TMI Blog2016 (9) TMI 1537X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and bottling charges, etc. only to the wholesale licensee appointed by the State Government. Pursuant to the said procedure, the assessee made payments in the Bank account of M/s. IFB Agro Industries Limited, Durgapur, Burdwan HELD THAT:- By virtue of payment through cash dated 04.09.2006, the wholesale licensee with exclusive privilege for bottling and/or sale by wholesale country spirit in sealed or capsule bottles and for manufacture and wholesale supply of country spirit in bulk litter enjoyed now by the holders of license in terms of section 22 of the Bengal Excise Act, 1909 and IFB Agro Industries Limited, Durgapur has become an arm of State Government. On this aspect, for all practical purposes, the relationship between the Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee Shri Aloke Nag, Additional CIT, D.R., for the Department ORDER Shri K. Narasimha Chary, This is an appeal by the Assessee challenging the order dated 25.11.2013 passed by the learned Commissioner of Income Tax (Appeals), Asansol (hereinafter referred to as learned CIT ) for the assessment year 2008-09. 2. Brief facts of the case are that the Assessee is a retail vendor of Country Spirit, which is an excisable commodity. The purchase and sale are strictly controlled by the State Government. Earlier the retail dealers like the assessee were depositing the cost price, excise duty, bottling charges, etc. in the Treasury for getting supplies from the wholesale licensee. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 62,68,458/- when the payment was directly made in the bank account of the seller and a such the provisions of sec. 40A(3) were not applicable. (4) For that the ld. CIT(A) erred in confirming the addition of ₹ 62,68,458/- when village where the assessee s shop was established had no banking facility and the payment made directly to the bank account of the seller was not hit by the provisions of sec. 40A(3). (5) For that even otherwise having regard to the nature and extent of banking facilities available consideration of business expediency and other relevant factors the ld. CIT(A) erred in confirming the addition made by the AO u/s 40A(3). (6) For that the ld. CIT(A) erred in confirming the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause it is only through him, the Government receives the amount from the retail vendors, as such the payments made by the assessee fall under the exception provided in Rule 6DD(k) of the Income Tax Rules. He, therefore, prayed to the Tribunal to delete the addition made on account of application of section 40A(3) of the Act. 4. On the other hand, the ld. D.R. contended that Rule 6DD(b) also requires the payments to be made in legal tender as framed by the Government and the Rules framed by the State Government in this regard do not compel the assessee to make cash payments only. He further argued that the payments made in the State Bank of India are saved, but not the payments, which were made into the customer account maintained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry for issue of country spirit to be taken by him from the warehouse concerned, duty, cost price, bottling charges, 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. 8. Now coming to the application of section 40A(3) is concerned, we find from the CBDT Circular No. 6P dated 06.07.1968 that this provision under section 40A(3) was designed to counter evasion of tax through claims for expenditure shown to have been incurred in cash with a view to frustrating proper investigation by the department as to the identity of the payee and reasonableness of the payment. When this is the primary object of enacting se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Industries Limited, Durgapur maintained in the State Bank. 9. Commercial expediency in relation to the application of section 40A(3) is well recognized by the various Courts vide in the cases as under:- (i) Attar Singh Gurmukh Singh vs.- ITO reported in (1991) 191 ITR 667 (SC) (ii) CIT vs.- CPL Tannery reported in (2009) 318 ITR 179 (Cal.); (iii) CIT vs.- Crescent Export Syndicate in ITA No. 202 of 2008 dated 30.07.2008 (Calcutta High Court); (iv) Anupam Tele Services vs.- ITO reported in (2014) 43 taxman.com 199 (Guj.); (v) Ashok Mondal vs.- ITO in ITA No. 873/KOL/2012 (Kolkata Tribunal s order dated 06.02.2014); 10. In the case of Ashok Mondal (supra), the Coo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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