Kamlakar Kantilal Chavan, Nashik V. Income-tax Officer,

ITA 692/PUN/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1595 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 13-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 145

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 692 /PN/201 6 / ASSESSME NT YEAR : 20 11 - 1 2 SHRI KAMLAKAR KANTILAL CHAVAN, AVDHOOT SERVO CARE CENTRE, AT & POST TAHARABAD, TAL. SATANA, DIST. NASHIK . / APPELLANT PAN: A BAPC7544E VS. THE INCOME TAX OFFICER, WARD 3 ( 4 ), MALEGAON . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SHRI HITENDRA NINAWE / RESPONDENT BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 2 8 . 0 6 .201 6 / DATE OF PRONOUNCEMENT: 08 . 0 7 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APP EAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 1 , NASHIK , DATED 0 1 . 0 2 .20 1 6 RELATING TO ASSESSMENT YEAR 20 11 - 1 2 AGAINST ORDER PASSED UNDER SECTION 14 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING G ROUNDS OF APPEAL: - 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.4,47,146/ - MADE ON ACCOUNT OF ESTIMATION OF GROSS PROFIT BY REJECTING THE BOOK RESULTS. ITA NO. 692 /PN/20 1 6 KAMLAKAR KANTILAL CHAVAN 2 2] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE REJECTION OF BOOK RESULTS WAS N OT JUSTIFIED ON FACTS OF THE CASE AND HENCE, THE GROSS PROFIT DECLARED BY THE ASSESSEE SHOULD HAVE BEEN ACCEPTED. WITHOUT PREJUDICE TO THE ABOVE GROUND, IT IS SUBMITTED AS UNDER 3] THE LEARNED CIT(A) ERRED IN HOLDING THAT ONLY 50% OF THE SHORTAGE LOSS DUE TO EVAPORATION OF DIESEL AND PETROL CLAIMED BY THE ASSESSEE WAS TO BE CONSIDERED AS GENUINE AND THEREBY CONFIRMING THE ADDITION TO THE EXTENT OF RS.4,47,146/ - MADE BY THE A.O. ON ACCOUNT OF ESTIMATION OF G.P. 4] THE LEARNED CIT(A) FAILED TO AP PRECIATE THAT THE SHORTAGE ON ACCOUNT OF EVAPORATION LOSS DECLARED BY THE ASSESSEE AT 0.37% IN RESPECT OF DIESEL AND 0.69% IN RESPECT OF PETROL WAS NOT EXCESSIVE ON FACTS OF THE CASE AND HENCE, THERE WAS NO REASON TO DISALLOW 50% OF THE SAME ON AN ADHOC BA SIS WITHOUT BRINGING ANY COMPARABLE CASES ON RECORD. 5] WITHOUT PREJUDICE, THE ASSESSEE SUBMITS THAT THE G.P. DETERMINED BY THE CIT(A) AFTER ESTIMATING THE SHORTAGE LOSS IS ON A HIGHER SIDE AND THE G.P. MAY BE ESTIMATED AT A REASONABLE LEVEL CONSIDERIN G THE FACTS OF THE CASE. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST ADDITION OF RS.4,47,146/ - MADE ON ACCOUNT OF ESTIMATION OF GROSS PROFIT BY REJECTING BOOK RESULTS. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS AN INDIVIDUAL AND WAS 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS AN INDIVIDUAL AND WAS OPERATING A PETROL PUMP UNDER THE DEALERSHIP OF INDIAN OIL CORPORATION LIMITED . FOR THE YEAR UNDER CONSIDERATION , THE ASSESSEE HAD DECLARED THE TOTAL INCOME AT RS. 3,97,987/ - . THE ASSESSING OFFICER NOTED THAT ON TOTAL SALES OF RS. 11,36,02,239/ - , THE ASSES SEE HAD SHOWN GROSS PROFIT OF RS. 14,71,979/ - I.E. DECLARING GP RATE OF 1.28% . IN THE PRECEDING YEAR ON TOTAL SALES OF RS. 12,12,31,411/ - , GROSS PROFIT WAS DISCLOSED AT RS. 15,67,927/ - , ON WHICH THE G P RATE WAS WORKED OUT AT 1.29% . THE ASSESSING OFFICER NOT ED THAT THOUGH THE ASSESSEE HAD PRODUCED PURCHASE BILLS, BUT HE DID NOT PRODUCE THE SALE BILLS OR EVIDENCE TO SUPPORT THE SALES EFFECTED. THE ASSESSEE HAD NOT PRODUCED THE MONTH - WISE, QUANTITY - WISE, AMOUNT - WISE PURCHASES AND SALES NOR INVENTORY OF OP E NING AND CLOSING STOCK OF PETROL, DIESEL AND OIL WAS FILED. THE ASSESSING OFFICER NOTED THAT AS PER GOVERNMENT RECORDS, THE GP RATE WAS RANGING FROM ITA NO. 692 /PN/20 1 6 KAMLAKAR KANTILAL CHAVAN 3 1.88% TO 2.7%. HOWEVER, IN THE ABSENCE OF BILLS NOT BEING PRODUCED, THE BOOKS OF ACCOUNT WERE REJECTED UNDER SECTION 145 OF THE ACT. THE ASSESSING OFFICER ADOPTED THE GP RATE AT 1.88% RESULTING IN ADDITION OF RS.6,63,743/ - . 5. THE CIT(A) NOTED THAT THE ASSESSING OFFICER HAD MADE ADHOC ADDITION ON GP WITHOUT BRINGING ANY TANGIBLE OR COMPARATIVE MATERIAL ON RECOR D AND SUCH TYPE OF ADDITIONS WERE NEITHER DESIRABLE NOR WARRANTED. HE FURTHER OBSERVED THAT GAS STATION WAS A BUSINESS, WHERE BOTH THE PURCHASE AND SALE PRICES WERE CONTROLLED BY THE GOVERNMENT AND THE PETROL PUMP DEALERS WERE GIVEN COMMISSION BY OIL COMP ANIES WHICH KEEP CHANGING ROUND THE YEAR, DEPENDING ON PRICE FIXED BY THE GOVERNMENT. THE ASSESSEE CLAIMED THAT THE TOTAL COMMISSION RECEIVED ON DIESEL AND PETROL WAS RS. 21,67,204/ - FROM WHICH, HE HAS REDUCED THE SHORTAGE ON ACCOUNT OF EVAPORATION OF PETR OL / DIESEL TO RS.5,40,962/ - . THE CIT(A) ALLOWED THE CLAIM OF ASSESSEE TO THE EXTENT OF 50% I.E. RS. 2 , 70 , 4 81/ - AND GROSS PROFIT OF ASSESSEE WAS WORKED OUT TO I.E. RS. 2 , 70 , 4 81/ - AND GROSS PROFIT OF ASSESSEE WAS WORKED OUT TO RS. 18,96,723/ - , AGAINST THE DECLARATION OF ASSESSEE AT RS. 14,49,577/ - . THE ADDITION WAS THUS, RE STRICTED TO RS. 4,47,146/ - , AGAINST WHICH THE ASSESSEE IS IN APPEAL. 6. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICAT ION WAS MOVED FOR ADJOURNMENT AND IT IS PROCEEDED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEAR NED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , BECAUSE OF SMALLNESS OF THE ISSUE. 7. ON PERUSAL OF RECORD, IT IS ESTABLISHED THAT THE ASSESSEE WAS RUNNING A PETROL PUMP, UNDER WHICH HE WAS CARRYING ON THE SALE OF PETROL AND DIESEL. THE ASSESSEE WAS R ECEIVING THE COMMISSION FROM INDIAN OIL CORPORATION LTD. ON THE SALE OF PETROL AND DIESEL. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD ITA NO. 692 /PN/20 1 6 KAMLAKAR KANTILAL CHAVAN 4 RECEIVED COMMISSION TO THE EXTENT OF RS.21,67,205/ - . A GAINST THE AFORESAID COMMISSION, THE ASSESSEE REDUCED THE SHORTAGE ON ACCOUNT OF EVAPORATION OF PETROL / DIESEL BY RS. 5,40,962/ - . THE ASSESSING OFFICER HAD REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE ON THE SURMISE THAT THE ASSESSEE HAD DECLARED GROSS PROFIT RATE FOR THE YEAR UNDER CONSIDERATION AT 1.28%, WHIC H WAS LOWER. THE ASSESSING OFFICER ON THE OTHER HAND, HAD APPLIED GP RATE AT 1.88% AFTER REJECTING THE BOOK RESULTS SHOWN BY THE ASSESSEE RESULTING IN ADDITION OF RS. 6,63,743/ - . THE CIT(A) ON THE ONE HAND, ACCEPTS THAT THE ADDITION MADE BY THE ASSESSING OFFICER WAS ON ADHOC BASIS WITHOUT BRINGING ON RECORD ANY TANGIBLE OR COMPARATIVE MATERIAL. HE ALSO ACCEPTS THE FACT THAT THE GAS STATION AS BUSINESS, WHERE BOTH PURCHASE AND SALE PRICES WERE CONTROLLED BY THE GOVERNMENT AND THE PETROL PUMP DEALERS WERE G IVEN COMMISSION, WHICH KEEP S CHANGING FROM TIME TO TIME. IN THE TOTALITY OF THE ABOVE SAID OBSERVATIONS OF THE CIT(A), THE ISSUE TO BE ADJUDICATED IS WHETHER THE ASSESSEE IS ENTITLED TO CLAIM THE SHORTAGE ON ACCOUNT OF EVAPORATION OF PETROL / DIESEL TO TH E EXTENT OF THE SHORTAGE ON ACCOUNT OF EVAPORATION OF PETROL / DIESEL TO TH E EXTENT OF RS. 5,40,962/ - . THE CIT(A) HAD RESTRICTED THE SHORTAGE TO 50% OF THE AMOUNT CLAIMED AT RS. 2,70,48 1 / - AND HAD RE - WORKED THE ADDITION ON ACCOUNT OF GP TO THE EXTENT OF RS. 4,47,146/ - , AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. I T IS AN ADMITTED FACT THAT THERE IS EVAPORATION OF PETROL / DIESEL WHILE THE SAME IS HANDLED DAY - TO - DAY. THE FIRST POINT OF EVAPORATION IS WHEN THE DIESEL IS FILLED FROM TANKERS INTO STORAGE TANKS AND THEREAFTER, WHEN IT IS DISP ENSED TO THE CUSTOMERS FROM THE DISPENSERS. THE EVAPORATION OF PETROL / DIESEL IS A RECOGNIZED NORM OF THE PETROLEUM COMPANIES AND EVEN WHEN THEY VERIFY THE QUANTITY OF PETROL / DIESEL AVAILABLE WITH THE RESPECTIVE PETROL PUMP OWNERS, THEN CONCESSION IS GIVEN TO THE RESPECTIVE PART IES ON ACCOUNT OF SUCH EVAPORATION. IN CASE THE QUANTITY AVAILABLE WITH THE PETROL PUMP OWNERS IS FOUND TO BE AT VARIANCE BY THE PETROLEUM COMPANIES, STRINGENT ACTIONS ARE ITA NO. 692 /PN/20 1 6 KAMLAKAR KANTILAL CHAVAN 5 TAKEN AGAINST THE PETROL PUMP OWNERS. IN VIEW THEREOF, PETROL PUMP OWNERS TAKE ALL MEASURES IN RESPECT OF QUANTITY OF THE PETROL AND DIESEL. WHERE THE ASSESSEE IS OPERATING HIS PETROL PUMP, WHICH WAS ALLOTTED TO HIM BY INDIAN OIL CORPORATION LIMITED, THEN IT IS INCUMBENT UPON THE ASSESSEE NOT TO CLAIM EXCESSIVE EVAPORATION ON ACCOUNT O F PETROL AND DIESEL. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, THERE IS MERIT IN THE CLAIM OF ASSESSEE TO ALLOW EVAPORATION CLAIMED AT RS. 5,40,962/ - . THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 8 TH DAY OF JU LY , 201 6 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 8 TH JU LY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 1 , NASHIK ; 4. / THE PR. CIT - 1 , NASHIK ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE