SMT. TASBEER DEVI, JAIPUR V. INCOME TAX OFFICER, WARD-6-5, JAIPUR

ITA 1037/JPR/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8741 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 16-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K L MOOLCHANDAN I
• Keywords: Gross profit estimation; Rejection of books of accounts
• Section: 13; 145(3); 22

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 1037/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2012-13 SMT. TASBEER DEVI, PROP. OF M/S SHAHEED BASTIRAM FILLING CENTRE, BAI JI KOTHI, JHALANA INDL. AREA, JAIPUR CUKE VS. ITO, WARD-6(5), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AGXPD8708K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. K. L. MOOLCHANDANI (CA) JKTLO DH VKSJ LS @ REVENUE BY : MS. CHANCHAL MEENA (ADDL. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 16/07/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 23/07/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-2, JAIPUR DATED 22.07.2019 WHEREIN THE ASSESSEE HAS TA KEN THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) HAS FACTUALLY AND LEGALLY ERRED IN HOLDING T HAT PROVISIONS OF SECTION 145(3) WAS RIGHTLY APPLIED BY THE LD. AO WI THOUT APPRECIATING THE FACT THAT NO SPECIFIC MISTAKE OR DISCREPANCY CO ULD BE POINTED OUT AS PLEADED BY THE APPELLANT IN THE APPEAL PROCEEDINGS ON THE BASIS OF VARIOUS JURIDICAL PRONOUNCEMENTS. THUS, THE FINDING S OF THE AUTHORITIES BELOW ON THE POINT DESERVE TO BE QUASHED SUMMARILY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) HAS FACTUALLY AND LEGALLY ERRED IN CONFIRMIN G THE ADDITION TO THE EXTENT OF 10,52,356/- BY APPLYING GP RATE OF 1.92% WITHOUT ITA NO. 1037/JP/2019 SMT. TASBEER DEVI, JAIPUR VS. ITO, WARD-6(5), JAIPU R 2 APPRECIATING THE FACT ALL THE SALES AND PURCHASES W ERE FULLY VOUCHED AND VERIFIABLE QUANTITY-WISE & VALUE WISE AS CONTENDED IN THE ASSESSMENT AND APPEAL PROCEEDINGS. THUS THE ADDITION OF RS. 10 ,52,356/- CONFIRMED ON THE BASIS OF PRESUMPTIONS AND SURMISES DESERVES TO BE DELETED. 3(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) HAS FACTUALLY AND LEGALLY ERRED IN CONFIRMIN G THE DISALLOWANCE OF VARIOUS EXPENSES TO THE EXTENT OF 10% (EXCEPT THE D ISALLOWANCE OF RS. 1,55,880/- MADE ON ACCOUNT OF SALARY PAYMENTS TO ST AFF), WITHOUT APPRECIATING THE FACT THAT ALL THE EXPENSES ARE FUL LY VOUCHED AND VERIFIABLE AND ARE EXCLUSIVELY FOR BUSINESS PURPOSE S ONLY. THUS THE ADDITION SO CONFIRMED DESERVES TO BE DELETED. (B) FURTHER, THE LD. CIT(A) HAS ERRONEOUSLY CONFIRM ED THE ADDITION OF RS. 1,55,880/- DISALLOWED OUT OF THE SALARY PAID TO THE STAFF MEMBERS WITHOUT APPRECIATING THE FACT THAT SUCH EXPENSES WE RE FULLY VERIFIABLE AND EVIDENT FROM THE OFFICIAL RECORDS OF PF, ESI AN D LABOR DEPTT. ETC. AS IN THE PAST. THUS THE LD. CIT(A) WAS NOT JUSTIFIE D IN IGNORING THE ABOVE VITAL FACTS AND PAST HISTORY OF THE CASE. ACCORDING LY, THE ADDITION SO CONFIRMED ON THE BASIS OF INCORRECT FACTS DESERVES TO BE DELETED. 2. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT THE APPELLANT IS A WINDOW LADY AND PROPRIETOR OF M/S SHAHID BASTI RA M FILLING CENTRE, JAIPUR, A PETROL PUMP WHICH WAS ALLOTTED TO HER IN F.Y. 2002-03 BY IOCL, ON COMPASSIONATE GROUND BEING WIDOW OF KARGIL WAR M ARTYR. AS THE APPELLANT IS A WIDOW LADY WITH A VILLAGE BACKGROUND , SHE HAD NO BUSINESS ACUMEN TO CARRY OUT THE BUSINESS OPERATIONS PERSONA LLY. IN THE CIRCUMSTANCES, SHE HAD TO CARRY OUT THESE BUSINESS ACTIVITIES THROUGH HER 'EMPLOYEES' ONLY. IT WAS SUBMITTED THAT ALL THE SAL ES AND PURCHASES AND OTHER OVER-HEAD EXPENSES WERE BEING ACCOUNTED FOR A ND VOUCHED METICULOUSLY AND WERE SUBJECTED TO CLOSE AND PERIOD ICAL CHECKING AT VARIOUS LEVELS BY THE APPELLANT, BESIDES REGULAR AN D PERIODICALLY CHECKING BY THE PETROLEUM AUTHORITIES FROM TIME TO TIME. THE TURN-OVER IS REGULATED THROUGH COMPUTERIZED MACHINES ONLY. IN THE CIRCUMST ANCES, ALL THE SALES, ITA NO. 1037/JP/2019 SMT. TASBEER DEVI, JAIPUR VS. ITO, WARD-6(5), JAIPU R 3 PURCHASES AND OTHER EXPENSES ETC. WERE FULLY AND PR OPERLY VOUCHED AND VERIFIABLE AS THERE IS NO SCOPE FOR ANY PILFERAGE O R TEMPERING OF THE STOCKS ETC. FOR ANY REASON INCLUDING THE 'EVAPORATION SHO RTAGES' ETC. WITH THE HELP OF MARKETING DISCIPLINE GUIDELINES' ISSUED BY INDIAN OIL. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THESE FACTS W ERE BROUGHT HOME EXPLICITLY WHICH WERE FOUND TO BE CORRECT IN THE AS SESSMENT PROCEEDINGS. THE LD. AO WAS HOWEVER NOT WILLING TO ACCEPT SUCH E XPLANATION ON THE GROUND THAT THE GP RATE SHOWN WAS COMPARATIVELY LOW AND THE LOSS OF QUANTITIES OF THE STOCK DUE TO EVAPORATION WAS ALSO ERRATIC MONTH-WISE. THERE WAS DOWNFALL IN THE GP RATE DURING THE YEAR A ND THE LOSS OF QUANTITIES BY EVAPORATION WAS ALSO ERRATIC MONTH-WI SE. ACCORDINGLY, THE LD. AO HAD PROCEEDED TO REJECT THE BOOKS RESULTS U/S 14 5(3) OF THE ACT AND APPLIED GP RATE OF 1.95% ON THE DECLARED TURNOVER A S AGAINST 1.5% DECLARED BY THE ASSESSEE AND MADE AN ADDITION OF RS .11,26,017/-. FURTHER, ADDITION OF RS.3,12,055/- WAS ALSO MADE BY DISALLOWING CERTAIN P&L EXPENSES ON THE GROUND THAT THESE WERE NOT PROP ERLY VOUCHED AND VERIFIABLE. ON PART, PART RELIEF HAS BEEN GIVEN BY THE LD CIT(A) AND AGAINST THE SAID FINDINGS, THE ASSESSEE IS NOW IN APPEAL BE FORE THE TRIBUNAL. 3. IT WAS SUBMITTED BY THE LD AR THAT THE BOOK RESU LTS HAVE BEEN INCORRECTLY REJECTED U/S 145(3) OF THE ACT IGNORING THE PAST HISTORY OF THE CASE. IN THE PAST AND IN SUBSEQUENT YEARS, THE BOOK RESULTS HAD NEVER BEEN REJECTED U/S 145(3) OF THE ACT AND NO TR ADING ADDITION HAD EVER BEEN MADE. NO MISTAKE OR ANY DISCREPANCY WAS P OINTED OUT IN THE QUANTITIES OF TURN-OVER AND THE RATES OF SALES OR PURCHASES. IN ABSENCE OF ANY SUCH MISTAKE, OR DISCREPANCY, NO TRADING ADD ITION IS LEGALLY MAINTAINABLE. LOW GP RATE SHOULD NOT BE BASIS OF TH E REJECTION OF THE BOOKS AS HELD BY THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF M/S HUES INDIA PVT. LTD. IN THE ASSTT. YR. 2009-10, THE DECLARED G P OF 1.56% HAD BEEN ITA NO. 1037/JP/2019 SMT. TASBEER DEVI, JAIPUR VS. ITO, WARD-6(5), JAIPU R 4 ACCEPTED BY THE DEPARTMENT WITHOUT MAKING ANY TRADI NG ADDITION. THUS THE GP SHOWN DURING THIS YEAR @ 1.5% IS VERY MUCH COMPA RABLE AND ACCEPTABLE. DURING THIS YEAR, THOUGH THE GP RATE HAD GONE DOWN AS COMPARED TO THE PRECEDING YEAR FOR THE VALID AND HONEST REASONS, YE T THE NP RATE WAS FAR BETTER. THE NP DURING THE YEAR WAS 0.48% AS AGAINST 0.44% IN THE TWO IMMEDIATE PRECEDING YEARS. IN THE CIRCUMSTANCES, TH E FALL IN GP DURING THE YEAR IS NOT DETRIMENTAL AS ADVERSELY VIEWED BY THE AUTHORITIES BELOW. AGAIN THE AUTHORITIES BELOW HAVE INCORRECTLY OBSERVED THA T THERE WAS 'EXCESS WEIGHT LOSS DURING THIS YEAR WHICH HAD CAUSED THE LOW GP RATE. IN FACT, DURING THIS YEAR, THERE WAS NO 'EXCESS WEIGHT LOSS' AS ALLEGED BY THE AUTHORITIES BELOW. AS PER CHART SUBMITTED DURING TH E ASSESSMENT PROCEEDINGS, DURING THIS YEAR, THE WEIGHT LOSS WAS 0.55% & 0.18% IN PETROL AND DIESEL RESPECTIVELY AS AGAINST 0.60% AND 0.20% IN THE PAST. THE AUTHORITIES BELOW DID NOT DISPUTE SUCH FIGURES. THU S THIS FINDING IS FACTUALLY INCORRECT, WARRANTING NO ADVERSE VIEW. LASTLY, WHIL E GIVING THE INSTANCE OF INCONSISTENT WEIGHT LOSS BY EVAPORATION IN THE MONT HS OF DECEMBER 773 LITRES AS COMPARED TO 717 IN THE MONTH OF MARCH, THEY HAD OPINED THAT NO PROPER RECORD OF THE WEIGHT LOSS HAD BEEN KEPT, NECESSITAT ING THE REJECTION OF BOOK RESULTS U/S 145(3) OF THE ACT. IN FACT, SUCH FINDIN GS ARE FACTUALLY AND PRACTICALLY INCORRECT. THE VARIATION IN THE WEIGHT LOSS IN THE MONTHS OF DECEMBER AND MARCH MAY BE FOR HUNDRED AND ONE REASO NS; DEPENDING UPON THE TEMPERATURE AND HANDLING MANNER ETC. MORE-OVER THESE FIGURES ARE NOT CORRECT AS POINTED OUT IN THE WRITTEN SUBMISSIONS. AND LASTLY, THE ALLEGED INCONSISTENT VARIATION IN WEIGHT LOSS IS VERY INSIG NIFICANT I.E. ABOUT 56 LITERS WORTH RS. 3,909/- HARDLY JUSTIFYING SUCH HUGE ADDIT ION TO THE TUNE OF RS. 10 LAC OR SO. OBVIOUSLY SUCH HUGE ADDITION IS DEVOID O F MERITS AND DESERVES TO BE DELETED. ITA NO. 1037/JP/2019 SMT. TASBEER DEVI, JAIPUR VS. ITO, WARD-6(5), JAIPU R 5 4. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) HAD UPHELD THE REJECTION OF THE BOOKS U/S 145(3) OF THE ACT ON THE BASIS OF THE FINDINGS OF THE LD. AO THAT THE SHORTAGE CLAIMED IS HIGHER THAN NORMAL & THE GP HAD GONE DOWN DURING THE YEAR. BOTH THE REASONS AS ASSIGNED BY THE LD. CIT (A) TO CONFIRM THE REJECTION OF BOOK RESULTS U/S 145(3) OF THE ACT ARE 'FACTUALLY' AND 'LEGALLY' INCORRECT AS EVIDENT FROM THE ABOVE FINDINGS ITSELF. IN FACT, THE ABOVE FINDINGS ARE SELF-CONTRADICTORY. IN FIRST PARA OF THE FINDINGS, SHE HAD OBSERVED THAT SHORTAGE CLAIMED WA S HIGHER THAN NORMAL AND IN THE SECOND PARA OF THE FINDINGS, SHE HAD HER SELF ADMITTED THAT DURING THIS YEAR, THE PERCENTAGE OF THE SHORTAGE HA D REDUCED FROM 0- 60% TO 0.55%. THUS IT HAD BEEN ADMITTED THAT DURIN G THE YEAR, SHORTAGE OCCURRED DUE TO EVAPORATION HAD REDUCED FR OM 0.60% TO 0.55%. IN THE CIRCUMSTANCES, THE FIRST REASON AS AS SIGNED BY THE LD. CIT (A) IS FACTUALLY INCORRECT. MORE-OVER, THE PERCENTA GE OF SHORTAGE CLAIMED IN THE PRECEDING YEAR HAD BEEN DULY ACCEPTED AND AS SESSED BY THE REVENUE. IN THE CIRCUMSTANCES, REJECTION OF BOOK RE SULTS ON THIS ACCOUNT ARE NOT WARRANTED. THE SECOND REASON AS ASSIGNED BY THE LD. CIT (A) IS ALSO NOT LEGALLY MAINTAINABLE AS HELD BY THE HONORABLE RAJAS THAN HIGH COURT IN THE CASE OF M/S HUES INDIA PVT. LTD. (VIDE APPEAL NO. 56/2015 DATED 30.7.2015). THE HONORABLE HIGH COURT HAVE OBSERVED THAT FOR LOW GP RATE, BOOK RESULTS SHOULD NOT BE REJECTED U/S 145(3) OF THE ACT. THIS JUDGMENT HAS DIRECT BEARING ON THE FACTS OF THE PRESENT CASE. THUS BOTH THE REA SONS AS ASSIGNED BY LD. CIT (A) TO REJECT THE BOOK RESULTS ARE FACTUALLY AND LE GALLY INCORRECT SO THE FINDINGS ON THE POINT DESERVE TO BE QUASHED SUMMARILY. 5. REGARDING TRADING ADDITION OF RS.10,52,326/- AS CONFIRMED BY THE LD. CIT (A), IT WAS SUBMITTED THAT SHE HAD SOUGHT TO CO NFIRM THIS 'HUGE' ADDITION MAINLY FOR THE REASON THAT DURING THE YEAR , THERE WAS FALL IN THE GP RATE AS COMPARED TO THE PRECEDING YEARS. AS THE QUA NTITY LOSS BY WAY OF ITA NO. 1037/JP/2019 SMT. TASBEER DEVI, JAIPUR VS. ITO, WARD-6(5), JAIPU R 6 EVAPORATION HAD BEEN ERRATIC AS EVIDENT FROM THE MO NTHLY CHARTS. IN THE MONTHLY CHART OF MS, THE SHORTAGE IN THE MONTH OF D ECEMBER WAS SHOWN AT 773 LITERS AS AGAINST 717 LITERS SHOWN IN THE MONTH OF MARCH. ACCORDINGLY, SHE HAD OPINED THAT THE QUANTITY LOSS DUE TO EVAPOR ATION HAD BEEN ERRATIC. IN THE CIRCUMSTANCES, THE LD. CIT (A) HAD APPLIED G P OF 1.92% (I.E. AVERAGE OF LAST TWO YEARS) AS AGAINST 1.50% SHOWN BY THE AP PELLANT DURING THE YEAR. OBVIOUSLY WORKING OF PROFIT IN THIS MANNER IS MOST UNREASONABLE AND UN-FAIR FOR THE FOLLOWING REASONS: (A) IT IS AN ADMITTED FACT THAT ALL THE SALES AND PURCHASES WERE FULLY VOUCHED AND VERIFIABLE. IN ABSENCE OF THE OWNER AT THE BUSI NESS SPOT, THE EMPLOYEES WERE CONDUCTING BUSINESS UNDER 'STRICT' SUPERVISION AND MONITORING. MORE-OVER THE BUSINESS WAS BEING CONDUCTED AS PER MARKETING D ISCIPLINE GUIDELINES ISSUED BY INDIAN OIL AND WERE SUBJECTED TO PERIODIC AL CHECKING ETC. FURTHER, DURING THE COURSE OF SCRUTINY, NO MISTAKE OR DISCRE PANCY WHAT-SO-EVER WAS NOTED. NO INTERFERENCE WAS MADE IN THE FIGURES OF S ALES AND PURCHASES ETC. THUS THE TURN-OVER HAD BEEN ACCEPTED AS PER BOOKS A ND THE AUDIT REPORT. THE DEPARTMENT HAD ALSO TAKEN THE SAME FIGURES OF S ALES AND PURCHASES AS PER BOOKS AND THE AUDIT REPORT ETC. IN THE CIRCU MSTANCES, IT IS PATENTLY ESTABLISHED THAT ALL THE SALES AND PURCHASES ARE FU LLY VOUCHED AND VERIFIABLE. (B) THE QUANTITIES AND THE RATES OF THE SALES AND P URCHASES ARE ALSO REGULATED BY THE COMPUTERIZED MACHINES AND ARE SUBJ ECTED TO PERIODICAL CHECKING BY THE AUTHORITIES OF INDIAN OIL. NO DISCR EPANCY COULD EVER BEEN POINTED OUT BY THESE AUTHORITIES AS A RESULT OF SUC H PERIODICAL CHECKING. THUS IT IS EVIDENTLY PROVED THAT ALL THE PURCHASES AND SALES ARE PROPERLY VOUCHED AND VERIFIABLE WARRANTING NO INTERFERENCE. ITA NO. 1037/JP/2019 SMT. TASBEER DEVI, JAIPUR VS. ITO, WARD-6(5), JAIPU R 7 (C) REGARDING ALLEGED 'ERRATIC' QUANTITY LOSS BY W AY OF EVAPORATION, IT IS WORTH MENTIONING THAT THE QUANTITY LOSS BY WAY OF E VAPORATION CANNOT BE 'STATIC'. IT MAY VARY FOR NUMBER OF REASONS DEPENDI NG UPON CLIMATE CONDITIONS AND HANDLING OF THE GOODS ETC. MORE-OVER FROM THE MONTHLY CHART IT IS NOTED THAT THERE IS SLIGHT VARIATION IN THE LOSS OF THE QUANTITY WHICH IS VERY NATURAL; WARRANTING NO ADVERSE VIEW. (D) THE LD. CIT (A) HAD 'INCORRECTLY' OPINED THAT THE QUANTITY LOSS BY EVAPORATION DURING THE YEAR WAS 'HIGHER' THAN NORMA L. AS PER MARKETING DISCIPLINE GUIDELINES, THE NORMAL LOSS VARIED FROM 0.6% AND ABOVE. MORE- OVER, IN THE CASE OF APPELLANT HERSELF, SUCH LOSS W AS @ 0.6% WHICH HAD BEEN ACCEPTED AND ASSESSED BY THE DEPARTMENT. IN OT HER CASES OF PETROL DEALERS AT JAIPUR, THE QUANTITY LOSS @ 0.60% AND AB OVE WAS HELD TO BE REASONABLE. (E) EVEN OTHER-WISE ALSO, ON ACCOUNT OF THE ALLEGE D EXCESSIVE QUANTITY LOSS BY EVAPORATION IN THE MONTH OF DECEMBER AS POI NTED OUT BY THE LD. CIT (A) IN THE APPEAL ORDER, THE QUANTITY LOSS WAS HARD LY 56 LITERS ONLY AS MENTIONED ABOVE. THE VALUE OF SUCH ALLEGED EXCESS L OSS SHOWN IN THE MONTH OF DECEMBER WOULD WORK OUT TO RS. 3909/-ONLY (56 X 69.82). IN THE CIRCUMSTANCES, IT WOULD BE HIGHLY ILLOGICAL AND UNJ USTIFIED TO CONFIRM THE ADDITION OF RS. 10,52,326/- FOR SUCH PETTY VARIATIO N. OBVIOUSLY THE ADDITION SO MADE IS HIGHLY EXCESSIVE AND DESERVES TO BE DELE TED. IN VIEW OF ABOVE DISCUSSIONS, THE LD. CIT(A) WAS NO T JUSTIFIED TO CONFIRM THE HUGE TRADING ADDITION OF RS. 10,52,326/- ON ACCOU NT OF SUCH MINOR VARIATION. THUS THE ADDITION SO MADE ON THE BASIS O F SUCH ILLOGICAL REASON DESERVES TO BE DELETED. ITA NO. 1037/JP/2019 SMT. TASBEER DEVI, JAIPUR VS. ITO, WARD-6(5), JAIPU R 8 6. THE LD. AR FURTHER SUBMITTED THAT AN ADDITION OF RS. 3,12,055/- MADE ON ACCOUNT OF DISALLOWANCE OF THE EXPENSES DEBITED TO P & L A/C. EXCEPT DISALLOWANCE OF RS. 1,55,880/- ON ACCOUNT OF THE SA LARY EXPENSES, THE OTHER DISALLOWANCES WERE RESTRICTED TO 10% OF THE EXPENSE S AS DEBITED TO P&L A/C. BY THE LD CIT(A) FOR THE REASONING THAT ALL TH ESE EXPENSES WERE NOT PROPERLY VERIFIABLE AND HAD ALSO INVOLVED `PERSONAL ELEMENT'. OBVIOUSLY, THE DISALLOWANCES CONFIRMED IN SUCH PERFUNCTORY MAN NER WITHOUT ANALYZING ITS NATURE AND THE VOLUME ETC. IS BAD IN LAW AND DE SERVES TO BE DELETED SUMMARILY. FURTHER, AS PER PAST HISTORY OF THE CASE ALSO, SUCH EXPENSES WERE ALLOWED FULLY AS THE OWNER DID NOT ATTEND THE BUSINESS OPERATIONS PERSONALLY SO THE PERSONAL ELEMENT IN THESE EXPENS ES WAS COMPLETELY RULED OUT. HAVING CONSIDERED THIS FACT AND THE FACT THAT ALL THE EXPENSES WERE INCURRED FOR BUSINESS PURPOSES EXCLUSIVELY AND ARE FULLY AND PROPERLY VOUCHED, NO DISALLOWANCE WHAT-SO-EVER WAS CALLED FO R. THE DISALLOWANCE OF THESE EXPENSES @10% BEING UN-CALLED FOR AND EXCESSI VE, THESE DESERVE TO BE DELETED. 7. IT WAS FURTHER SUBMITTED THAT REGARDING THE DISA LLOWANCE OF RS.1,55,880/- OUT OF SALARY EXPENSES AS CONFIRMED B Y THE LD. CIT (A), IT MAY BE NOTED THAT THE SALARY EXPENSES WERE FULLY VO UCHED AND VERIFIABLE WITH THE HELP OF DOCUMENTARY EVIDENCES LIKE ESI, P. F AND LABOR RECORDS ETC. AS DISCUSSED AT LENGTH IN THE WRITTEN SUBMISS IONS MADE BEFORE THE LD. CIT (A). IT IS NOTED THAT THE AUTHORITIES BELOW HAD INCORRECTLY MENTIONED THAT NO SIGNATURE OF THE EMPLOYEES WAS OB TAINED IN THE SALARY SHEETS IN SUPPORT OF SUCH PAYMENTS. IN FACT, SUCH S IGNATURES WERE OBTAINED SEPARATELY ON THE VOUCHERS AS PRODUCED BEF ORE THE LD. CIT (A). THE LD. CIT (A) WAS HOWEVER NOT WILLING TO ACCEPT I TS CORRECTNESS ON FLIMSY GROUNDS. THE LD. CIT (A) HAD MAINLY QUESTION ED THE CORRECTNESS OF THE SALARY PAYMENTS TO THREE EMPLOYEES; WITHOUT SPE CIFYING THEIR NAMES ITA NO. 1037/JP/2019 SMT. TASBEER DEVI, JAIPUR VS. ITO, WARD-6(5), JAIPU R 9 AND THE DETAILS OF SALARY PAYMENTS ALLEGEDLY PAID T O THEM. BOTH THE AUTHORITIES HAD FAILED TO MENTION SUCH DETAILS. IN ABSENCE OF SPECIFIC DETAILS AND NAMES OF THREE EMPLOYEES, NO VALID ADDI TION COULD BE MADE AND THE SAME DESERVES TO BE DELETED SUMMARILY. 8. REGARDING SALARY PAYMENT OF RS.78,000/- MADE TO SHRI SHUSHIL KUMAR YADAV, THE SON OF THE APPELLANT, IT WAS SUBMI TTED THAT THE LD. CIT (A) HAD DISALLOWED THE SAME WITHOUT ASSIGNING ANY R EASON. IN FACT, SHRI SHUSHIL KUMAR HAD BEEN IN THE EMPLOYMENT OF THE APP ELLANT FOR LAST MANY YEARS AND HAD BEEN PAID SALARY IN THE SAME VICINITY . HE IS 22 YEARS OLD AND IS A B.COM GRADUATE. IN THE CIRCUMSTANCES, THE SALARY PAYMENTS MADE TO HIM WERE VERY FAIR AND REASONABLE. DURING THIS Y EAR, HE WAS PAID ABOUT RS.6,000/- PER MONTH TOTALING RS.78,000/- (INCLUDIN G BONUS ETC.). IN THE PAST ALSO, SALARY PAYMENTS MADE TO HIM WERE ACCEPTE D BY THE DEPARTMENT. THE AUTHORITIES BELOW HAVE NO VALID REA SON TO DEVIATE FROM THE PAST HISTORY. MORE-OVER, HE IS REGULARLY ASSESS ED TO TAX AND HAD BEEN SHOWING SUCH SALARY RECEIPTS IN HIS INCOME TAX RETU RNS. AS THE SALARY PAYMENTS MADE TO HIM ARE EVIDENT BY THE ESI LABOR, PF & INCOME RECORDS ETC. AND HAD BEEN ACCEPTED IN THE PAST, SO THE SAME COULD NOT BE NEGATED DURING THIS YEAR ON FLIMSY GROUNDS AS ASSIG NED BY THE LD. CIT(A). IN THE CIRCUMSTANCES, THE ADDITIONS SO CONFIRMED BY THE LD. CIT(A) UNDER THIS HEAD ARE DEVOID OF MERITS AND THE DESERVE TO B E DELETED SUMMARILY. 9. PER CONTRA, THE LD DR SUBMITTED THAT THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS FOR THE REASON THA T THE ASSESSEE HAS SHOWN LOW NET PROFIT FROM LARGE GROSS RECEIPTS. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE HAS DECLARED LOWER G.P RATE OF 1.5% AND THE AR OF THE ASSESSEE H AS NOT BEEN ABLE TO JUSTIFY AND SPECIFY THE REASON TO THE SATISFACTION OF THE ASSESSING OFFICER FOR ITA NO. 1037/JP/2019 SMT. TASBEER DEVI, JAIPUR VS. ITO, WARD-6(5), JAIPU R 10 SUCH FALL IN THE G.P RATE AS COMPARED TO PREVIOUS Y EARS. FURTHER, ON PERUSAL OF THE STOCK RECORDS PRODUCED FOR VERIFICATION, IT WAS GATHERED BY THE ASSESSING OFFICER THAT SHORTAGES ON ACCOUNT OF EVAPORATION WA S ON HIGHER SIDE IN THE MONTH OF DECEMBER, 2011 AS COMPARED TO JUNE, 2011 A ND IN NORMAL CIRCUMSTANCES, EVAPORATION DURING THE MONTH OF JUNE WOULD HAVE BEEN HIGHER THAN THAT OF DECEMBER BUT THE ASSESSEE DID NOT OFFE R ANY SATISFACTORY EXPLANATION. FURTHER, THE ASSESSEE FAILED TO PRODUC E SALES BILLS FOR PETROL, DIESEL AND LUBRICANTS. IT WAS ACCORDINGLY SUBMITTED THAT DUE TO THE AFORESAID DISCREPANCIES, THE BOOK RESULT WERE REJECTED BY IN VOKING SECTION 145(3) OF THE ACT AND GROSS PROFIT WAS ESTIMATED AT 1.95% AS AGAI NST 1.5% DECLARED BY THE ASSESSEE BASED ON PREVIOUS YEAR RESULTS. IT WAS FUR THER SUBMITTED THAT ON APPEAL, LD. CIT(A) HAS ALREADY REDUCED THE G.P RATE TO 1.9% AND THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, NO F URTHER RELIEF MAY BE ALLOWED TO THE ASSESSEE. 10. REGARDING DISALLOWANCE OF VARIOUS EXPENSES MADE BY THE ASSESSING OFFICER, IT WAS SUBMITTED THAT THE LD. CIT(A) HAS A LREADY REDUCED SUCH DISALLOWANCE TO 10% AND GIVEN THAT THE EXPENSES ARE NOT FULLY VERIFIABLE, THE SAID FINDINGS OF THE LD. CIT(A) SHOULD BE CONFIRMED . REGARDING THE SALARY EXPENDITURE, OUR REFERENCE WAS DRAWN TO THE FINDING S OF THE LD. CIT(A) WHEREIN IT HAS BEEN SATED THAT NO SIGNATURE OF RECI PIENT WERE OBTAINED IN SALARY-SHEET AND SOME VOUCHERS WERE PRODUCED DURING THE APPELLATE PROCEEDINGS WHICH SEEMS PREPARED IN A SINGLE SITTIN G NARRATION ETC. IT WAS ACCORDINGLY SUBMITTED THAT THERE IS NO INFIRMITY IN THE FINDING OF LD. CIT(A) AND THE SAME SHOULD BE CONFIRMED. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE CASE OF THE ASSESSEE W AS SELECTED FOR SCRUTINY ON ACCOUNT OF LOW NET PROFIT RATE. IN THIS REGARD, WE REFER TO THE FOLLOWING COMPARATIVE N.P. CHART FOR LAST YEARS AND THE YEAR UNDER CONSIDERATION: ITA NO. 1037/JP/2019 SMT. TASBEER DEVI, JAIPUR VS. ITO, WARD-6(5), JAIPU R 11 ASSTT. YEAR SALES GROSS PROFIT NET PROFIT G.P. RATE N.P. RATE 2012-13 24,55,40,818/- 36,62,028/- 11,66,563/- 1.50% 0.48% 2011-12 19,64,34,172/- 38,26,733/- 8,59,672/- 1.94% 0.43% 2010-11 17,02,32,332/- 32,35,796/- 7,53,218/- 1.90% 0.44% ON PERUSAL OF AFORESAID FIGURES, WE FIND THAT THE A SSESSEE HAS DECLARED A HIGHER NET PROFIT RATE OF 0.48% AS COMPARED TO 0.43 % FOR A.Y 2011-12, AND 0.44% FOR A.Y 2010-11. THEREFORE, AS FAR AS COMPARA TIVE POSITION VIS--VIS PAST YEARS IS CONCERNED, THE ASSESSEE HAS DECLARED A BETTER NET PROFIT RATE DURING THE YEAR UNDER CONSIDERATION. 12. NOW, COMING TO THE REASONS FOR REJECTION OF BOO KS OF ACCOUNTS AND INVOCATION OF PROVISIONS OF SECTION 145(3) OF THE A CT. IN THIS REGARD, ON PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT THE A SSESSEE IS A PROPRIETOR OF M/S SHAHID BASTI RAM FILLING CENTRE, JAIPUR, AN IOC L PETROL PUMP WHICH WAS ALLOTTED TO HER IN F.Y. 2002-03 WHERE THE QUANT ITY AND PRICE OF VARIOUS PETROLEUM PRODUCTS ARE REGULATED BY IOCL AN D THERE IS THUS NO DISPUTE REGARDING THE PURCHASES, THE SALES, THE OPE NING AND CLOSING STOCK AS SHOWN BY THE ASSESSEE IN THE PROFIT/LOSS ACCOUNT AN D STOCK RECORDS HAVE BEEN MAINTAINED AND VERIFIED DURING THE ASSESSMENT PROCE EDINGS. THE ASSESSING OFFICER HAS HOWEVER DISPUTED THE SHORTAGES ON ACCOU NT OF EVAPORATION CLAIMED BY THE ASSESSEE AND HAS COMPARED THE EVAPORATION SH ORTAGES FOR TWO MONTHS I.E, JUNE AND DECEMBER AND HAS COME TO A CONCLUSION THAT THE EVAPORATION SHORTAGES SO CLAIMED FOR THE WHOLE YEAR IS NOT ACCE PTABLE. WE FIND THAT THERE MAY BE FLUCTUATION IN EVAPORATION LOSS ON MONTH-ON- MONTH BASIS, HOWEVER, IF WE LOOK AT THE COMPARATIVE YEARLY SHORTAGE PERCENTA GE VIS--VIS PAST YEARS AS UNDER: ITA NO. 1037/JP/2019 SMT. TASBEER DEVI, JAIPUR VS. ITO, WARD-6(5), JAIPU R 12 ASSTT. YEAR PETROL (LTRS.) DIESEL (LTRS.) SALE SHORTAGE RATE OF SHORTAGE SALE SHORTAGE RATE OF SHORTAGE 2010-11 1567964 9412 0.60% 1624439 3245 0.20% 2011-12 1468456 8807 0.60% 1654733 2990 0.18% 2012-13 1520239 8359 0.55% 1955831 3550 0.18% WE FIND THAT THE ASSESSEE HAS CLAIMED SHORTAGE OF 0 .55% IN PETROL DURING THE YEAR AS AGAINST 0.60% IN THE PAST TWO YEARS AND SIM ILARLY, THE ASSESSEE HAS CLAIMED 0.18% IN DIESEL DURING THE YEAR WHICH IS CO MPARABLE TO A.Y 2011-12 AND BETTER THAN 0.20% CLAIMED IN A.Y 2010-11. THE S AME PROVIDES A MORE REALISTIC AND RATIONALE BASIS AS COMPARED TO MONTHL Y COMPARISON AND WILL FACTOR-IN THE CLIMATIC AND OTHER FACTORS PREVAILING THROUGHOUT THE YEAR RESULTING IN SUCH SHORTAGES. EVEN WHERE THE ASSESS ING OFFICER INTENDS CARRYING OUT MONTHLY COMPARISON, THEN THE SHORTAGES CLAIMED IN THE MONTH OF JUNE 2011 SHOULD HAVE BEEN COMPARED WITH SHORTAGES IN TH E MONTH OF JUNE 2010 AND LIKEWISE, FOR OTHER MONTH WHICH HOWEVER, HAS NO T BEEN DONE IN THE INSTANT CASE. IN ANY CASE, THE COMPARATIVE SHORTAG ES FOR TWO MONTHS IS NOT REFLECTIVE OF ANY INCONSISTENT CLAIM OF SUCH SHORTA GES FOR THE WHOLE YEAR AND IT IS EVEN NOT THE CASE OF THE REVENUE THAT SIMILAR DI SCREPANCIES ARE FOUND IN REMAINING MONTHS. WE THEREFORE FIND THAT THE SHORT AGES SO CLAIMED BY THE ASSESSEE ARE LOWER THAN WHAT HAS BEEN CLAIMED AND A LLOWED BY THE REVENUE IN PAST TWO YEARS FOR WHICH THE REQUISITE DATA IS A VAILABLE ON RECORD AND THEREFORE, THE SAME BEING FOUND COMPARABLE CANNOT B E FORM A RATIONAL BASIS FOR REJECTION OF BOOKS OF ACCOUNTS SO MAINTAINED BY THE ASSESSEE. IN THE RESULT, THE REJECTION OF BOOKS OF ACCOUNT IS HEREBY SET-ASIDE AND THE CONSEQUENT TRADING ADDITION IS HEREBY DELETED. IN THE RESULT, THE MATTER IS ITA NO. 1037/JP/2019 SMT. TASBEER DEVI, JAIPUR VS. ITO, WARD-6(5), JAIPU R 13 DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE AND THE GROUND OF APPEAL IS ALLOWED. 13. REGARDING DISALLOWANCE OF VARIOUS EXPENSES, WE FIND THAT THE LD CIT(A) HAS RESTRICTED SUCH DISALLOWANCES TO 10% WHICH IS C ONSISTENT WITH THE DISALLOWANCES MADE IN THE PAST YEARS AND WHICH HAS BEEN ACCEPTED BY THE ASSESSEE. IN THE RESULT, WE ARE NOT INCLINED TO IN TERFERE WITH THE FINDINGS OF THE LD CIT(A) AND THE SAME IS HEREBY CONFIRMED. 14. REGARDING DISALLOWANCE OF SALARY EXPENSES OF RS 1,55,880/-, THE CLAIM OF THE ASSESSEE IS THAT THE SAME IS FULLY VERIFIABLE F OR ESI, PF RECORDS AND HAS BEEN DULY OFFERED TO TAX, WHERE APPLICABLE IN THEIR PERSONAL TAX RETURNS. THE MATTER IS ACCORDINGLY REMITTED TO THE FILE OF THE A SSESSING OFFICER TO VERIFY THE SAME AND WHERE THE SAME IS FOUND TO BE IN ORDER, AL LOW THE NECESSARY RELIEF TO THE ASSESSEE. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISPOSED OFF IN LIGHT OF AFORESAID DIRECTIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 23/07/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23/07/2020 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SMT. TASBEER DEVI, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD-6(5), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) ITA NO. 1037/JP/2019 SMT. TASBEER DEVI, JAIPUR VS. ITO, WARD-6(5), JAIPU R 14 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 1037/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR