IN INCOME TAX APPELLATE TRIBUNAL, BENCH KOLKATA [Before Hon ble Shri N.V.Vasudevan, JM & Dr.Arjun Lal Saini, AM ] ITA No.716/Kol/2016 Assessment Year : 2011-12 M/s. URMA C.S.Shop -versus- I.T.O., Ward-3(4), Purulia Purulia [PAN: AABFU 3173 H] (Appellant) (Respondent) For Appellant : Shri R.N.Ram, AR For Respondent : Shri A.K.Panda, Addl. CIT Date of Hearing : 22.09.2016 Date of Pronouncement : 19.10.2016. ORDER Per Dr.Arjun Lal Saini, AM captioned appeal filed by assessee pertaining to A.Y.2011-12, is directed against order passed by Commissioner of Income Tax (A)-Asansol, in Appeal No.30/C.I.T.(A)/Asl/W-3(4)/Purulia/14-15, dated 28.01.2016, which in turn arises out of order passed by Ld. Assessing Officer u/s 143(3) of Income Tax Act, 1961 (in short, Act), dated 07.03.2014. 2. facts of case are as stated in brief. return of income for A.Y.2011-12 was filed by assessee, declaring taxable income of Rs.22,432/-. Later on case was selected for scrutiny u/s 143(3) of Act and AO has completed assessment by making addition of Rs. 20,68,357/- for violation of provision of section 40A(3) of I. T. Act, and other small additions because assessee did not furnish documents and evidences. 3. Aggrieved from order of ld. AO, assessee filed appeal before ld. CIT(A), who has also confirmed action of AO by observing followings :- . 2 ITA No.716/Kol/2016 M/s. URMA C.S.Shop A..Y.2011-12 12. Bengal Excise (Supply of Country Spirit on payment of duty) Rules 2005 does not make any express provision mandating necessity of effecting payment in cash by vendor in relation to purchases effected either from government or its authorized bottling agents. In view of above, I uphold addition of Rs 20,68,357/- made by Assessing Officer. grounds against additions are dismissed. 13. In ground of appeal other disallowance are also agitated. No details as to why disallowance are objected are available or preferred. Hence I decide same on basis of contents in assessment order. 14. Upon going through assessment order I find that A.O. has made additions of Rs 7,695/-, Rs 4,26,320/- , Rs 12,228/-, Rs1,000/- , Rs 89,347/- and Rs.9,031/-. He has also recorded reasons. No material to overturn same is before me. Hence I dismiss grounds against additions. 15. appeal is dismissed. All grounds of appeal stand disposed of accordingly. 4. Not being satisfied with order of ld. CIT(A), assessee is in further appeal before us and has taken following grounds of appeal :- 01. That on facts and circumstances of case Id. AO. erred in treating assessee as retail trader of Country Spirit whereas appellant is licensee of Country Spirit under supervision and control of State Excise Authority under Govt. of West Bengal. 02. That on facts and circumstances of case Id. A.O. erred in making disallowance of Rs.20,68,357/- being total purchase of country spirit including excise duty, sales tax, T.D.S. and bottling charges U/S 40A(3) on ground that purchase amount exceeded threshold limit of Rs.20,000/- disregarding fact that entire purchase was made from Government Bond(Warehouse) under control of State Excise Department and such purchase from Government falls within exceptions of Rule 6DD(a). 03. That on facts and circumstances of case Id. A.O. erred in disregarding notification of Govt. of W.B. Excise Department notification No.1208 EX dt. 29/08/2005 that retail vendors will not deposit money for purchase of C.S., Excise Duty and other taxes to Govt. treasury. They will deposit cost of C.S., Excise Duty and other impositions by law direct to wholesalers and accordingly appellant has made payments to wholesalers following directions of Govt. and such payments as per directions and rule framed therein falls under rule 6DD(a) and rule 6DD(b) and accordingly appellant is free from any disallowance U/s 40A(3). 04. That on facts and circumstances of case Id. A.O. erred in making disallowance U/s 40A(3) whereas cost of C.S. Purchase from Govt. Bonds falls within exception provided under rule 6DD(a) and Excise Duty and sales tax falls within exception provided under rule 6DD(b) and accordingly deserves total deletion. 05. That on facts and circumstances of case Id. AO. erred in making addition of Rs.4, 26,302/- on account of loss of F.L (foreign liquor) in course of destruction by 3 ITA No.716/Kol/2016 M/s. URMA C.S.Shop A..Y.2011-12 crowed of local villagers comprising of hundreds of women which came in print media and also in electronic media and whereas such loss was incurred in course of carrying out business of appellant. 06. That on facts and circumstances of case Id. A.O. erred in making addition of Rs. 89,347/- on account of net debit balance computed by AO in respect of A.N. Enterprise and Kisan F.L Bond. 5. Ground Nos.1,2,3 and 4 relate to one solitary grievance of assessee in respect of cash payment made by assessee in excess of Rs.20,000/- u/s 40A(3) of Act vide Rule 6DD(a) and 6DD(b) of IT Rules. Therefore first we are going to deal with solitary grievance of assessee which has been reflected by way of multiple grounds raised by assessee (ground Nos. 1 to 4). 6. ld. AR for assessee has submitted (in respect of ground Nos. 1 to 4) that Assessee is retail vendor of country liquor and pochai. country liquor is excisable commodity. Its purchase and sale are strictly controlled by State Government. Previously, retail dealers like assessee used to deposit cost price excise duty, bottling charges etc in treasury against Form TR-7 in cash for getting supplies from wholesale licensee. Subsequently Excise Department by notification dated 29/08/2005 changed procedure. As per revised procedure prescribed by Excise department for lifting country spirit retail vendor like assessee was required to make entire payment consisting of cost of stock in trade , excise duty and bottling charges etc only to wholesale licensee appointed by State Government . Following revised procedure assessee made payments by cash deposits in bank account of supplier namely M/S IFB AGRO AND INDUSTRIES.LTD, Durgapur in State Bank Of India at Purulia. While completing assessment Assessing officer disallowed sum of RS.20, 68,357/- U/S 40A (3) on ground that each payment exceeded sum of RS.20000/- as payment was made in cash to bank account of seller. He noted his observation on page 5 and 6 of his assessment order and mentioned that entire payment was made in bank account of IFB Agro Industries Ltd, in State Bank of India, Purulia. 4 ITA No.716/Kol/2016 M/s. URMA C.S.Shop A..Y.2011-12 assessee filed appeal against aforesaid disallowance and claimed that assessee case is covered under Rule-6 DD(b) and Rule 6 DD(k) but CIT Appeal passed order without caring notice of hearing having been served to appellant on ground that her predecessor has confirmed disallowances U/S 40A(3) in respect of earlier assessment years. ld AR for assessee also drew our attention to very recent consolidated judgment passed by Hon`able Income Tax Appellate Tribunal A-Bench Kolkata in I.T.A No 148/Kol/2015 Assessment Year 2007-08, I. T.A. No. 185/Kol/2014 Assessment Year 2008-09 & I.T.A No 1186/Kol/2014 Assessment Year 2010-11 in case of Ramnagar Pachwai & C.S.(S) shop vs. Income Tax Officer, Ward-2(3), Asansol. It is important to note that in his order dated 05/08/2016 ruled that case of appellant falls under exceptions provided in rule 6DD(b) and Rule 6DD(k) of IT rules and accordingly allowed appeal of assessee. present appeal of assessee( of M/s Urma C.S.Shop ), under consideration is squarely covered by above judgment, as both assessees M/S Ramnagar Pachwai & C.S.(s) Shop and M/S Urma C.S. Shop are retail vendor of country liquor and pachwai shop and are controlled by Excise department of State Government. Both have deposited cash in bank account of seller and lifted goods from warehouse under control excise department. 7. On other hand, ld. Departmental Representative for revenue has primarily reiterated stand taken by AO which we have already noted in our earlier para, and is not being repeated for sake of brevity. 8. Having heard rival submissions, perused material available on record, we are of view that there is merit in submissions of assessee, as propositions canvassed by ld. AR for assessee are supported by judgment of Hon ble ITAT, Kolkata ( cited supra) and facts narrated by him. ld. AR has pointed out that as per revised procedure prescribed by Excise department for lifting country spirit retail vendor like assessee was required to make 5 ITA No.716/Kol/2016 M/s. URMA C.S.Shop A..Y.2011-12 entire payment consisting of cost of stock in trade, excise duty and bottling charges etc only to wholesale licencee appointed by State Government. Therefore, following revised procedure assessee made payment by cash deposited in bank account of supplier namely M/s. IFB Agro and Industries Ltd., Durgapur in State Bank of India, Purulia. Therefore, considering above factual position addition made by ld. CIT(A) needs to be deleted. Accordingly, we delete addition made by ld. CIT(A). 9. In result, appeal filed by assessee on this issue is allowed. 10. Ground No.5 raised by assessee relates to addition of Rs.4,26,302/- on account of loss/ destruction by crowd of local villagers. ld. AO has disallowed Rs.4,26,302/- by observing followings :- 3. Further, explanation regarding loss in transit to tune of Rs. 2,76,302/ - and debit amount of Rs. 1,50,000/ - under head 'Drum & Bottles Destroyed in Trading, P& L account in year ended on 31/03/2011 was found not satisfactory. Hence, amount aggregating to tune of Rs. 4,26,302/- is disallowed and added back to total income of assessee as A/R of assessee firm had failed to establish loss in transit to tune of Rs. 2,76,302/- and 'the destruction of Drums and bottles amounting to Rs. 1,50,000/- by adducing strong and cogent documentary evidence in support of claim made under above said heads. 11. Aggrieved from addition of ld. Assessing Officer assessee filed appeal before ld. CIT(A), who has also confirmed order of Assessing Officer, observing that no material or evidences were filed before him by assessee. 12. Not being satisfied with order of ld. CIT(A), assessee is in further appeal before us on this issue and submitted that AO disallowed sum of Rs.4,26,302/- on account of loss of F.L. in course of destruction by crowd of local villagers. 13. On other hand, ld. Departmental Representative for revenue has strongly defended order made by ld. AO and order made by ld. CIT(A), and explained that no evidence or documents were filed by assessee either before 6 ITA No.716/Kol/2016 M/s. URMA C.S.Shop A..Y.2011-12 AO or before ld. CIT(A). Therefore, assessee is not eligible to claim any benefit on account of destruction by crowd of local villagers. 14. Having heard rival submissions, perused material available on record, we are of view that there is merit in submissions of ld. DR for revenue, as propositions canvassed by ld. DR for revenue are supported by facts narrated by him. He has mentioned that no evidence were submitted by assessee before AO. There is no FIR filed by assessee stating that bottles were destroyed by crowd of local villagers. Therefore in view of above factual position we confirm order passed by ld. CIT(A). 15. In result, appeal filed by assessee on this ground is dismissed. 16. Ground No.6 raised by assessee relates to addition of Rs.89,347/- on account of net debit balance computed by AO in respect of A.N.Enterprise and Kisan F.L. Bond. AO has disallowed said sum observing that ld. AR for assessee firm could not produce any documentary evidence regarding credit balance of Rs.86,917/-, against A.N.Enterprise. credit balance amounting to Rs.13,735/- against Kishan F.L.Bond is accepted. Thus net debit balance becomes equal to Rs.1,00,669/- (Rs.86934 + Rs.13735). Hence, amount of Rs.89,347/- (Rs.1,90,016 minus Rs.1,00,669) is added to total income of assessee. 17. Not being satisfied with order of AO assessee filed appeal before ld. CIT(A), who has also confirmed action of ld. AO, as assessee had not furnished any evidence or documentary proof before ld. CIT(A). Not being satisfied with order of ld. CIT(A), assessee is in further appeal before us on this issue. 18. ld. AR for assessee has submitted that this is addition made by ld. AO, u/s 68 of Act and addition made by him is not valid. 7 ITA No.716/Kol/2016 M/s. URMA C.S.Shop A..Y.2011-12 19. On other hand, ld. Departmental Representative for revenue has primarily reiterated stand taken by ld. AO. He argued that assessee had neither submitted any documentary evidence before AO nor before ld. CIT(A), therefore it is genuine addition made by AO. 20. Having heard rival submissions, perused material available on record, we are of view that there is merit in submissions of ld. DR for revenue , as he has rightly pointed out that assessee has neither submitted any documentary evidence before ld. AO nor before ld. CIT(A), to prove genuineness of transaction. Therefore addition made by ld. AO is valid. Therefore based on above factual position we confirm order passed by ld. CIT(A) on this issue. 21. In result, appeal filed by assessee on this is dismissed. 22. In result, appeal filed by assessee is partly allowed. Order pronounced in court on 19.10.2016. Sd/- Sd/- [N.V.Vasudevan] [Dr.Arjun Lal Saini] Judicial Member Accountant Member Date: 19.10.2016. R.G.(.P.S.) Copy of order forwarded to: 1. M/s Urma C.S.Shop, Bara Urma Hattala, Purulia-723154. 2 I.T.O., Wd-3(4), Purulia. 3. CIT(A)-Asansol 4. CIT-Asansol 5. CIT(DR), Kolkata Benches, Kolkata. True Copy, By order, Deputy /Asst. Registrar, ITAT, Kolkata Benches 8 ITA No.716/Kol/2016 M/s. URMA C.S.Shop A..Y.2011-12 M/s. URMA C.S.Shop v. I.T.O., Ward-3(4), Purulia