2018 (6) TMI 513

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....assessee in the present case is a partnership firm which is engaged in running a country spirit shop. The return of income for the year under consideration was filed by it on 30.09.2012. As noticed by the A.O. during the course of assessment proceedings, the assessee firm had made purchases from M/s. Asansol Bottling & Packaging Co. Ltd. during the year under consideration and payments against the same were made by depositing cash directly in the bank account of M/s. Asansol Bottling & Packaging Co. Ltd. aggregating to Rs. 1,07,14,621/. Since the said payments made in cash exceeding Rs. 20,000/- were in contravention of section 40A(3) of the Income Tax Act, 1961 and the assessee could not explain any exceptional circumstances as specified u....

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....r section 40A(3) was deleted by the Tribunal for the following reasons given in paragraphs no. 21 & 22 of its order: "21. We find that M/s. Asansol Bottling & Packaging Co. Pvt. Ltd. is a bottling plant cum warehouse under Rule 2(vii) of the West Bengal Excise Rules, 2005 with privilege granted u/s 22 of The Bengal Excise Act, 1909. At this juncture, it would be relevant to go into the definition of warehouse as provided under the State Excise Rules, 2005, as below:- "Warehouse", under Rule 2(vii) of the W.B. Excise Rules, 2005, means the warehouse for supply of country spirit to retail vendors, established at convenient places by the Commissioner at the expense of the State Government, or at the expense of a person to whom the exc....

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.... this juncture as below:- Section 22 - Grant of exclusive privilege of manufacture and sale of country liquor or intoxicating drugs - (1) The State Government may grant to any person, on such conditions and for such period as it may think fit, the exclusive privilege - (a) of manufacturing, or supplying by wholesale, or (b) of manufacturing, and supplying by wholesale, or (c) of selling, by wholesale or retail. or (d) of manufacturing or supplying by wholesale and selling retail, or (e) of manufacturing and supplying by wholesale and selling retail, any country liquor or intoxicating drug within any specified local area: Provided that public notice shall be giv....

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....Excise Department, Government of West Bengal. At the cost of repetition, we would like to state that the said regulation mandated the payments to be made directly into the bank account of the said wholesale licensee by the retail vendor (i.e assessee herein) for strict and effective regulation of the country liquor and for prevention of spurious stocks and black marketing transactions from the same. Hence it could be safely concluded that the said wholesale licensee had acted at the instance of the State Government. Once this is so, then the said wholesale licensee could be construed as an agent of the State Government. For the sake of convenience, the relevant rule is reproduced hereunder:- Rule 6DD(k) - where the payment is made ....