TMI Blog2015 (11) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... /2015 - - - Dated:- 28-8-2015 - Shri J. Sudhakar Reddy, J. For The Appellant by :Shri Anil Kochar, Advocate For The Respondent by : Smt. Sucheta Chattopadhyay, JCIT, Sr.DR ORDER This is an appeal filed by the assessee directed against the order of the Commissioner of Income-Tax (Appeals)-XXXII, Kolkata dated 21.10.2014 for the assessment year 2007-08. 2. Facts relating to the case are that the assessee is a partnership firm and is engaged in the business of running a country liquor shop. It buys country spirit from one M/s. Sarojit Kumar Dey, C.S. B.P., who has its work and office at Ahmedpur, district-Birbhum, West Bengal. On verification, the AO found that the assessee had paid huge sums of money in cash to M/s. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of country spirit from the territorial licensee bottling plant, IFB Agro Industries Ltd, City Centre, Durgapur. falls within the exemption provided under rule 6DD(b) of the I.T Rules 1962. Admittedly, the AO has recognised that the provision of Rule 6DD(b) of the I.T Rules 1962 is applicable in case of payments made to government directly. This is found in page 2 of the assessment order. A perusal of the Kolkata Gazette Tuesday dated 20th Sept 2005 shows that the Government of West Bengal, Department of Excise has issued a notification, wherein the warehouse has been identified to mean the warehouse for supply of country spirit to the retail vendors, established at convenient places by the Commissioner at the expense of the State Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in legal tender under the rules framed by the Government, is exempted from the rigours of section 40A(3) of the Act. Here, it is noticed that the payments made by the assessee for purchase of country spirit and country liquor is to the government as per the notification issued by the government and is in legal tender specified by the notification. In the circumstances, we are of the view that the payment made by the assessee for the purchase of country liquor and country spirit from the territorial licensee bottling plant, IFB Agro Industries Ltd, City Centre, Durgapur is protected by the exemption in terms of Rule 6DD(b) of the I.T Rules 1962. In the circumstances, the addition as made by the AO and as confirmed by the ld. CIT(A) by invok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment was genuine or whether it was out of the income from undisclosed sources. The terms of section 40A(3) are not absolute. Considerations of business expediency and other relevant factors are not excluded. Genuine and bona fide transactions are not taken out of the sweep of the section. It is open to the assessee to furnish to the satisfaction of the Assessing Officer the circumstances under which the payment in the manner prescribed in section 40A(3) was not practicable or would have caused genuine difficulty to the payee. It is also open to the assessee to identify the person who has received the cash payment. Rule 6DD provides that an assessee can be exempted from the requirement of payment by a crossed cheque or crossed bank dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee for purchase of rice, paid the amount directly to the bank account of the payee. The effect of issue of crossed cheque/DD is that the payee named therein receives the payment through banking channels. The purpose is dual. In the first instance it is to see that the payee and payee alone receives the payment and to ensure that the payment is routed through bank channel so as to trace the origin and conclusion of the transaction. In the case before us, it is seen that instead of issuing cheque/DD the assessee prepared a challan and along with the cash the challan was presented to the bank of the payee for the credit of the same in the account of payee. In the result, it is ensured that the payee and payee alone receives the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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