M/s. R.M. Saha Petroleum Agency, Agartala V. Income Tax Officer, Ward-3, Agartala

ITA 225/GTY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2077 (ITAT-GUWAHATI)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 04-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANDIP SENGUPTA
• Assessee Lawyers: P P CHAKRABORTY

Judgement Text

1 ITA NO.225/GAU/2018 R. M. SAHA PETROLEUM AGENCY, AY 2013-14 IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH, E COURT AT KOLKATA ( ) . . , . [ , ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, AM] I.T.A. NO. 225/GAU/2018 ASSESSMENT YEAR: 2013-14 M/S. R. M. SAHA PETROLEUM AGENCY, (PAN: AAAAR3708B) VS. INCOME-TAX OFFICER, WARD-3, AGARTALA APPELLANT RESPONDENT DATE OF HEARING 13.05.2019 DATE OF PRONOUNCEMENT 19.06.2019 FOR THE APPELLANT SHRI P. P. CHAKRABORTY, ADVOCATE FOR THE RESPONDENT SHRI SANDIP SENGUPTA, JCIT, SR. DR ORDER PER A.T.VARKEY, JM THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), SHILLONG DATED 25.06.2018 FOR 2013-14. 2. THE ONLY ISSUE IS AGAINST THE ACTION OF THE LD. CIT(A) IN SUSTAINING THE ADDITION OF RS.10,26,815/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE AO NOTED THAT THE ASSESSEE IS A DEALER OF INDIAN OIL CORPORATION LTD. (HEREINAFTER REFERRED TO AS IOC) AND USED TO PURCHASE AND SELL PETROL AND DIESEL. ACCORDING TO AO, AS PER THE AUDITED STATEMENT OF ACCOUNT SUBMITTED BY THE ASSESSEE, THE ASSESSEE HAD MADE PURCHASE OF PETROL AND DIESEL TO THE TUNE OF RS.18,65,33,200/-. THE AO IN ORDER VERIFY THE GENUINENESS OF THE PURCHASE CONTACTED THE IOC WHICH IN TURN FORWARDED THE PURCHASE LEDGER MAINTAINED FOR THE ASSESSEE. ACCORDING TO AO, THE QUANTUM OF PURCHASE MADE DATE WISE WHEN ADDED UP CAME TO RS.18,75,60,015/-. THUS, THE AO FOUND THAT THERE IS DIFFERENCE IN PURCHASE TO THE TUNE OF RS.10,26,815/-. SO ACCORDING TO AO, THIS PURCHASE MADE BY THE ASSESSEE TO THE TUNE OF RS.10,26,815/- WAS NOT DISCLOSED IN THE BOOKS 2 ITA NO.225/GAU/2018 R. M. SAHA PETROLEUM AGENCY, AY 2013-14 OF ACCOUNT AND SINCE THE ASSESSEE COULD NOT EXPLAIN THE DIFFERENCE, THE AO TREATED THE SAME AS UNDISCLOSED PURCHASES AND ADDED THE SAME TO THE TOTAL INCOME. THUS, AN AMOUNT OF RS.10,26,815/- WAS ADDED TO THE INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO DISMISS THE SAME. AGGRIEVED, THE ASSESSEE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDING TO LD. AR, THE ASSESSEE IS A DEALER OF IOC; AND THE IOC CENTRALLY DECLARES THE PRICE OF MS PETROL AND HS DIESEL. ACCORDING TO HIM, ALL THE DEALERS HAVE TO FOLLOW THE PRICES FIXED IN RESPECT OF PURCHASE AND SALES FOR THE DEALERS APPOINTED BY THE IOC, THEREFORE, IT WAS SUBMITTED BY THE LD. AR THAT THE GROSS PROFIT (GP) OF THE DEALERS IS SAME THROUGHOUT THE NATION. IT WAS BROUGHT TO OUR NOTICE THAT THE IOC INFORMS THE DEALERS ITS PREVAILING SALE PRICE BY OFFICE ORDER AND THE LD. AR DREW OUR ATTENTION TO EXHIBIT E AND THUS, IT WAS CONTENDED BY THE LD. AR THAT GP OFFERED BY THE IOC TO ITS DEALERS ARE AROUND 1.01% OF THE PURCHASE VALUE. ACCORDING TO LD. AR, DUE TO INADVERTENT CLERICAL CALCULATIONS/MISTAKE THE DIFFERENCE OF PURCHASE WAS FOUND TO THE TUNE OF RS.10,26,815/-. ACCORDING TO HIM, THE AO OUGHT NOT TO HAVE ADDED THE ENTIRE AMOUNT AS INCOME OF THE ASSESSEE AND SHOULD HAVE ONLY ADDED THE GP ON PURCHASE OF PETROL/DIESEL OF RS.10,26,815/-. WE NOTE THAT THE ASSESSEE IS A DEALER OF IOC AND IT HAS NO OTHER BUSINESS OTHER THAN PURCHASE AND SALE OF PETROL AND DIESEL FROM IOC. WE NOTE THAT THE ENTIRE PURCHASE OF GOODS CANNOT BE ADDED AS THE INCOME OF THE ASSESSEE AND ONLY THE PROFIT EMBEDDED IN THE SALES OF THE GOODS CAN BE BROUGHT TO TAX. IN THIS KIND OF CASES, THE UNDISCLOSED INCOME THAT SHALL FORM PART OF THE TOTAL INCOME WOULD BE SO TAKEN AFTER DEFRAYING ALL THE EXPENSES THAT ARE INCURRED FOR EARNING SUCH INCOME BY THE ASSESSEE. WE RELY ON THE PRINCIPLE MADE BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. PIARA SINGH (1980) 124 ITR 40 WHICH IS RELEVANT. ONCE THE PURCHASES HAS BEEN TAKEN INTO ACCOUNT AND CHARGED TO THE P&L ACCOUNT, THE NATURAL COROLLARY WOULD BE THAT THEY WOULD HAVE BEEN EITHER SHOWN AS SALE OR LYING IN THE STOCK. THE AO CANNOT ADD THE ENTIRE PURCHASE WITHOUT REDUCING EITHER THE SALES OR THE STOCK BY A MATCHING SUM. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT ONLY THE PROFIT ELEMENT EMBEDDED IN THE SALES CAN ONLY BE TAXED AND AO OUGHT NOT TO HAVE ADDED THE ENTIRE PURCHASE AS INCOME OF THE ASSESSEE. 3 ITA NO.225/GAU/2018 R. M. SAHA PETROLEUM AGENCY, AY 2013-14 TAKING NOT THAT THE GP IS TO THE TUNE OF 1.01%, WE DIRECT THE AO TO COMPUTE THE INCOME OF THE ASSESSEE @ 1.1% OF RS.10,26,815/-. APPEAL OF ASSESSEE IS PARTLY ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 JUNE, 2019. SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19 JUNE, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. R. M. SAHA PETROLEUM AGENCY, AGENT OF IOCL, COLONEL CHOWMUHANI, AGARTALA, WEST TRIPURA 799001. 2 RESPONDENT ITO, WARD-3, AGARTALA 3. 4. THE CIT(A), SHILLONG. CIT , SHILLONG 4. DR, ITAT, GUWAHATI BENCH, GUWAHATI / TRUE COPY, BY ORDER, SR. P.S / H.O.O. / D.D.O ITAT, GAUHATI BENCH