Saamita Mishra, Cuttack V. ITO, Cuttack

ITA 379/CTK/2012

• Counselvise Citation: 37922114 RSA 2012
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 27-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 08-06-2012
• Court: TRIBUNAL
• Department Lawyers: N K NEB
• Assessee Lawyers: J M PATTNAIKA P MISHRAARS
• Keywords: Unexplained expenditure
• Section: 68; 69; 69C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 379/CTK/2012 / ASSESSMENT YEAR 2008 - 09 SMT. SAS MITA MISHRA,KHAMAR SAHI, P.O.GORAPOHARI, CUTTACK PAN: AMZPM 6494 P - - - VERSUS - INCOME - TAX OFFICER, WARD 2(4), CUTT ACK. ( /APPELLANT ) ( / RESPONDENT ) / I.T.A.NO. 389/CTK/2012 / ASSESSMENT YEAR 2008 - 09 INCOME - TAX OFFICER, WARD 2(4), CUTTACK. - - - VERSUS - SMT. SA S MITA MISHRA,KHAMAR SAHI, P.O.GORAPOHARI, CUTTACK PAN: A MZPM 6494 P ( /APPELLANT ) ( / RESPONDENT ) FOR THE ASSESSEE : S/SHRI J.M.PATTNAIK/A.P.MISHRA,ARS FOR THE DEPARTMENT: SHRI N.K.NEB, DR / DATE OF HEARING: 27.09.2012 / DATE OF PRONOUNCEMENT: 28.09 .2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER . THESE APPEALS BY THE ASSESSEE AS WELL AS THE REVENUE RAISE GROUNDS DEALT WITH AND ADJUDICATED UPON BY THE LEARNED CIT(A) BY ORDER DT.27.3.2012 WHEN PART ADDITIONS ARE C ONFIRMED AND ALSO DELETED WHEN THE ASSESSEE AND THE REVENUE ARE AGITATING THE ORDER ON THE PART SUSTENANCE AND PART DELETION RESPECTIVELY. WE PROPOSE TO TAKE UP THE RESPECTIVE GROUNDS AS MENTIONED BELOW AFTER HEARING THE RIVAL PARTIES. I.T.A.NO. 379/CTK/2012 AND I.T.A.NO. 389/CTK/2012 (CROSS APPEALS) 2 2. THE GROUNDS RAISE D BY THE ASSESSEE READ AS UNDER. 1 . THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF 6,00,000 MADE U/S 68 BY THE ASSESSING OFFICER FOR THE A. Y. 2008 - 09. THE ADDITION IS UNJUSTIFIED, ARBITRARY, ERRONEOUS AND LEGALLY UNTENABLE, AND HENCE NEEDS TO BE DELETED IN FULL. 2 . THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ER RED IN CONFIRMING THE ADDITION OF 6,04,060 MADE U/S - 69 BY THE ASSESSING OFFICER FOR A A.Y. 2008 - 09. THE ADDITION IS UNJUSTIFIED, ARBITRARY, ERRONEOUS AND LEGALLY UNTENABLE, AND HENCE NEEDS TO BE DELETED IN FULL. 3 . THAT ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, CIT (A) OUGHT TO HAVE APPRECIATED THE POINTS RAISED BY THE APPELLANT AND SHOULD H AVE APPLIED THE DECISION OF HON BLE ITAT CUTTACK BENCH IN THE CASE OF SRI RADHA KRISHNA PRADHAN VS ITO WARD - 2(1), CUTTACK IN ITA NO. - 157ICTK2O11 FOR ALL THE GRO UNDS AS A WHOLE AND. NOT FOR A SINGLE GROUND. IN VIEW OF THE AFORESAID DECISION ALL THE ADDITIONS SHOULD HAVE BEEN DELETED BY THE CIT APPEAL AND RETURN INCOME SHOULD HAVE BEEN ACCEPTED. 4 . THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A ) WAS NOT JUSTIFIED IN REJECTING THE ADDITIONAL GROUND TAKEN BY THE APPELLANT. THE ADDITIONS MADE BY THE AO BASED ON INFRUCTRUS AND NONEXISTENT FACTS AND FIGURES ARE LIABLE TO BE DELETED IN FULL. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS. 01. IN T HE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY WAS NOT JUSTIFIED IN DELETING THE ADDITIONS OF 8,50,890, MADE ON ACCOUNT OF DIFFERENCE IN EXCESS SHORTAGE OF HSD(DIESEL) AND MS(PETROL) RELYING ON THE SAME TYPE OF ISSUE REPORTED IN ITA NO:157/CTK/2011 PASSED BY THE HONBLE ITAT,CUTTACK BENCH,CUTTACK WHERE THE HONBLE ITAT HAS REFERRED TO CIRCULAR I SSUED BY MINISTRY OF PETROLEUM & CHEMICALS, GOI FIXING GROSS PROFIT @1.33% AND ALLOWING EVAPORATION LOSS @0.75H THERE ON, - BUT ACTUALLY NET GROSS PROFIT COMES TO 0.58% I.E.(1.33% - 0.75H) NOT I.T.A.NO. 379/CTK/2012 AND I.T.A.NO. 389/CTK/2012 (CROSS APPEALS) 3 0.33% AS STATED BY ITAT. A MISCELLANEOUS APPLICATION HAS BEEN FILED BEFORE THE ITAT REGARDING THE APPARENT MISTAKE COMMITTED IN INTERPRETING THE CONTENTS OF THE CIRCULAR IN THE CITED CASE. CLARIFICATION OBTAINED FROM ONE OF THE OIL COMPANY M/S.HPCL, BHUBANESWAR (ASSESSEE IS A RETAILER OF SUCH COMPANY) SHOWS MARGIN PROFIT GIVEN TO RETAILERS OF PETROLEUM PRODUCTS AS UNDER: A) MS (PETOL) - : MARGIN OF PROFIT FOR EVERY SALE OF 100 - COMES TO RS,0.215 FOR THE F/Y:2008 - 09,09 - 10,10 - 11 TILL 16.11.2011 AND 0.499 FOR THE REMAINING PERIOD OF F/Y:2011 - 12. EVAPORATION LOSS: 0.7 5% FOR TOTAL TURN OVER UPTO 600 KILOLITERS B) HSD (DIESEL) : MARGIN OF PROFIT FOR EVERY SALE OF 100 - COMES TO RS,0.757FOR THE F/Y:2008 - 09, 0.730 FOR THE F/Y:2009 - 10 TILL 30.10.2010 AND 0.757 FOR REST OF PERIOD OF F/Y:2010 - 11, AND 0.912 FOR THE F/Y:20 11 - 12) EVAPORATION LOSS: 0.25% FOR TOTAL TURN OVER UP TO 600 KILOLITERS SUCH CLARIFICATIONS INDICATE THAT EXCESS EVAPORATION LOSS TREATED AS UNDISCLOSED SALE OF THE ASSESSEE BY THE AC HAS NOT BEEN PROPERLY CONSIDERED BY THE LD.CIT(A). 02. IN THE FACTS A ND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) IS NOT JUSTIFIED IN DELETING THE TOTAL UNEXPLAINED EXPENDITURE U/ S.69C AMOUNTING TO RS, 5,53,213 BEING UNACCOUNTED PAYMENTS MADE TO M/ S.HPCL ON THE GROUND THAT TWO PAYMENTS HAVE BEEN MADE THROUGH DRAFTS MADE OUT O F AVAILABLE CASH BALANCE OF EARLIER SALES AND ONE INVOICE IS CANCELLED. WHERE AS THERE ARE NO SUCH ENTRIES IN THE CASH BOOK DATED 23.07.2007 AND 03.12.2007 FOR THE AMOUNT OF DRAFT OF 39,107 AND 33,000 RESPECTIVELY. 3. THE BRIEF FACTS AS HAVE BEEN BR OUGHT ON RECORD ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM RETAIL OUTLET OF HPCL (PETROL PUMP), I.E. THROUGH SALE OF PETROL, DIESEL AND LUBRICANTS. BEING THE CONTROLLED ITEMS THE COMMISSION OF ASSESSEE IS FIXED BY GOVT. OF INDIA. HENCE THE GROSS PROFIT OF THE ASSESSEE IS FIXED AND CAN BE CALCULATED EASILY BY MULTIPLYING LITERS SOLD WITH COMMISSION PER LITER. I.T.A.NO. 379/CTK/2012 AND I.T.A.NO. 389/CTK/2012 (CROSS APPEALS) 4 THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION IS FILED AT A TOTAL INCOME OF RS. 1,44,412. AS AGAINST THIS THE ASSESSMENT WAS C OMPLETED U/S. 143 (3) BY THE ID. ASSESSING OFFICER AT A TOTAL INCOME OF 27,52,580 BY MAKING FOLLOWING ADDITIONS I.E. A. TREATING HANDLING LOSS TO BE AS UNDISCLOSED SALES OUTSIDE THE BOOKS AT 8,50,890 B. TREATING UNSECURED LOANS RECEIVED AS BOGUS U/S.6 8 AT 6,00,000 C. TREATING PAYMENT TO HPCL AS OUT OF BOOKS AND MADE ADDITION U/S.69(C) AT 6,04,060 D. UNEXPLAINED EXPENDITURE U/S.69C AT 5,53,213 5. THE ISSUES WERE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY WHEN THE LEARNED CIT(A) DELETED THE HA NDLING LOSS AND THE PAYMENT TO HPCL WHICH GROUNDS HAVE BEEN RAISED BY THE REVENUE BE F ORE US (SUPRA) . THE ASSESSEE IN APPEAL AGAINST CONFIRMATION OF THE UNSECURED LOAN AMOUNTING TO 6 LAKHS AND EXCESS DEBT SHOWN BY HPCL AS ON31.3.2008 U/S.69C AMOUNTING TO 6,04,060. 6. AT THE OUTSET, THE RIVAL PARTIES HAVE TRIED TO ANALYZE THE ACCOUNTING METHOD ADOPTED BY THE ASSESSEE WHEN THE AUDITOR WHO HAD SUBMITTED THE AUDIT REPORT UNDER THE PROVISIONS OF SECTION 44AB ON THE BASIS OF INFORMATION MADE AVAILABLE TO THE CHA RTERED ACCOUNTANT FROM THE PROPRIETRESS AND THE MUNIM NAMELY ACCOUNTANT OF THE ASSESSEE WAS BEFORE HIM. IT HAS BEEN SUBMITTED THAT THE AUDITOR PASSED AWAY AND THEREFORE, THE LACKING, IF ANY, AS WERE QUERIED BY THE ASSESSING OFFICER WERE TELESCOPED TO THE F AULT OF THE AUDITORS WHO HAD CERTIFIED THE ACCOUNTS. WE HAVE PERUSED THE ORDER OF ASSESSMENT WHEN THE UNEXPLAINABLE ITEMS WERE CONSIDERED BY THE ASSESSING OFFICER FOR TAXATION BUT WERE TO BE EXPLAINED IN ACCORDANCE WITH THE AUDITED FINANCIAL STATEMENTS BEF ORE THE LEARNED CIT(A). IN OTHER WORDS, THE LEARNED CIT(A) HAS APPLIED HIS MIND TO THE FINANCIAL STATEMENTS I.T.A.NO. 379/CTK/2012 AND I.T.A.NO. 389/CTK/2012 (CROSS APPEALS) 5 WHICH THE LEARNED CIT(A) DEEMED FIT NOT TO FIND FAULT WITH BLAMING THE DEPARTED SOULS AUTHENTICATION OF FINANCIAL STATEMENTS WHICH HAVE BECAME AS A MATTER OF RECORD. THE LEARNED DR HAS ARGUED THAT THE REVISIONARY INSTANCE TAKEN BY THE ASSESSEE AT THE TIME OF QUERIES RAISED BY THE ASSESSING OFFICER CLEARLY INDICATES THAT THE ASSESSEES BLAME ON THE DEPARTED SOUL CANNOT BE ALLOWED AS A LIBERAL VIEW TAK EN BY THE LEARNED CIT(A) INSOFAR AS THE ASSESSING OFFICER HAS CATEGORICALLY BROUGHT O N RECORD VARIOUS MATERIALS TO INDICATE WHY THE ADDITIONS U/SS.68, 69C AND 69 COULD NOT SIMULTANEOUSLY ALLOWABLE. THE LEARNED DR ALSO OPPOSED THE CONTENTION THAT THE LEARNE D CIT(A) ERRED IN HOLDING THAT THE DEBTORS COULD HAVE BEEN CONVERTED INTO STOCK AND THE ACCOUNT VERIFIED FROM THE THIRD PARTIES COULD LEAD TO A FINDING THAT THERE WAS NO FRESH BORROWING DURING THE YEAR. THE MATERIAL THEREFORE SUPPLIED BY THE ASSESSEE BEFOR E THE AUTHORITIES BELOW WHICH ARE ALSO NOW SUBMITTED BY WAY OF PAPER BOOK IS CLEARLY CHANGE OF STANCE BY THE ASSESSEE BY PASSING THE BLAME ON THE CHARTERED ACCOUNTANT WHO HAS SIGNED THE BALANCE S HEET BY SUBMITTING THE REPORT U /S.44AB. THE LEARNED COUNSEL F OR THE ASSESSEE TRIED TO SHIFT THE BURDEN AS HAS BEEN NOTED BY THE LEARNED CIT(A) WAS ALSO BASED ON THE FACTS THAT THE AUDIT REPORT HAD BEEN SIGNED ON NOT FULLY APPRECIAT ING THE FACTS OF THE CASE INSOFAR AS THE AO HAD CATEGORICALLY BROUGHT ON RECORD VARIO US LAC UNAE INSOFAR AS THE AMOUNTS CONSIDERED BY THE LEARNED CIT(A) FOR PAYMENTS HAVE BEEN MADE OUTSIDE THE BOOKS OF ACCOUNT COULD NOT HAVE BEEN ALLOWED BY THE LEARNED CIT(A) UNLESS EXPLAINED AND UNDERSTOOD BY THE LEARNED CIT(A) IN A PROPER PERSPECTIVE. TH E LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED ON THE AFFIDAVIT OF THE PROPRIETRESS WHO SUBMITTED THE FOLLOWING: I.T.A.NO. 379/CTK/2012 AND I.T.A.NO. 389/CTK/2012 (CROSS APPEALS) 6 MRS. SASHMITA MISHRA, AGED ABOUT 41 YEARS, W/O - MR. KRUSHNA CHANDRA MISHRA, PERMANENT RESIDENT OF AT - KHAMARSAHI, GORAPOKHAR, BADAMBA, CUTTACK - 75 3031, ODISHA BEING THE PROPRIETOR OF M/S.PRAMODINI SERVICE STATION (HPCL RETAIL OUTLET) DO HEREBY SOLEMNLY AFFIRM AND STATES AS FOLLOWS: 1) THAT I AM FILING MY INCOME TAX RETURNS WITH PAN - AMZPM6494, DISCLOSING THE INCOME FROM MY PETROL PUMP. FY 2007 - 08 IS THE FIRST FULL YEAR OF OPERATION OF MY PETROL PUMP. 2) THAT I DO NOT HAVE ANY KNOWLEDGE OF ACCOUNTING/AUDIT/INCOME TAX FOR WHICH I HAVE ENGAGED ONE ACCOUNTANT NAMELY MR.AJIT KUMAR ACHARYA AND ENTIRELY DEPENDING ON HIM FOR ALL SUCH ISSUES. 3) THAT THE IN COME TAX RETURN FOR THE ASSESSMENT YEAR 2008 - 09 WAS FILED AT A TOTAL INCOME OF RS.1,44,412/ - (RUPEES ONE LAKH FORTY FOUR THOUSANDS FOUR HUNDRED TWELVE ONLY) BY ME ALONG WITH THE PROFIT & LOSS A/C., BALANCE SHEET, AUDIT REPORT PREPARED BY THE ACCOUNTANT. 4 ) THAT NEITHER I AM TECHNICALLY COMPETENT TO VERIFY THE REPORT NOR I HAVE VERIFIED THE SAME. ONLY I HAVE SIGNED THE REPORT ON THE REQUEST ON THE ACCOUNTANT WITHOUT ANY KNOWLEDGE OF ITS CONTENT. 5) THAT ON GETTING A DEMAND NOTICE OF RS.11,62,240/ - (RUPEES ELEVEN LAKHS SIXTY TWO THOUSANDS TWO HUNDRED FORTY ONLY) FROM THE INCOME TAX DEPARTMENT, I WAS SHOCKED AND ENGAGED ANOTHER CHARTERED ACCOUNTANT FIRM M/S.BNT & ASSOCIATES TO VERIFY ALL THE DETAILS. 6) THAT ONLY AFTER VERIFICATION BY M/S.BNT & ASSOCIATES I CAME TO KNOW THAT THE FIGURES SUBMITTED INTO THE AUDIT REPORTS ARE NOT CORRECT. 7) THAT NEITHER I HAVE TAKEN LOAN OF RS.6,00,000/ - (RUPEES SIX LAKHS ONLY) DURING THE FY 2007 - 08 NOR THE QUANTITATIVE DETAILS OF STOCK SUBMITTED IN THE AUDIT REPORT ARE CORRE CT. SIMILARLY THE PURCHASE AND SALE VALUE/QUANTITY IS NOT CORRECT. ALSO THE DEBTORS AMOUNTING TO RS.11,84,043/ - (RUPEES ELEVEN LAKHS EIGHTY FOUR THOUSANDS FORTY THREE ONLY) APPEARING IN THE BALANCE SHEET IS NOT CORRECT. I.T.A.NO. 379/CTK/2012 AND I.T.A.NO. 389/CTK/2012 (CROSS APPEALS) 7 8) THAT I AM GETTING A FIX COMMISSI ON OF RS.0.60 & RS.0.90 AS APPROVED BY THE GOVT. OF INDIA ON SALE OF DIESEL AND PETROL. 7. AFTER HEARING THE RIVAL PARTIES ON THIS ISSUE, WE ARE OF THE CONSIDERED VIEW THAT MISINTERPRETATION ON THE FACTS AS DISCLOSED IN THE FINANCIAL STATEMENTS COULD NOT BE PASSED ON AS A BLAME DUE TO SELF DEFICIENCY OF ANALYZING THE FINANCIAL RESULT IN A PROPER MANNER. ON PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE HAVE APPRECIATED THAT INTER SE TRANSFER OF UNSECURED LOANS OF AMOUNTS OWED TO SUNDRY CREDITORS AND S TOCKS HAVE BEEN CONVERTED INTO DEBTORS WERE REPORTEDLY SUBMITTED BY THE ASSESSING OFFICER IN A DIFFERENT MANNER WHICH REQUIRES EXPLANATION ONLY FROM THE CHARTERED ACCOUNTANT WHO HAD SIGNED THE BALANCE SHEET. TECHNICALLY THERE IS NO CAUSE OF ALARM TO CONSI DER THE CASE FIT FOR INVOKING THE PROVISIONS OF SECTION 145(3). WE HAVE PERUSED THE ASSESSMENT ORDER AND FIND THAT THE INCOME COMPUTED BY THE ASSESSING OFFICER WAS PATENTLY NOT IN THE LINES OF COMPUTING THE CORRECT INCOME AS HE COULD HAVE FOUND FAULT IN TH E BOOKS OF ACCOUNT WHICH RESULTED IN FINANC IAL STATEMENTS DULY AUDITED AND AUTHENTICATED BY THE AUDITOR. WE RATHER APPRECIATE THE LEARNED CIT(A)S EFFORTS IN UNDERSTANDING THE ISSUES INSOFAR AS HE CLEARLY DELETED THE REVENUE ITEMS WHICH CANNOT FORM PART OF INCOME ON THE BASIS OF INCOME RETURNED BY THE ASSESSEE IN ACCORDANCE WITH THE BOOKS OF ACCOUNT. THIS CLINCHES THE ISSUE IN FAVOUR OF THE ASSESSEE INSOFAR AS NO FINGER CAN BE POINTED TO DEPARTED SOUL. 8. HAVING SAID SO AND AFTER VERIFYING THE ORDERS OF THE AUTHORITIES BELOW, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITIONS CONFIRMED BY THE LEARNED CIT(A) AMOUNTING TO 6 LAKHS WAS PROPERLY EXPLAINED AS NOT HAVING BEEN OBTAINED DURING THE YEAR WHEN THE ACCOUNTANT IN ORDER TO BALANCE THE AMOUNT OWED TO HPCL WH ICH I.T.A.NO. 379/CTK/2012 AND I.T.A.NO. 389/CTK/2012 (CROSS APPEALS) 8 THE ASSESSING OFFICER HAD VERIFIED HAD SHOWN THE ASSESSEE OWED THEM A SUM OF 15,30,269. IN OTHER WORDS, THE ENHANCEMENT OF THE UNSECURED LOANS FROM 14 LAKHS TO 20 LAKHS NEVER OCCURRED AND IT WAS THE AMOUNT OWED TO HPCL WHICH WAS TO BE INCREASED FROM 9,26,199. THIS WAS AN ERROR COMMITTED BY THE ACCOUNTANT AND NOT BY THE CHARTERED ACCOUNTANT AUTHENTICATING THE FINANCIAL STATEMENTS. SIMILARLY THE AMOUNT WHICH STOOD PAID BY THE ASSESSEE AMOUNTING TO 6,04,060 WAS CONSIDERED UNILATERALLY BY THE LEARNED C IT(A) WHEN THE LEARNED CIT(A) CHOSE TO DELETE THE ADDITION ON ACCOUNT OF 5,53,213 WHICH THE ASSESSING OFFICER HAD BROUGHT ON RECORD BY HOLDING THAT THESE PAYMENTS WERE NOT MADE THROUGH THE REGULAR BOOKS OF ACCOUNT. THEREFORE, THE AMOUNT OF 6,04,060 PRACT ICALLY BALANCE THE AMOUNT DELETED BY THE LEARNED CIT(A) SO MUCH SO THAT THE DIFFERENCE IN AMOUNT WHICH THE LEARNED DR HAS TRIED TO IMPOSE WAS ON HAVING BEEN PAID FROM CASH , PAY ORDERS MADE, NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AT LEAST OUGHT TO BE AD DED IN THE HANDS OF THE ASSESSEE AS PER THE GROUND RAISED BY THE REVENUE IN THEIR APPEAL. THE DIFFERENCE IS ACTUALLY 50,847 WHICH REMAINS TO BE EXPLAINED BY THE ASSESSEE NOT AS A MATTER OF AUTHENTICATED FINANCIAL STATEMENT BUT AS A MATTER OF ACCOUNT OF PAYMENT TO HPCL TO WHICH HPCL CONFIRMED THE AMOUNT OWED TO THEM BY THE ASSESSEE AT 15,30,269. THE ADDITION U/S.69 THER EFORE CANNOT BE MADE WHEN THE LEARNED CIT(A) ERRED IN DELETING THE VERY AMOUNT WHICH HAD BEEN PAID PURPORTEDLY FROM OUTSIDE BOOKS OF ACCOUNT AS BROUGHT ON RECORD BY THE ASSESSING OFFICER. THEY ARE COMPENSATORY IN NATURE AND THEREFORE AT THE MAXIMUM COULD B E SUBJECTED TO TAX INSOFAR AS THE ASSESSEE HAS CLAIMED THAT THE PAYMENT CONFIRMS THE BALANCE OUTSTANDING AS BROUGHT ON RECORD BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTION 136 THEREFORE AT BEST COULD LEAD TO TAXING A SUM OF 50,847 IN I.T.A.NO. 379/CTK/2012 AND I.T.A.NO. 389/CTK/2012 (CROSS APPEALS) 9 THE HANDS OF THE ASSESSEE U/S.69C. HOWEVER, THE LEARNED COUNSEL FOR THE ASSESSEE HAS ARGUED AS RIGHTLY NOTED BY THE BENCH THE BLAME GAME SHOULD ACTUALLY BE CONFINED TO COMPUTE THE CORRECT INCOME INSOFAR AS THE DEPARTED SOUL CANNOT BE SUMMONED FOR EXPLAINING THE MIST AKES MADE IN THE ACCOUNT OF DEBTORS AND STOCK AND SUNDRY CREDITORS AND UNSECURED LOANS ON THE INFORMATION FURNISHED BY THE ASSESSEES MUNIM FOR CONDUCTING THE AUDIT. HE PROPOSED THAT THE ASSESSEE HAS SHOWN GROSS MARGIN OF 1.23% WHICH IS PREVALENT IN THE CA SE OF PETROL PUMP RESULTING IN NET MARGIN OF 0.35% WHEN THERE WAS NO EFFORT BY THE ASSESSING OFFICER TO DISALLOW ANY OF THE EXPENSES CLAIMED. HE PROPOSED THAT THE NET INCOME DISCLOSED IN THE AUDITED ACCOUNT AT 1,44,412 MAY BE ENHANCED BY THE AMOU NT WHICH THE LEARNED DR PROPOSES TO BE TAXED U/S.69C AS MENTIONED ABOVE. IN OTHER WORDS, THE SETTLED SCORE OF A BALANCE SHEET WHEN THE INTER TRANSFERS OF THE LIABILITY SIDE AND ASSETS SIDE STAND FULLY EXPLAINED THE REVENUE LOSS AT THE MAXIMUM MAY BE ENHANCED WHICH INCOME CANNOT BE SAID TO BE OUTSIDE THE ACCOUNT S . HE AGREED THAT THE SUM OF 50,847 MAY BE ADDED AS ENHANCEMENT IN THE NET PROFIT. 9. THE LEARNED DRS SUBMISSION ON THE FIRST ISSUE REGARDING THE EVAPORATION LOSS CLAIMED IN EXCESS AS AGAINST THE PRINCIPLES OF EVAPORATION AS ALSO DECLARED BY THE OIL COMPANIES HAS BEEN ARGUED WAS ON ERRONEOUS FINDINGS OF THE LEARNED CIT(A) HAS BEEN TAKEN CARE OF BY THE AUDITOR REPORTING THE QUANTITATIVE DETAILS WHEN THE VALUATION OF THE CLOSING STOCK AT THE CONSISTENCE SYSTEM OF ACCOUNTING AT THE LOWER OF COST OR MARKET VALUE HAS BEEN FOLLOWED BY THE ASSESSEE. THE LEARNED CIT(A) THEREFORE WAS JUSTIFIED IN DELETING THE ADDITION OF THE AMOUNT OF 8,50,890 INSOFAR AS THE ASSESSEE COULD NOT BE SAID TO HAVE MADE PROFIT ON THE SALE O F STOCK WITHOUT INCORP ORATING IN THE BOOKS OF ACCOUNT AS SHE WAS DEPENDENT ON THE I.T.A.NO. 379/CTK/2012 AND I.T.A.NO. 389/CTK/2012 (CROSS APPEALS) 10 EMPLOYEES AND THE MUNIM. THE VALUATION OF THE CLOSING STOCK THEREFORE DOES NOT SUFFER FROM INFIRMITY WHICH EVAPORATION MAY NOT BE AS PER THE SPECIFIED PARAMETERS OF THE OIL C OMPANIES INDICATING VARIOUS OTHER PILFERAGES ETC., WHICH ARE INCIDENTAL BUSINESS LOSSES. 10. CONCLUDING OUR ADJUDICATI ON WE OF THE FIRM BELIEF THAT THE APPEAL BY THE ASSESSEE IS BOUND TO BE ALLOWED AND THE REVENUES APPEAL PARTLY ALLOWED TO THE EXTENT THAT THE SUM OF 50,847 IS TO BE ADDED TO THE NET PROFIT AS INCOME OF THE ASSESSEE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THAT OF THE REVENUE IS PARTLY ALLOWED. SD/ - SD/ - ( . . . ) , (K.S.S.PRASAD RA O), JUDICIAL MEMBER. ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 28.09.2012 - COP Y OF THE ORDER FORWARDED TO: 1 . THE ASSESSEE : SMT. SAS MITA MISHRA,KHAMAR SAHI, P.O.GORAPOHARI, CUTTACK 2 THE DEPARTMENT : INCOME - TAX OFFICER, WARD 2(4), CUTTACK. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTAC K BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 379/CTK/2012 AND I.T.A.NO. 389/CTK/2012 (CROSS APPEALS) 11 APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 28.09.2012 .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BE FORE THE DICTATING MEMBER 29.09.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES T O THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..