Mr. Suresh Rajaram Shinde, Kolhapur V. Income-tax Officer, Ward - 1(2), Kolhapur

ITA 1096/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9787 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-10-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 29-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Peak credit

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1096/PN/2011 (ASSTT.YEAR : 2003-04) SURESH RAJARAM SHINDE, 790/39/4, RAIGAD COLONY, PACHGAON ROAD, KOLHAPUR. .. APPELLANT PAN NO.AXUPS 9301F VS. INCOME TAX OFFICER, WARD-1(2), AYAKAR BHAVAN, TARABAI PARK, KOLHAPUR. .. RESPONDENT APPELLANT BY : SMT. DEEPA KHARE RESPONDENT BY : SMT. ANN KAPTHUAMA DATE OF HEARING : 06-12-2012 DATE OF PRONOUNCEMENT : 11-12-2012 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 01-07- 2011 OF THE CIT(A)-KOLHAPUR, RELATING TO ASSESSMENT YEAR 2003-04. 2. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR T HE ASSESSEE DID NOT PRESS GROUND OF APPEAL NO.1 WHICH RELATES TO VALIDITY OF THE ISSUE OF NOTICE U/S.148. SINCE THE LEARNED DR HAD NO OBJECTION, THEREFORE, T HE FIRST GROUND RAISED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 3. IN THE REMAINING GROUNDS THE ASSESSEE HAS CHALLE NGED THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS.6,59,005/- MADE BY THE AO TO THE TOTAL INCOME OF THE ASSESSEE BY ESTIMATING THE PROFIT FRO M BUSINESS @ 10%. 4. FACTS OF THE CASE, IN BRIEF, ARE THAT IN RESPONS E TO NOTICE U/S.148 THE ASSESSEE FILED A RETURN DECLARING TOTAL INCOME AT RS.10,680/ -. IN THE STATEMENT RECORDED BY 2 THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE CONFIRMED THE FOLLOWING FACTS : I. THAT HE HAD ENTERED INTO AN AGREEMENT WITH SHRI RATNAKAR TATYARAO JOSHI FOR THE BUSINESS OF SALE AND PURCHASE OF KEROSENE. II. THAT THE BUSINESS WAS ACTUALLY CARRIED ON BY SH RI RATNAKAR TATYARAO JOSHI AND RECEIVED COMMISSION OF THREE PAISE PER LITRE. 5. IN SUPPORT OF HIS CONTENTION REGARDING RECEIPT O F COMMISSION ON SALE OF KEROSENE, THE ASSESSEE SUBMITTED A DETAILED STATEME NT OF SUCH RECEIPTS FOR A.Y. 2003-04. HOWEVER, THE AO REJECTED THE CONTENTION O F THE ASSESSEE FOR THE FOLLOWING REASONS. I. THE COPY OF AGREEMENT PRODUCED WAS NOT REGISTERE D. II. NO ORIGINAL AGREEMENT WAS PRODUCED. III. THE AGREEMENT BORE THE SIGNATURES OF THE CONCE RNED PARTIES AND WAS NOT EXECUTED IN THE PRESENCE OF WITNESSES. DESPITE OPPORTUNITIES GIVEN BY THE AO THE ASSESSEE DID NOT APPEAR BEFORE HIM FOR WHICH THE AO RECASTED THE TRADING ACCOUNT SHOWING S ALES AT RS.65,90,000/- AND BROUGHT TO TAX NET PROFIT OF RS.6,59,005/- BEING 10 % OF SALES. 6. BEFORE THE CIT(A) THE ASSESSEE ARGUED THAT PROFI T RATE OF 3.34% MAY BE ADOPTED AS HAS BEEN ADOPTED IN THE CASE OF BALAJI LPG AND PETRO PVT. LTD. BY THE AO FOR THE A.Y. 2001-02 IN AN ORDER PASSED U/S.143( 3)/147. 7. HOWEVER, THE LEARNED CIT(A) WAS NOT CONVINCED WI TH THE ARGUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE ADDITION MA DE BY THE AO. WHILE DOING SO, HE DISTINGUISHED THE DECISION RELIED ON BY THE ASSESSEE BEFORE HIM INCLUDING THAT OF THE DECISION OF THE TRIBUNAL IN THE CASE OF KOLHAPUR ICE AND COLD STORAGE. HE OBSERVED THAT THERE IS A HUGE BLACK MARKET IN KE ROSENE THROUGHOUT THE COUNTRY AND THIS IS FOR THE REASON THAT THE TARGETTED POPUL ATION WHO USE KEROSENE AS THEIR PRIMARY FUEL TO MEET THE HOUSEHOLD NEEDS FOR ENERGY ARE VERY OFTEN DEPRIVED OF THEIR QUOTA OF KEROSENE DUE TO PILFERAGE AS IT WAS ESTABLISHED IN THE CASE OF BALAJI 3 LPG AND PETRO PVT. LTD. AND IN THE CASE OF THE ASSE SSEE. ACCORDING TO HIM, KEROSENE IS PILFERED AND THEN SOLD TO VARIOUS PEOPL E LIKE TOUR VEHICLE OPERATORS AND TRANSPORTERS WHO IN TURN USE IT TO ADULTERATE T HE DIESEL USED AS FUEL IN THE VEHICLES PLIED BY THEM IN ORDER TO REDUCE THE COST OF RUNNING OF VEHICLES. THE PRICES CHARGED IN BLACK MARKET FOR SUCH PILFERED KE ROSENE IS HIGHER THAN THE NORMAL SELLING PRICE OF KEROSENE IN OPEN MARKET DEPENDING ON THE PRICE OF THE DIESEL. SINCE THE ASSESSEE WAS UNABLE TO PROVE THAT THE SAL E OF KEROSENE WAS MADE TO THE TARGETTED GROUP AND THERE WAS NO PILFERAGE THE LEAR NED CIT(A) UPHELD THE ADDITION MADE BY THE AO. 7.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 8. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BROUGHT TO THE NOTICE OF THE BENCH THE SUBMISSIONS MADE BEFORE THE CIT(A), ACCORDING TO WHICH UNDER SIMILAR FACTS AND CIRCUMSTANCES THE DEPARTMEN T HAS ESTIMATED THE NET PROFIT @ 3.84% ON PURCHASE OF KEROSENE FOR A.Y. 2001-02 IN CASE OF BALAJI LPG AND PETRO PVT. LTD. ACCORDING TO HER, THE ASSESSEE HAS PURCHASED KEROSENE AMOUNTING TO RS.56,01,544/- AND THE PROFIT @ 3.84% ON PURCHAS ES COMES TO RS.2,15,100/-. THEREFORE, THE SAME AT BEST CAN BE SUSTAINED AND NO T RS.6,59,005/- AS MADE BY THE AO AND UPHELD BY THE CIT(A). SHE FURTHER SUBMITTED THAT TELESCOPING BENEFIT FOR ADDITION OF RS.20,000/- ON ACCOUNT OF PEAK CREDIT O F CASH DEPOSIT SHOULD ALSO BE ALLOWED AGAINST BUSINESS PROFIT ESTIMATED. THE LEAR NED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT SRI RATNAKAR TATYARAO JOSHI, WITH WHOM THE AGREEMENT WAS MADE, HAS ALREADY DIED. SHE ACCORDINGLY SUBMITTED THAT THE TOTAL ADDITION CAN BE SUSTAINED TO THE EXTENT OF RS.1,95,000/-. 8.1 THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDER OF THE CIT(A). 4 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE WAS INDULGING IN CLANDESTINE SALE OF KEROSENE IN BLACK MARKET. ACCORDING TO THE ASSESSEE, HE WAS GETTING ONLY COMMISSION @ 3 PAISE PER LITRE AND ACCORDINGLY HE HAS DECLARED THE COMMISSION FROM SUCH KEROSENE BUSINESS AT RS.10680/-. ACCORDING TO THE AO, SINCE THE ASSESSEE WAS INDULGING IN SELLING OF KEROSENS IN THE BLACK MARKET, HE ESTIMAT ED THE NET PROFIT @10% OF THE SALES. THUS, THE AO DETERMINED PROFIT OF RS.6,59, 005/- ON TURNOVER OF RS.65.90.052/- WHICH HAS BEEN CONFIRMED BY THE CIT( A). IT IS THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT UNDER SOM EWHAT SIMILAR FACTS AND CIRCUMSTANCES THE DEPARTMENT HAS ESTIMATED THE NET PROFIT @ 3.84% ON PURCHASE OF KEROSENE FOR A.Y. 2001-02 IN CASE OF BALAJI LPG AND PETRO PVT. LTD. FROM THE COPY OF THE ASSESSMENT ORDER, WE FIND THE AO WHILE ADOPTING NET PROFIT RATE OF 10% ON SALES HAS NOT GIVEN ANY COMPARATIVE CASE BUT HAS DETERMINED SUCH PROFIT ON ESTIMATE BASIS. CONSIDERING THE TOTALITY OF THE FA CTS OF THE CASE, A NET PROFIT OF 4% ON THE TURNOVER OF RS.65,90,052/-, IN OUR OPINION, WILL MEET THE ENDS OF JUSTICE. SO FAR AS THE CONTENTION OF THE LEARNED COUNSEL FOR TH E ASSESSEE THAT TELESCOPING BENEFIT OF RS.20,000/- ADDED ON ACCOUNT OF PEAK CREDIT OF C ASH DEPOSIT BE ALLOWED AGAINST BUSINESS PROFIT ESTIMATED, WE FIND THE SAME IS WITH OUT ANY MERIT. WE ACCORDINGLY REJECT THE ABOVE CONTENTION OF THE ASSESSEE. THE A O IS DIRECTED TO COMPUTE THE NET PROFIT @ 4% OF THE TURNOVER. WE HOLD AND DIRECT AC CORDINGLY. THE GROUND RAISED BY THE ASSESSEE IS PARTLY-ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY-ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 11 TH DAY OF DECEMBER 2012. SD/- SD/- (R.S. PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED THE 11 TH DECEMBER 2012 SATISH 5 COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-KOLHAPUR. 4. THE CIT, CENTRAL, PUNE 5. D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE