Income Tax Appellate Tribunal - Kolkata
Nityananda Saha, Kolkata vs Assessee on 23 June, 2010
आयकर अपीलीय अधीकरण, Ûयायपीठ - " िस" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH: KOLKATA
(सम¢)Before ौी महावी
महावीर
वीर िसंह, Ûयायीक सदःय एवं/and ौी,
ौी सी.डȣ.राव लेखा सदःय)
[Before Hon'ble Sri Mahavir Singh, JM & Hon'ble Shri C. D. Rao, AM]
आयकर अपील संÉया / I.T.A No. 1512/Kol/2010
िनधॉरण वषॅ/Assessment Year : 2006-07
Sri Nityananda Saha. Vs Income Tax Officer, Wd-52(2), Kolkata
(PAN-ALWPS 5663 A)
(अपीलाथȸ/Appellant) (ू×यथȸ/Respondent)
For the Appellant: Shri M. M. Sarcar
For the Respondent: Shri B. R. Purakayastha
आदे श/ORDER
This appeal by assessee is arising out of the order of CIT(A)-XXXIII, Kolkata in Appeal No.176/CIT(A)-XXXIII/Wd-52(2)/Kol/08-09 vide dated 23.06.2010. The assessment was framed by ITO, Ward-52(2), Kolkata of the Income Tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Year 2006-07 vide his order dated 19.12.2008.
2. The only issue in this appeal of the assessee is against the order of CIT(A) confirming the action of Assessing Officer in disallowing cash payment for purchase of rice by invoking provisions of section 40(A)(3) of the Act. For this, the assessee has raised the following two grounds:
"1. For that the Learned Income Tax Officer as well as the Commissioner of Income Tax (Appeals) was wrong, unjust and arbitrary in disallowing cash payments for cost of Rice ignoring fact that the cash payments are genuine as per law and were made for smooth running of the business of essential commodity like Rice.
2. For that Learned Commissioner of Income Tax (Appeal) was not correct in describing the Rice Mill Owners as Traders only and fails to consider that the Rice Mill Owners are processor of agricultural products like rice and allowed to be paid in cash U/R 6DD(f)(iv) of the I. T. Rule, 1962."
2 ITA 1512/K/2010 Nityananda Saha. A.Y.06-07
3. The assessee also raised additional grounds, which were subsequently withdrawn as not pressed and to that effect an endorsement was made by the Ld. Counsel for the assessee on instruction of the assessee.
4. The brief facts leading to the above issue are that the assessee is a wholesale dealer of rice and he purchases rice from different parts of Bengal and sometimes outside Bengal from Rice Mills. The assessee's contention before the Assessing Officer and before the CIT(A) and even now before us is, that the Rice Mill Owners accept only cash and they do not accept cheques from the purchasers of rice for want of banking facilities in rural areas, where rice mills are situated. The assessee contended that rice millers received payment in cash for convenience as payments to cultivators for purchasing paddy is made in cash. It was also contended that it is customary to pay cost of rice in cash to the millers for smooth running of the business and there is nothing illegal in payment of cash for purchase of rice. It was claimed by the assessee that all the payments in cash for purchase of rice are genuine payments and it is for the purpose of smooth running of business. The assessee contended that the Assessing Officer as well as the CIT(A) has failed to consider the facts and legal protection provided by Rule 6DD(f)(iv) of the I. T. Rules, 1962.
5. We find that the assessee has made purchases in cash from rice mills situated in Kolkata, Hooghly etc. and the same are detailed out by Assessing Officer as under:
Details of replies received Amount of Date of Mode of Amount of sale payment Payment payment Received
i) M/s. Giriraj Rice Mill (P) Ltd., Rs.3,81,000/- 17.02.05 Cash Rs. 95,000/-
Regd. Office 7C, Kiron Sankar 29.06.05 Cash Rs. 95,000/-
Roy Road, Kolkata-700 001 25.03.06 Cash Rs. 95,000/-
26.03.06 Cash Rs. 96,000/-
ii) M/s. Ma Gouri Rice Mill P.O. Rs.5,86,000/- 08.07.05 Cash Rs. 99,000/-
Kamarpukur, PS Goghat, Dist. 26.07.05 Cash Rs. 96,000/-
Hooghly 28.09.05 Cash Rs. 97,000/-
29.01.06 Cash Rs. 98,000/-
08.03.06 Cash Rs. 98,000/-
iii) M/s. Maha Lakshmi Rice Mill Rs.1,98,000/- 14.10.05 Cash Rs. 98,000/-
Kirti Chandrapurl, P.O. Nabaraj, 15.12.05 Cash Rs.1,00,000/-
Hoogly
3 ITA 1512/K/2010 Nityananda Saha. A.Y.06-07
iv) M/s. Sitaram Rice Mill, Vill + Rs.2,95,000/- 22.05.05 Cash Rs.1,00,000/-
P.O Khatul, PS Goghat, Dist. 18.11.05 Cash Rs. 95,000/-
Hoogly 10.12.05 Cash Rs.1,00,000/-
6. The assessee admittedly argued that no doubt these payments are in cash but rice mills are situated in rural areas. When pointed out to the Ld. Counsel for the assessee that Kolkata, Hoogly and the addresses as given are clearly in the area where banking facilities are available, as pointed out by Ld. DR. The assessee has not brought any evidence that there are no banking facilities in those areas as noted by the Assessing Officer. We find from Rule 6DD that there is no Rule 6DD(f)(iv) as referred to by the Ld. Counsel for the assessee in its written submission before the lower authorities or even now before us. We find that the assessee wanted to refer Rule 6DD(g), which reads as under:
"where the payment is made in a village or town, which on the date of such payment is not served by any bank, to any person who ordinarily resides, or is carrying on any business, profession or vocation, in any such village or town;"
7. It is apparent from the arguments above made by the Ld. Counsel that he wanted to refer Rule 6DD(g) as there is no banking facilities available in town or village where rice mills or assessee's business is situated. The assessee could not bring any instance that there is no banking facilities either in Kolkata, the headquarters of assessee's business or in headquarters of Rice Millers as listed out by the Assessing Officer. It is fairly presumed and supported by Ld. DR that P.S. Goghat, P.O Nabaraj, P.O. Goghat belong to district Hoogly are quite covered by banking facilities. The Ld. Counsel for the assessee in alternative made submission that whatever payments made on holidays falling on Sundays or any national holiday, on which banks are closed, the same should be excluded for making disallowance u/s.40A(3) of the Act. We are in agreement with the alternative argument of the Ld. Counsel for the assessee, wherever the payments are made on holiday i.e. national holidays or Sundays when banking facilities are closed, the disallowance u/s. 40A(3) should not have been made in view of exception provided by Rule 6DD(j), which reads as under:
"where the payment was required to be made on a day on which the banks were closed either on account of holiday or strike."
4 ITA 1512/K/2010 Nityananda Saha. A.Y.06-07
8. The assessee fairly conceded the position that the issue can be remitted back to the file of Assessing Officer for verification of the payments made on national holidays and Sundays, when banking facilities was closed and the same can be excluded while making disallowance. In view of the above, we set aside this issue to the file of the Assessing Officer for very limited purpose that in case the payments falling on holidays i.e. national holidays or on Sundays when banking facilities are not available, the disallowance should not be made, rest the assessee has no case. In view of the above direction, this appeal of the assessee is set aside to the file of the Assessing Officer for limited verification and allowed for statistical purposes.
9. In the result, the appeal of the assessee is allowed for statistical purposes.
10. Order pronounced in open court on 21st day of March, 2011.
Sd/- Sd/-
सी.डȣ
सी डȣ.राव
डȣ राव लेखा सदःय वीर िसंह, Ûयायीक सदःय
महावी
महावीर
(C. D. Rao) (Mahavir Singh)
Accountant Member Judicial Member
तारȣख)
तारȣख) Dated 21st day of March, 2011
(तारȣख
वǐरƵ िनǔज सिचव Jd.(Sr.P.S.)
आदे श कȧ ूितिलǒप अमेǒषतः- Copy of the order forwarded to:
1. अपीलाथȸ/APPELLANT Sri Nityananda Saha, 32, T. P. Lane, Rajpur, Sonarpur, Kolkata-700 149.
2 ू×यथȸ/ Respondent, ITO, Ward-52(2), Kolkata
3. आयकर किमशनर/The CIT(A), Kolkata
4. आयकर किमशनर (अपील)/CIT, Kolkata
5. वभािगय ूितनीधी / DR, Kolkata Benches, Kolkata स×याǒपत ूित/True Copy, आदे शानुसार/ By order, सहायक पंजीकार/Asstt. Registrar.