ACIT, Chandigarh V. M/s Sukhna Automobiles Petrol Pump, Chandigarh

ITA 913/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64026 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 06-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 912/CHD/2012 (ASSESSMENT YEAR : 2008-09) & ITA NO. 913/CHD/2012 (ASSESSMENT YEAR : 2009-10) THE A.C.I.T., VS. M/S SUKHNA AUTOMOBILES PETROL PUMP, CIRCLE 4(1) SECTOR 28C, CHANDIGARH. CHANDIGARH. PAN: AANFS2336L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.S.NAGAR, DR RESPONDENT BY : NONE DATE OF HEARING : 07.11.2012 DATE OF PRONOUNCEMENT : 27.11.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THESE TWO APPEALS FILED BY THE REVENUE ARE AGAINST THE SEPARATE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), CHANDIGARH BOTH DATED 04.06.2012 RELATING TO ASSESSMENT YEARS 2008- 09 AND 2009-10 AGAINST THE ORDER PASSED U/S 143(3) OF THE INCOME T AX ACT, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING COMMON GROU NDS OF APPEAL IN BOTH THE APPEALS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF 2 RS.13,78,706/- (RS.20,76,421/- IN ITA NO.913/CHD/20 12) OUT OF TOTAL ADDITION OF RS.20,25,009/- (RS.21,02,143/- IN ITA NO.913/CHD/2012) MADE ON ACCOUNT OF EXCESS EVAPORATION/HANDLING LOSS CLAIMED ON PETROL AND DIE SEL. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) B E SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEN D ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR IS DISPOSED OF F. 3. BOTH THE APPEALS FILED BY THE REVENUE ON IDENTIC AL ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS C ONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 4. DESPITE SERVICE OF NOTICE NONE APPEARED ON BEHAL F OF THE ASSESSEE. THEREFORE, WE PROCEED TO DISPOSE OFF THE PRESENT AP PEAL AFTER HEARING THE LEARNED D.R. FOR THE REVENUE IN VIEW OF THE ISSUE R AISED IN THE PRESENT APPEAL. 5. THE FACTS IN BOTH THE APPEALS ARE IDENTICAL. HO WEVER, REFERENCE IS MADE IN ITA NO.912/CHD/12 IN ORDER TO ADJUDICATE TH E ISSUE. 6. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS RUNNING PETROL PUMP. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THE ASSESSEE TO HAVE SHOWN EVAPORATIO N LOSS OF 79208 LITRES OF PETROL AGAINST SALE OF 6158735 LITRES OF PETROL, WHICH WORKS TO 1.286% OF THE TOTAL SALES MADE BY THE ASSESSEE. SI MILARLY, IN THE DIESEL ACCOUNT THE HANDLING LOSS WAS SHOWN AT 0.39%. THE ASSESSING OFFICER SOUGHT INFORMATION FROM M/S INDIAN OIL CORPORATION LTD., CHANDIGARH REGARDING THE STANDARD NORMS FOR PETROL AND DIESEL EVAPORATION/HANDLING LOSSES PERMISSIBLE UNDER THE GUIDELINES ADOPTED BY THE MINISTRY OF OIL & NATURAL GAS. THE REPLY OF THE SAID CONCERN IS INCO RPORATED AT PAGES 2 AND 3 OF THE ASSESSMENT ORDER. THE ASSESSEE WAS SH OW CAUSED TO EXPLAIN THE REASONS FOR HIGH EVAPORATION/HANDLING LOSSES OF PETROL AND DIESEL. THE EXPLANATION OF THE ASSESSEE WAS THAT THE SAID E VAPORATION LOSS IS AS 3 PER THE AUDITED BOOKS OF ACCOUNT AND DULY MAINTAINE D STOCK REGISTER AND ALSO AS PER THE NORMS PRESCRIBED BY THE OIL COMPANI ES AND GENERAL NORMS OF HANDLING AT PETROL PUMP SITE. THE ASSESSEE ALSO PRODUCED COPIES OF EXCISE/PG REGISTER BEFORE THE ASSESSING OFFICER. T HE COPY OF INSPECTION REPORT AND THE FIGURES OF EVAPORATION/HANDLING LOSS ES CALCULATED BY THE AREA SALES OFFICER AT THE TIME OF INSPECTION FOR RE SPECTIVE PERIODS WERE ALSO PRODUCED BEFORE THE ASSESSING OFFICER. THE TO TAL EVAPORATION/HANDLING LOSSES CALCULATED BY THE AREA SALES OFFICER FOR THE RESPECTIVE PERIODS IS SUMMARIZED AND REPRODUCED AT PAGE 4 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER NOTED FRO M THE ABOVE SAID CHART THAT THE FIGURES FOR 42 DAYS WERE NOT AVAILAB LE AND BY EXTRAPOLATING THE SAID FIGURES, TOTAL LOSSES FOR 366 DAYS (AS 200 8 WAS LEAP YEAR), IN CASE OF PETROL CAME TO 0.6619% OF THE TOTAL SALES B Y THE ASSESSEE AND FOR DIESEL IT CAME TO 0.23% OF THE TOTAL SALES OF DIESE L. AS PER GUIDELINES PROVIDED BY INDIAN OIL COMPANY, THE EVAPORATION LOS S WAS 0.75% ON QUANTITY UP TO 600 KL. OF PETROL AND 0.25% ON QUANT ITY UP TO 600 KL. OF DIESEL. THE ASSESSING OFFICER REJECTED THE EXPLANA TION OF THE ASSESSEE IN VIEW OF THE VARIOUS REPORTS AND COMPUTED THE EVAPOR ATION LOSS OF PETROL AT 37852 LITRES AS AGAINST LOSS OF 79208 LITRES SHO WN BY THE ASSESSEE. IN RESPECT OF DIESEL, THE SAID LOSS WAS CALCULATED ON 20080 LITRES AS AGAINST 38592 LITRES OF DIESEL SHOWN BY THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD SOLD LARGE QUANTI TY OF PETROL AND DIESEL OUTSIDE THE BOOKS OF ACCOUNT AND BY APPLYING THE AV ERAGE SALE PRICE OF THE PETROL/DIESEL, THE ASSESSING OFFICER COMPUTED T HE SUPPRESSION OF SALE ON ACCOUNT OF EVAPORATION LOSS SHOWN AT RS.20,25,00 9/-. ACCORDINGLY, AN ADDITION OF RS.20,25,009/- WAS MADE BY THE ASSES SING OFFICER. 7. THE CIT (APPEALS) RELYING UPON THE ORDER OF THE PREDECESSOR CIT (APPEALS) IN ASSESSEES OWN CASE RELATING TO ASSESS MENT YEAR 2007-08 4 AND ALSO THE ORDER OF THE CHANDIGARH BENCH OF THE T RIBUNAL IN THE CASE OF ARJUN SINGH IN ITA NO.326/CHD/2009 ALLOWED EVAPORAT ION LOSS OF 1%. THE ASSESSING OFFICER WAS THUS DIRECTED TO RECOMPUT E THE ADDITION BY LIMITING SHORTAGE TO 1% IN BOTH THE ACCOUNTS I.E. P ETROL AND DIESEL. 8. THE REVENUE IS IN APPEAL AGAINST THE ABOVE SAID FINDINGS OF CIT (APPEALS). NO APPEAL FILED BY THE ASSESSEE HAS BEE N BROUGHT TO OUR NOTICE. WE FIND THAT THE PRESENT ISSUE OF EVAPORAT ION LOSS HAS BEEN CONSIDERED BY THE CHANDIGARH BENCH OF THE TRIBUNAL IN ARJUN SINGH (SUPRA) WHEREIN IT HAS BEEN HELD AS UNDER: 2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON THE FILE. BRIEF FACTS ARE THA T THE ASSESSEE DECLARED LOSS OF RS.2,12,730/- IN ITS RETURN FILED ON 30.10.2006, WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. IT WAS NOTICED BY THE ASSESSING OFFICER THAT IN THE ACCOUNTS OUT OF TOTAL PETROL OF 703953 LITERS, THE ASSESSEE HAS SHOWED LOSS OF 7998 LITERS WHICH AS PER THE ASSESSING OFFICER WAS HIGHLY EXCESSIVE. OPPORTUNITY WAS PROVIDED TO THE ASSESSEE VIDE LETTER DATED 1.9.2008 TO EXPLAIN THE EXCESSIVE CLAIM OF LOSS. THE STAND OF THE ASSESSEE WAS THAT THE EVAPORATION LOSS IS WITHIN THE PRESCRIBED NORMS. THE ASSESSING OFFICER CALCULATED THE LOSS, WHICH WAS IN EXCESS BY 1% I.E. 2874 LITERS WHICH RESULTED INT O THE ADDITION OF RS.1,01,337/-. ON APPEAL, THE IMPUGNED ADDITION WA S CONFIRMED WHICH IS UNDER CHALLENGE BEFORE THE TRIBUNAL. WE HAVE FOUND THAT THE ASSESSING OFFICER HAS QUOTED THE CERTIFICATE ISSUED BY FEDERATION OF ALL INDIA PETROLEUM TRADERS (INCORPORATED UNDER THE INDIAN COMPANIES, ACT) WHEREIN A MAXIMUM LOSS OF 1% WAS PROJECTED. ON THE OTHER HAND, THE LEARNED FIRST APPELLATE AUTHORI TY HAS RELIED UPON THE DECISION OF THE PATNA BENCH OF THE TRIBUNAL IN THE CASE OF MATENJI BHAGWANJI AND ALSO OF THE MEERUT BENCH OF THE TRIBU NAL IN THE CASE OF GUPTA SERVICE STATION WHEREIN EVAPORATION LOSS UPTO 1% WAS HELD TO BE NORMAL. EVEN THE ASSESSEE HAS NOT EXPLAINED AT A NY STAGE, AS TO HOW, THE LOSS OF 7998 LITERS OF PETROL IS JUSTIFIED AS THE P RESENT LOSS IS ABOUT 1.14%. HOWEVER, ALTERNATELY IT WAS CLAIMED THAT THE EXCESS OF 1% I.E. RS.33834/- SHOULD HAVE BEEN ADDED. WE HAVE FOUND F ORCE IN THE ALTERNATIVE SUBMISSION RAISED BY THE ASSESSEE, THER EFORE, KEEPING IN VIEW THE ABOVE FACTS, THE ASSESSING OFFICER IS DIRE CTED TO MAKE THE ADDITION OF THE EXCESS LOSS WHICH IS MORE THAN THE PRESCRIBED LIMIT I.E. 1% IN PLACE OF 1.14% SHOWN BY THE ASSESSEE. THEREFORE, THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED. 9. THE TRIBUNAL HAD HELD THE EVAPORATION LOSS OF 1% IN THE ACCOUNT OF BOTH THE PETROL AND DIESEL AS REASONABLE. THE ISSU E RAISED IN THE PRESENT APPEALS BEFORE US IS ALSO IN RELATION TO THE CLAIM OF EVAPORATION/HANDLING 5 LOSS. FOLLOWING THE RATIO LAID DOWN BY THE CHANDIG ARH BENCH OF THE TRIBUNAL WE ARE IN AGREEMENT WITH THE FINDINGS OF T HE CIT (APPEALS) IN ALLOWING THE CLAIM OF EVAPORATION/HANDLING LOSS AT 1% OF THE TOTAL SALES AND DISALLOWING THE BALANCE. UPHOLDING THE ORDER O F THE CIT (APPEALS) WE DISMISS GROUNDS OF APPEAL RAISED BY THE REVENUE IN BOTH THE APPEALS. 10. IN THE RESULT, THE APPEALS OF THE REVENUE IN IT A NO.912 & 913/CHD/12 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH DAY OF NOVEMBER, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27 TH NOVEMBER, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH