validity of the certificate cannot be questioned by the ld. D/R, when the same has not been disputed by the Assessing Officer as well as the ld. CIT(A). He further submitted that all the 23 people were residents of 8 villages.
In our view, the certificate given by the Panchayat Pradhan of Gram Bhastara-Hooghly, prima facie, proves that these 23 people from whom the assessee has purchased paddy, in cash, are agriculturists. No contrary evidence has been brought on record by the Revenue. A certificate given by an authority cannot be discarded, unless it is proved that contents of that certificate are wrong or false. The Assessing Officer has no evidence to hold that these 23 persons are not agriculturists. Thus, on this factual finding, this disallowance is to be deleted.
Even if it is assumed that purchases were made from agriculturists through agents, the Hon’ble Gujarat High Court in the case of CIT vs. A.C. Industries [2014]
Assessment Year: 2012-13 Munshi Mini Rice Mill 43 taxmann.com 290 (Gujarat), held that where purchases were made from agriculturists as also through common agents, case was correctly held to be falling under exception provided under clauses (e) and (k) of rule 6DD.
Respectfully following the same, and for the reasons cited above, I delete the disallowance and allow the appeal of the assessee.
In the result, appeal of the assessee is allowed.