The Asstt. Commr. Income Tax, Circle-1, JUNAGADH V. Shri Pragjibhai Gokaldas Nathwani, Mangrol

ITA 575/RJT/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6732 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-10-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 07-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: MJ RANPURA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: SHRI RAJPAL YADAV, JUDICIAL MEMBER AND S H RI AMARJIT SINGH , ACCOUNTANT MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] ACIT, CIRCLE - 1, JUNAGADH (APPELLANT) VS SHRI PRAGJIBHAI GOKALDAS NATHWANI, PROP. OF MANGROL OIL MILL, TOWER ROAD, AT MANGROL, DIST. JU NAGADH P AN: AAYPN4310N (RESPONDENT /CROSS OBJECTOR ) REVENUE BY : S H RI AVINASH KUMAR , SR. D . R. ASSESSEE BY: S H RI M.J. RANPURA , A.R. DATE OF HEARING : 17 - 10 - 2 016 DATE OF PRONOUNCEMENT : 02 - 01 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THI S ASSESSEE S APPEAL FOR A.Y. 20 10 - 1 1 , AR ISE FROM ORDER OF THE CIT(A) - IV, RAJKOT DATED 9 - 0 7 - 201 4 IN APPEAL NO. CIT(A) - IV / 0 006 /1 3 - 1 4 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT . I T A NO . 5 75 / RJT /20 1 4 A SSESSMENT YEAR 20 10 - 1 1 I.T.A NO. 5 7 5 /RJT / 2014 A.Y. 2010 - 11 PAGE NO ACI T VS. SHRI PRAGJIBHAI GOKALDAS NATHWANI 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 2, 19, 919/ - U/S.40A(2)(B). THE LD. CIT( A) OUGHT TO HAVE UPHELD THE SAME. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE 'KHARA JAT EXPENSES. ' THE LD. CIT(A) HAS CONFIRMED EXPENSES OF RS. 81,863/ - @ 3% AS AGAINSTRS.2,72,876 / - @ 10% DISALLOWED OUT OF TOTAL EXPENSES OF RS. 27,28, 756/ - . 3. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 18, 50, 620/ - ON ACCOUNT OF SHORTAGE OF GROUNDNUT OIL AN D THAT OF RS. 9, 89, 325/ - ON ACCOUNT OF SHORTAGE OF COCONUT OIL. 3 . IN THIS CASE RETURN OF INCOME DECLARING INCOME OF RS. 8,67, 985 / - WAS FILED ON 12 - 10 - 20 10 . THE FACTS OF THE CASE ARE DISCUSSED AS PER THE VARIOUS GROUNDS OF APPEAL AS UNDER: - DISALLO WANCE OF RS. 2,19,919 AS EXCESS PAYMENT MADE U/S 40 A(2)(B) OF THE ACT . 4 D URING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS OBSERVED THAT ASSESSEE HAS MADE CERTAIN PAYMENT TO THE PERSON SPECIFIED UNDER SECTION 40 A(2)(B) OF THE ACT. TH E AO HAS SELECTED THREE RELATED PARTIES FROM THE ANNEXTURE FURNISHED BY THE ASSESSEE FROM THE WHOM PURCHASES WERE MADE . THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD PAID HIGHER PRICE FOR THE PURCHASES FROM THE FOLLOWING RELATED PARTIES : - I.T.A NO. 5 7 5 /RJT / 2014 A.Y. 2010 - 11 PAGE NO ACI T VS. SHRI PRAGJIBHAI GOKALDAS NATHWANI 3 SR. NO. N AME OF PAYEE PURCHASES (RS.) 1 MANGROL OIL INDUSTRIES 1,02,82,130/ - 2 SHRI MANGROL OIL MILL 1,64,83,962/ - 3 PANKAJ FOODS 2,94,86,307/ - IN THIS CONNECTION THE SSESSEE HAS STATED THAT DUE TO COMPETI TION IN THE MARKET, HE HAS TO MAINTAIN AND D ELIVER A QUALITY PRODUCT TO THE CUSTOMER AND FOR THIS PURPOSE. T HEY HAVE TO PASS THROUGH CE RTAIN PROCESS WHICH INCLUDED USING DOUBLE FILTE R OIL AND THE COST FOR SUCH OIL IS GENERALLY MORE THAN THE FILTER OIL . BECAUSE OF THESE FACTS SLIGHTLY HI GHER PRICE WA S PAID TO THE THREE ASSOCIATED CONCERN. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND DISALLOWED EXCESS PAYMENT TO THE EXTENT OF RS.2 , 19 , 919 MADE TO THE SPECIFIED PERSON BY INVOKING THE PROVISION OF SECTION 40 A(2)(B ) OF THE ACT. AGGRIEVED AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER , THE ASSESSEE HAS FILED APPEAL BEFORE THE LEARNED CIT(APPEAL) . THE LEARNED CIT(APPEAL) HAS ALLOWED THE APPEAL OF THE ASSESSEE. THE DECISION OF THE LEARNED CIT( APPEAL ) IS REPRODUCED AS UNDER 4. I HAVE PERUSED THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION PUT FORTH BEFORE ME BY THE AR OF THE APPELLANT. I HAVE ALSO CAREFULLY PERUSED THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE AR OF THE APPELLANT. THE APPELLANT IS ENGAGED IN TRADING OF EDIB LE OIL, WHICH HE PROCURES FROM VARIOUS SOURCES, GETS THEM PACKED AND THE SAME ARE SOLD UNDER HIS OWN DEVELOPED BRAND KNOWN AS 'GULAB' BRAND. THIS BUSINESS IS IN EXISTENCE SINCE MANY YEARS. IT IS ALSO SEEN THAT, THE 'EXCESSIVE' PAYMENT MADE BY THE APPELLANT TO THE THREE PERSONS WERE AROUND, 3%. THE AR OF THE APPELLANT CONTENDED THAT, WHEN A I.T.A NO. 5 7 5 /RJT / 2014 A.Y. 2010 - 11 PAGE NO ACI T VS. SHRI PRAGJIBHAI GOKALDAS NATHWANI 4 PERSON HAS TO KEEP UP WITH HIS BRAND IMAGE, IT WOULD ONLY BE PRUDENCE ON HIS PART TO MAKE CERTAIN HIGHER PAYMENTS, AS BY DOING SO, HO ENSURES SMOOTH SOURCING, REGULAR SUP PLY AND CONSISTENCY IN QUALITY FOR HIS PRODUCTS. IT IS ALSO SEEN THAT THE APPELLANT DEALS WITH FILTERED EDIBLE OIL AND DOUBLE FILTERED EDIBLE OIL. IT IS OBVIOUS THAT THE DOUBLE FILTERED EDIBLE OIL FETCHES MORE PRICE AND VIS - A - VIS, IT ALSO COSTS MORE TOO. T HEREFORE, LOOKING TO THE NATURE OF THE APPELLANT'S BUSINESS, VOLUME AND PRODUCT INVOLVED, PAYMENT IN EXCESS OF THE PREVAILING MARKET RATE IN THE RANGE OF 2 TO 3% TO THREE DIFFERENT PERSONS CANNOT BE TERMED AS EXCESSIVE WITHIN THE MEANING OF SECTION 40A(2)( B) OF THE I T ACT. IT IS ALSO SEEN THAT, THE AO HAS COMPARED THE PAYMENT MADE BY THE APPELLANT TO SPECIFIED PERSONS, WITH THE PAYMENTS MADE BY THE APPELLANT TO NON - SPECIFIED PERSONS. IT HAS TO BE BORNE IN MIND THAT, NOT ALL PAYMENTS MADE TO SPECIFIED PERSO NS AS PER SECTION 40A(2)(B) CAN BE TERMED AS EXCESSIVE, PARTICULARLY, WHEN THE APPELLANT IS DEALING IN A BRANDED PRODUCT WHICH IS EDIBLE IN NATURE. THEREFORE, THE AO WAS TOO HARSH IN DISALLOWING A ,SUM OF RS 2,19,919/ - U/S. 40A(2)(B) OF THE I T ACT, PARTIC ULARLY, WHEN THEY WERE NOT ABNORMALLY EXCESSIVE AND BEYOND ANY REASONABLE IMAGINATION. THEREFORE, THE DISALLOWANCE MADE IS DIRECTED TO BE DELETED. IN THE RESULT, THIS GROUND OF THE APPELLANT IS ALLOWED. IT IS ALSO SEEN FROM THE RECORDS THAT, SIMILAR ADDIT IONS MADE IN OTHER YEARS WERE ALSO DELETED ON FIRST APPEAL. THEREFORE, THIS GROUND IS ALLOWED. 5. D URING THE COURSE OF APPELLANT PROCEEDING THE LEARNED DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND THE LEARNED COUNSEL S UP PORTED THE O RDER OF LEARNED CIT APPEAL. WE HAVE GONE THROUGH THE SUBMISSION OF BOTH THE SI DES E AND FIND THA T THE ASSESSEE HAS MADE PAYMENT EXCESS BY 3% TO THE THREE ABOVE STATED RELATED PARTIES BECAUSE OF SOURCING OF DOUBLE FILTER EDIBLE OIL. WE OBSERVED TH AT I T IS CLEAR THAT DOUBLE FILTER OIL IS MORE COSTLY THAN THE FI LTER OIL AND IT ALSO FETCH MORE PRICE IN THE MARKET THAN THE FILTERED OIL. WE F IND THAT LEARNED CIT APPEAL HAS JUSTIFI ED HIS DECISION KEEPING IN VIEW THE NATURE OF BUSINESS, VOLUME AND QUALITY OF PRO DUCTS I.T.A NO. 5 7 5 /RJT / 2014 A.Y. 2010 - 11 PAGE NO ACI T VS. SHRI PRAGJIBHAI GOKALDAS NATHWANI 5 INVOLVED . IN VIEW OF ABOVE FACTS AND FINDINGS , WE DO NOT FIND ANY RE ASON TO INTERFERE IN THE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX ( APPEAL ) . DISALLOWANCE OUT OF KHARAGAT EXPENSE S 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASS ESSING OFFICER HAS NOTICED THAT ASSESSEE HAS DEFECTED THE P & L A/C ON ACCOUNT OF KHARAJAT EXPENSES OF RS. 1, 19 , 88,695 / - . ON VERIFICATION, THE A SSESSING O FFICER FIND THAT MOST OF THE EXPENSES WERE INCURRED IN CASH AND THE VOUCHERS NOT CONTAINED THE DETAI L OF RATE OF PAYMENT AND THE DESTINATION WHERE THE OIL WAS DELIVERED. IN THIS REGARD THE ASSESSEE STATED THAT ONLY THE AMOUNT OF RS.2, 72,8,756 WAS INCURRED IN CASH OUT OF THE TOTAL EXPENSES INCURRED UNDER THIS HEAD. HE FURTHER STATED THAT IT CANNOT BE SA ID THAT THE EXPENDITURE WAS NOT GENUINE MERELY ON THE REASONING THAT THE EXPENSES WERE INCURRED IN CASH. HOWEVER , HE REQUESTED THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE OUT OF CASH EXPENSES TO THE EXTENT OF 1% OF THESE EXPENSES WHICH COMES TO RS. 27,288/.THE ASSESSING HAS NOT FULLY ACCEPTED THE EXPLANATION OF THE ASSESSEE AND RESTRICTED THE DISALLOWANCE TO THE EXTENT OF 10% OF EXPENDITU RE OF RS.27,28,756 PAID BY CASH . AGAINST THIS ADDITION, THE ASSESSEE FILED APPEAL BEFORE THE LD. COMMISSIONER O F INCOME TAX(A). 7 THE LD. COMMISSIONER OF INCOME TAX(A) HAS RESTRICTED THE ADDITION TO THE EXTENT OF 3% OF THE KHARAJAT EXPENSES INCURRED IN CASH I.T.A NO. 5 7 5 /RJT / 2014 A.Y. 2010 - 11 PAGE NO ACI T VS. SHRI PRAGJIBHAI GOKALDAS NATHWANI 6 AGAINST . THE DECISION OF THE LD. COMMISSIONER OF INCOME TAX(A) IS REPRODUCED AS UNDER: - 6. I HAVE PE RUSED THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION FILED BY THE AR OF THE APPELLANT. IT CAN BE SEEN FROM THE ASSESSMENT ORDER THAT, THE AO HAD MADE AN ARBITRARY COMMENT THAT THE CASH KHARAJA EXPENSES ARE NOT VERIFIABLE. HE ACCORDINGLY DISALLOWED LUMP SU MP 10% OUT OF THE SAME. THE ONLY ADVERSE INFERENCE DRAWN BY HIM WAS THAT, THE VOUCHERS DO NOT CONTAIN SERIAL NUMBER, RATE OF PAYMENT, DESTINATION WHERE GROUNDNUT OIL / COTTONSEED OIL IS DELIVERED AND THE VOUCHERS ARE NOT SIGNED BY ANY SUPERVISOR / MANAGER. AGAINST, THE AR SUBMITTED THAT, THE APPELLANT'S BOOKS OF ACCOUNT WERE AUDITED UNDER THE PROVISIONS OF SECTION 44AB OF THE ACT AND THAT THE APPELLANT'S RETURN WAS ACCOMPANIED BY SUCH AUDITED ACCOUNTS AS ALSO PARTICULARS IN FORM NO. 3CD, AND THAT, THE APPEL LANT'S COMPARATIVE GP/NP WITH THAT OFF EARLIER YEAR ARE FAVOURABLE. IT WAS THEREFORE PLEADED THAT THE DISALLOWANCE MADE ON ARBITRARY BASIS MAY BE DELETED. 7.1 DURING THE COURSE OF THE APPELLATE PROCEEDINGS THE LD. D.R. RELIED ON THE ORDE R OF THE ASSESSI NG OFFICER. ON THE OTHER HAND, LD. A.R. SUPPORTED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(A). 8. AFTER HEARING BOTH THE SIDES AND PERUSAL OF MATERIAL ON RECORD, WE NOTICED THAT THE ASSESSING OFFICER HAD DISALLOWED 10% OF THE KAHARJAT EXPENSE S INC URRED IN CASH OF RS. 2, 72,8,756 - INCURRED IN CASH ON THE GROUND THAT MOST OF THE EXPENSES WERE INCURRED IN CASH AND THE VOUCHERS NOT CONTAINED THE DETAIL OF RATE OF PAYMENT AND THE DESTINATION WHERE THE OIL WAS DELIVERED . WE FIND THAT THE ASSESSING OFFICER HAD NOT POINTED OUT ANY SPECIFIC DEFECTS AND THE DISALLOWANCE WAS MADE ON GENERAL ASSUMPTION THAT EXPENSES WERE INCURRED IN CASH AND THE VOUCHERS NOT CONTAINED THE DETAIL OF RATE OF PAYMENT AND THE DESTINATION WHERE THE OIL WAS DELIVERED FOR WANT OF PROPER I.T.A NO. 5 7 5 /RJT / 2014 A.Y. 2010 - 11 PAGE NO ACI T VS. SHRI PRAGJIBHAI GOKALDAS NATHWANI 7 MAINTENANCE OF VOUCHERS. LOOKING TO THE VOLUME OF EXPENDITURE INCURRED IN CASH AND THE FACTS REPORTED BY THE LD. CIT(A), WE UPHOLD THE DECISION OF THE LD. CIT(A) TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF BEING 3% OF THE KHARGAT EXPENSES INCUR RED IN CASH. SHORTAGE IN LOOSE GROUND NUT OIL AND COTTON SEEDS OIL OF RS. 31,55,969 / - 9. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED SHOR T AG E OF 54670 KGS. IN THIS CONNECTION, HE STATED T HAT THE SHORTAGE TO BE ON THE HIGHER SIDE AS THE ASSESSEE WAS NOT MANUFACTURING THE OIL . HE THEREFORE ALLOWED SHORTAGE TO THE EXTENT OF 3038 KG OUT OF GROUND NUT OIL AND 2432 KG. OU T OF COTTON SEED OIL RESULTED IN ADDITION OF RS. 28,39,945 / - TO THE TOTAL INCOME OF THE ASSESSEE . THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX(A) . 10. THE LD. COMMISSIONER OF INCOME TAX(A) HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER, THE DECISION OF THE LD. COMMISSIONER OF INCOME TAX(A) IS REPRODUCED AS UNDER: - 7.1 FROM THE ABOVE IT CAN BE SEEN THAT, ALTHOUGH THE AO STARTS HIS FINDING WITH THE OBSERVATION THAT, NO SHORTAGE IS POSSIBLE IN THE APPELLANT'S LINE OF BUSINESS, HOWEVER, HE CONCLUDES BY MAKING ESTIMATED DISALLOWANCE AT ROUGHLY 90% OF THE ACTUAL CLAIM. IN FACT, FROM THE FACT OF THE ORDER, IT IS NOT KNOWN AS TO ON WHAT BASIS THE AO HAD MADE DISALLOWANCE OF AS HIGH AS 90%. NO INDEPENDENT INQUIRIES WERE CARRIED OUT BY HIM. THERE IS NOTHING ON RECORD TO PROVE THAT THE APPELLANT'S CL AIM OF SHORTAGE WAS BOGUS. ON THE OTHER HAND, IT IS THE CONTENTION OF THE ID. AR OF THE APPELLANT THAT, THE CLAIM OF LOSS IS AS I.T.A NO. 5 7 5 /RJT / 2014 A.Y. 2010 - 11 PAGE NO ACI T VS. SHRI PRAGJIBHAI GOKALDAS NATHWANI 8 MEAGER AS 0.19% AND 0.23% OF OIL AND COTTON SEEDS OIL, OUT OF THE TOTAL PURCHASES. THIS SHORTAGE IN REAL SENSE WORKS OUT TO ONLY A FRACTION OF THE TOTAL QUANTITY PURCHASED BY THE APPELLANT DURING THE YEAR. THE FINALLY PACKED CONSUMABLE RANGES FROM 1 KG TO 15 KGS, IN TINS, BOTTLES AND POUCHES. THE AO, BY RESTRICTING THE SHORTFALL, IS ALSO NOT DENYING THAT THERE IS NO SHORTFALL. ON T HE OTHER HAND, HE FAILS TO JUSTIFY THE LOSS OF 10% SO GRANTED BY HIM. IN ORDER TO JUSTIFY THAT THERE DO EXIST SHORTAGES IN THE APPELLANT'S LINE OF BUSINESS, THE AR SUBMITTED THAT, THE APPELLANT IS ENGAGED IN TINNING OF EDIBLE OIL. THE SUPPLIER OF OIL SUPPL IES THE LOOSE OIL IN TANKERS. THE LOOSE OIL IS TRANSFERRED FROM TANKERS TO STORAGE TANK. AT THE TIME OF SHIFTING LOOSE OIL, SOME PORTION OF OIL REMAINS IN TANKER ITSELF IN VIEW OF THE FACT THAT THE OIL IS HAVING STICKY CHARACTERISTICS. FURTHER DUE TO OVAL SHAPE OF TANKERS, OT UPTO A CERTAIN LEVEL REMAINS BELOW THE EXIT PIPE, WHICH CAN BE TERMED AS DEAD LEVEL. HENCE SUCH QUANTITY OF OIL ALSO FORMS PART OF SHORTAGE. FURTHER DURING THE TRANSMISSION OF OIL SOME PORTION GETS LEAKED FROM TUBES. THEREFORE SUCH WA STE ALSO FORMS PART OF SHORTAGE. AFTER TRANSFERRING THE OIL TO SHORTAGE TANKS, THE OIL IS FILLED INTO CONTAINERS MANUALLY BY EMPLOYEES BY PUTTING ONE BY ONE CONTAINER BELOW THE EXIT TAP OF STORAGE TANK, WHICH REFERS TO TINNING. DURING THE TINNING ALSO OIL GETS SPREAD ON EARTH. IN VIEW OF THE ABOVE AT EACH AND EVERY STAGE OF TINNING, THERE ARE MANY CIRCUMSTANCES WHEN THE OIL GETS SPREAD, WHICH IS UNCOLLECTABLE AS THE SAME IS AN EDIBLE PRODUCT HENCE ONE HAS TO TAKE CARE IT. THE AR ALSO SUBMITTED THAT, IN THE IMMEDIATE PRECEDING YEAR I.E. FOR AY 2009 - 10 THE AO DISALLOWED LOSS DUE TO SHORTAGE, HOWEVER, CONSIDERING THE NATURE OF BUSINESS AND SUBMISSION OF THE APPELLANT HON'BLE CIT(A) - IV, RAJKOT HAS VIDE ORDERS DATED 18.09.2013 IN APPEAL NO.CIT(A) - IV/0272/LL - 12 DE LETED THE DISALLOWANCE AND ALLOWED THE APPEAL OF THE APPELLANT. 7.2 I FIND SUBSTANTIAL FORCE IN THE ABOVE ARGUMENTS, PARTICULARLY WHEN THE AO'S FINDINGS ARE CONTRARY IN ITSELF. BY ALLOWING 10% SHORTAGE, THE AO IN PRINCIPLE AGREES THAT THERE ARE OCCURRENCE OF SHORTAGE, ALBEIT, THE DISALLOWANCE ARE MADE ON SURMISES AND CONJECTURES. NO REASON FOR ALLOWING 10% OF THE SHORTAGE HAS BEEN BROUGHT ON RECORD. LOOKING TO ALL THE ABOVE FACTORS, THE DISALLOWANCE OUT OF SHORTAGE MADE BY THE AO BEING ARBITRARY IN NATURE AND HAVING WITHOUT BASE, THE SAME IS DIRECTED TO BE DELETED. IN THE RESULT, THIS GROUND OF APPELLANT'S APPEAL IS ALLOWED. I.T.A NO. 5 7 5 /RJT / 2014 A.Y. 2010 - 11 PAGE NO ACI T VS. SHRI PRAGJIBHAI GOKALDAS NATHWANI 9 10.1 DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. D.R. RELIED ON THE ORDER OF ASSESSING OFFICER. ON THE OTHER H AND, LD. A.R. RELIED ON THE ORDER OF COMMISSIONER OF INCOME TAX(A). 11. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. WE NOTICED THAT THE ASSESSEE S CLAIM OF SHORTAGE O F OIL IN PERCENTAGE TERM COMES TO 0. 19 % TO 0. 2 3% WHICH WAS NOT U NUSUAL. WE OBSER VED THAT THE SHORTAGE IN OIL HAD BEEN TAKEN PLACE IN THE PROCESS OF TRANSFORMING THE OIL FROM THE TANKERS TO STORAGE TANKS AND THEREFORE INTO THE PACKING MATERIAL SUCH AS BOTTLES, JARS TINS AND POUCHES. WE FIND THAT THE ASSESSING OFFICER H AD DISALLOWED THE SHORTAGE IN OIL WITHOUT ANY SUPPORTING MATERIAL JUST ON THE BASIS OF PRESUMPTION AND GUESS WORK. IN VIEW OF THE ABOVE STATED FACTS AND FINDINGS, WE CONSIDERED THAT THE LD. COMMISSIONER OF INCOME TAX(A) IS JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 12 . IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PR ONOUNCED IN THE OPEN C OUR T ON 02 - 01 - 201 7 SD/ - SD/ - (RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMED ABAD : DATED 02 / 01 /201 7 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE I.T.A NO. 5 7 5 /RJT / 2014 A.Y. 2010 - 11 PAGE NO ACI T VS. SHRI PRAGJIBHAI GOKALDAS NATHWANI 10 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT