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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri Waseem Ahmed, AM & Shri K. Narasimha Chary, JM]
For the Appellant: N o n e For the Respondent: Shri Anand Kr. Singh, JCIT ORDER
Per Shri K. Narasimha Chary, JM:
This appeal by assessee is arising out of order of CIT(A), Asansol vide Appeal No. 117/CIT(A)/Asl/W-1(3)/Asl/10-11 dated 25.11.2013. Assessment was framed by ITO, Wd- 1(3), Asansol u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) for AY 2008-09 vide his order dated 25.10.2010.
Brief facts of this case are that the assessee is a seller of country spirit. For the Assessment Year 2008-09, he filed the return of income on 3.10.2008 declaring a total income of Rs. 1,92,420/-. During the relevant year, assessee was found to have made purchases from a Bottling Plant. Ld. AO made enquiries u/s. 133(6) of the Act and basing on the reply received from the Bottling plant people, he found that payment for purchases worth Rs.71,11,297/- was made in cash in excess of Rs. 20,000/- each. It was submitted before the Assessment Officer that such payments do not attract the provisions under section 40A(3) of the Act, in view of the provisions under Rule 6DD(a) of the Income Tax Rules. However, the Assessment Officer relying on a decision of Hon’ble Kerala High Court in K.Abdu & Co. vs. Income Tax Officer [2008] 170 Taxman 297 (Ker) observed that the Rule 6DD (a) of the Rules applies only for payments to the institutions referred to therein and not for payments made to any party’s account maintained in the institutions referred to therein. Challenging such findings, the assessee carried the matter in appeal before the Ld. CIT(A).
Sisir Kr. Chakraborty(Choudhury), AY 2008-09 2. It was argued before the learned CIT(Appeals) that the payments are made pursuant to the provisions of the West Bengal Excise (Supply of Country Spirit on Payment of Duty) Rules, 2005 as such Rule 6DD(b) applies to this case. Learned CIT(Appeals) by way of impugned order, dismissed the appeal holding that in the West Bengal Excise (Supply of Country Spirit on Payment of Duty) Rules, 2005 there is no mandate for purchaser or agent to make payment by way cash.
Challenging the said findings of the Ld. CIT(A), the AO filed this appeal before the Tribunal on the following grounds: “1. For that on the facts of the case the Ld. CIT(A), Asansol, was not legally justified in sustaining the addition of Rs.71,80,697/- u/s. 40A(3) of the Act, 1961, when the payments made as per procedure laid down under the West Bengal Excise (Supply of country spirit on Payment of Duty) Rules, 2005, is covered by exception to Rule 6DD of the Income Tax Rules ’62, and as such the addition may please be deleted.”
In spite of service of notice and granting opportunities, assessee did not enter appearance either in person or through an authorized Representative. Hence, we shall proceed with the matter to determine the issue with reference to the material available on record and hearing the learned DR.
There is no dispute that the assessee is a retail vendor of country liquor which is an excisable commodity. The sales and purchases country liquor are controlled by the State Government and earlier the retail sellers used to deposit the cost price, excise duty, bottling charges etc. in the treasury but subsequently the Excise Department by way of Notification dated 29.08.2005 changed the procedure. We have gone through such Rules. As per this procedure vide clause 6(2) no retail vendor of country spirit shall deposit duty directly into the local treasury for issue of country spirit to be taken by him from the warehouse concerned, but the duty, cost price, 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 licensee concerned. The assessee claims that the payments were made under these Rules, to the Bottling plant appointed by the State Government by way of notification to be the wholesale licensee for collecting the cost price, excise duty, bottling charges etc. However, no such notification is available before us to sustain this statement of the assessee that there is any such appointment.
Sisir Kr. Chakraborty(Choudhury), AY 2008-09 6. In Rule 2(vii) of the West Bengal Excise Rules, 2005 the warehouse was defined and in section 22 of the West Bengal Excise Act exclusive privilege of manufacture and sale of country liquor was granted to such bottling plant. In Rule 6DD(b) of the Income Tax rules, it is stated that 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 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 behalf of such person. In M/s. Amrai Pachai & C.S. Shop, dated 15.01.2014 a coordinate bench of this Tribunal on a comprehensive consideration of Rule 6(2) of the Rules under notification issued in Calcutta Gazette, Tuesday 20th September, 2005 and 6DD(b) of the I. T. Rules held that the payments made by the assessee to the wholesale licensee for purchase of country spirit are protected by exemption in terms of rule 6DD(b) of the I. T. Rules. Further in a decision of a Coordinate Bench of this Tribunal in Ramnagar Pachwai & C.S.(S) Shop, in ITA No. 148/Kol/2015 this Tribunal considered similar set of facts with reference to Rule 2(vii) of the West Bengal Excise Rules section 22 of the West Bengal Excise Act, Rule 6DD(b) and Rule 6DD(k) of the I. T. Rules in the light of the observations of this Tribunal in Amrai Pachai & C.S. Shop, supra and came to the conclusion that the case of assessee in that case falls under the exception provided in Rule 6DD(b) and Rule 6DD(k) of I. T. Rules and the disallowance made u/s. 40A(3) of the Act was deleted.
We have carefully perused the record and find that no notification in respect of appointment of the Bottling Plant to the credit of whose account the assessee was making payments as wholesale licensee is available before us to consider the status of such an entity with reference to the different provisions and citations placed before us. In the absence of such evidence it is not possible for us to reach any conclusion to the effect that the case of the assessee is covered under Rule 6DD(b) of the Rules. Further, AO had no opportunity of considering the contention of the assessee in the light of the legal position referred to above by us. We, therefore, in these circumstances, feel it just and proper to set aside the orders of the lower authorities and restore the matter to the file of the AO for fresh adjudication after giving reasonable opportunity of being heard to the assessee. Assessee may produce all the Sisir Kr. Chakraborty(Choudhury), AY 2008-09 relevant material before the Assessing Officer and cooperate in adjudication of just tax liability. The ground of appeal is answered accordingly.
In the result, the appeal of assessee is allowed for statistical purposes.