M/s Sainik Service Station, Hardoi V. Income Tax Officer-3(3), Hardoi

ITA 661/LKW/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4390 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 05-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PRINTING; PETROL; ADDING RS

Judgement Text

I.T.A. NO.661/LKW/2017 ASSESSMENT YEAR:2014-15 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.661/LKW/2017 ASSESSMENT YEAR:2014-15 M/S SAINIK SERVICE STATION, PIHANI CHUNGI, HARDOI. PAN:AAKFS 6394 R VS. INCOME TAX OFFICER-3(3), HARDOI. (APPELLANT) (RESPONDENT) O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LEARNED CIT(A), BAREILLY DATED 19/07/2017. IN THIS APPEAL THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS ), BAREILLY ERRED ON FACTS AND IN LAW IN CONFIRMING TH E ORDER OF THE A.O. IN DISALLOWING RS.29,321/- BEING 10% OF PUMP E XPENSES, REPAIRS AND PRINTING & STATIONERY EXPENSES ON SURMI SES. 2. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS) , BAREILLY ERRED ON FACTS AND IN LAW IN CONFIRMING TH E ORDER OF THE A.O. IN RESTRICTING EVAPORATION/ HANDLING LOSS OF D IESEL & MS (PETROL) AND ADDING RS 47,856/- AND RS 12,656/- RES PECTIVELY TO THE INCOME IN SPITE OF DETECTING NO SALES OUTSID E THE BOOKS. 3. THE APPELLANT FIRM RESERVE A RIGHT TO ADD/ALTER/ AMEND ANY GROUND OF APPEAL AT THE TIME OF HEARING. APPELLANT BY SHRI SANJAY SAXENA, C.A. RESPONDENT BY S HRI C. K. SINGH, D. R. DATE OF HEARING 30/10/2018 DATE OF PRONOUNCEMENT 31/10/2018 I.T.A. NO.661/LKW/2017 ASSESSMENT YEAR:2014-15 2 2. AT THE OUTSET, LEARNED A. R. SUBMITTED THAT THE ASSESSEE IS RUNNING A PETROL PUMP AND THERE OCCURS CERTAIN NATURAL EVAPOR ATION IN PETROL AND DIESEL FOR WHICH THE ASSESSEE HAD CLAIMED LOSS. HO WEVER, THE AUTHORITIES BELOW HAVE RESTRICTED THE SAME RELYING ON THE INSTR UCTIONS ISSUED BY MARKETING DISCIPLINE GUIDELINES FOR RETAIL OUTLET D EALERSHIP. LEARNED A. R. SUBMITTED THAT THERE CANNOT BE ANY HARD AND FAST RU LES FOR FIXING THE EVAPORATION LIMIT AND DURING THE EARLIER YEARS THE EVAPORATION WAS MORE THAN THE EVAPORATION CLAIMED DURING THIS YEAR AND I N NONE OF THE EARLIER YEARS ANY ADDITION WAS MADE BY THE ASSESSING OFFICE R. LEARNED A. R. FURTHER SUBMITTED THAT NO MISTAKE WAS FOUND IN STOC K REGISTER AS THE ASSESSEE HAD MAINTAINED STOCK REGISTER ON DAILY BAS IS THEREFORE, THE ACTION OF AUTHORITIES BELOW IS NOT JUSTIFIED. 2.1 AS REGARDS AD HOC DISALLOWANCE AMOUNTING TO 10% OF EXPENSES, LEARNED A. R. SUBMITTED THAT THE ASSESSEE HAD SUBMI TTED COMPLETE BOOKS OF ACCOUNT INCLUDING VOUCHERS. HOWEVER, THE ASSESSING OFFICER MADE A DISALLOWANCE OF 10% HOLDING THAT THE EXPENSES WERE INCURRED IN CASH AND WERE SUPPORTED BY HAND MADE VOUCHERS. LEARNED A. R . SUBMITTED THAT NOWHERE IN THE BOOKS OF ACCOUNT OR VOUCHERS ANY MIS TAKE WAS POINTED OUT AND NOWHERE IT HAS BEEN HELD THAT THE EXPENSES WERE NOT INCURRED FOR BUSINESS PURPOSES. IN THIS RESPECT LEARNED A. R. R ELIED ON THE JUDGMENT OF SMC BENCH OF LUCKNOW TRIBUNAL IN THE CASE OF SMT. U RMILA GUPTA VS INCOME TAX OFFICER IN I.T.A. NO.439/LKW/2016 AND R. S. RIC E MILLS (P) LTD. VS. INCOME TAX OFFICER IN I.T.A. NO.341/LKW/2016. 3. I HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THR OUGH THE MATERIAL PLACED ON RECORD. I FIND THAT ASSESSEE HAS SUBMITT ED A CHART SHOWING THEREIN THE PERCENTAGE OF EVAPORATION FOR DIESEL AN D PETROL DURING THE CURRENT YEAR AND DURING THE EARLIER TWO YEARS AND I N THE PRESENT YEAR THE EVAPORATION LOSS IS LESSER THAN THE EARLIER YEARS. I FURTHER FIND THAT ASSESSEE I.T.A. NO.661/LKW/2017 ASSESSMENT YEAR:2014-15 3 HAS CLAIMED TO HAVE FURNISHED STOCK REGISTER BUT TH E ASSESSING OFFICER HAS HELD THAT ASSESSEE HAD FAILED TO PRODUCE STOCK REGI STER CERTIFIED BY SALES OFFICER OF THE OIL COMPANY WHICH FACT IS CONTRARY T O THE SUBMISSIONS OF THE ASSESSEE. THEREFORE, I DEEM IT APPROPRIATE TO REMI T THE ISSUE OF EVAPORATION TO THE FILE OF THE ASSESSING OFFICER WHO SHOULD VER IFY THE CLAIM OF THE ASSESSEE ON THE BASIS OF STOCK REGISTER AND SHOULD ALSO BASE HIS DECISION KEEPING IN VIEW THE EARLIER YEARS EVAPORATION CLAI M. ACCORDINGLY, GROUND NO. 2 IS ALLOWED FOR STATISTICAL PURPOSES. 3.1 AS REGARDS THE ISSUE OF AD HOC DISALLOWANCE, I FIND THAT NOWHERE IN THE ASSESSMENT ORDER THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT. HE HAS SIMPLY MADE THE DISALLOWANCE HOLDING THAT TH E EXPENSES WERE NOT VERIFIABLE AS THE EXPENSES WERE INCURRED THROUGH SE LF MADE VOUCHERS AND WERE INCURRED IN CASH. THIS TYPE OF FINDING FOR MA KING AD HOC DISALLOWANCE IS NOT SUSTAINABLE IN LAW AND NOWHERE IN THE ASSESS MENT ORDER HE HAS HELD THAT THE EXPENSES WERE NOT INCURRED FOR BUSINESS PU RPOSES. THE LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF R. S. RICE MIL LS (P) LTD. VS. INCOME TAX OFFICER IN I.T.A. NO.341/LKW/2016 VIDE ORDER DATED 19/10/2016 HAS DELETED THE AD HOC DISALLOWANCE BY HOLDING AS UNDER: 4. I NOTED THAT THE ASSESSEE HAS SUBMITTED ALL TH E DETAILS OF ALL THE EXPENSES AND THE VOUCHERS WHATEVER HAS BEEN DEBITED BY THE ASSESSEE IN HIS PROFIT & LOSS ACCOUNT. MEREL Y EXPENSES HAS BEEN CLAIMED ON HANDMADE VOUCHERS IN RESPECT OF THE WAGES, IN MY OPINION, IT CANNOT BE THE BASIS FOR MA KING THE DISALLOWANCE. IT IS NOT A CASE OF THE REVENUE THAT THE ASSESSEE HAS INCURRED THE EXPENDITURE IN CASH IN EXCESS OF T HE LIMIT PRESCRIBED U/S 40A SUB-SECTION (3). THEREFORE, IT C ANNOT BE THE BASIS OF DISALLOWING THE EXPENSES THAT THE ASSESSEE HAS MADE THE PAYMENT OF EXPENSES IN CASH. THE REVENUE HAS NO T BROUGHT OUT ANY VIOLATION OF THE PROVISION OF SECTION 40A S UB-SECTION (3) ON THE PART OF THE ASSESSEE. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS MERELY AD HOC DISALLOWANCE. NO AD HOC I.T.A. NO.661/LKW/2017 ASSESSMENT YEAR:2014-15 4 DISALLOWANCE CAN BE MADE. I, THEREFORE, DELETE THE SAID DISALLOWANCE OF RS. 97,500/-.' 3.2 KEEPING IN VIEW THE ABOVE JUDICIAL PRECEDENT AN D FACTS OF THE CASE, I DELETE THE AD HOC DISALLOWANCE AND ALLOW GROUND NO. 1 TAKEN BY THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 31/10 /2018) SD/. ( T. S. KAPOOR ) ACCOUNTANT MEMBER DATED:31/10/2018 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW