RONIKA DALDA,NALGONDA vs. INCOME TAX OFFICER, WARD-1, NALGONDA

The assessee has raised six grounds in her appeal however, the crux of the issue is that the Ld.CIT (A) has erred in confirming the findings of the Ld. AO with respect to suppression of commission income of Rs. 16,06,379/- and thereby made net addition of Rs. 11,34,710/- after granting deduction for license fees paid and shortages.

The brief facts of the case are that the assessee is an individual engaged in the business as dealer in petroleum products such as Motor Spirits (MS), High Speed Diesel (HSD) and Lubricants under the name and style M/s. Ramson Filling Station, Wadapally and M/s. Sundaraiah Filling Station, Nakerkal respectively marketed by M/s. Indian Oil Corporation and Bharat Petroleum Corporation Limited. The assessee filed her return of income on 21/09/2014 admitting total income of Rs. 6,00,580/-. Subsequently, the case was taken up for scrutiny and finally assessment was completed vide order dated 28/12/2016 wherein the Ld. AO computed the suppressed commission income of Rs. 16,06,379/-. While doing so, the Ld. AO had obtained information from M/s. Indian Oil Corporation Ltd, M/s. Bharat Petroleum Corporation Limited and from the Website of petroleum planning and Analysis Cell of Ministry, Petroleum and Natural Gases, Government of India’s. During the course of scrutiny assessment proceedings, the assessee had explained before the Ld. AO that the shortage in turnover was not due to suppression of commission income, but it was due to discounts allowed to the customers of the assessee. However, the assessee could not produce any evidence to justify her stand. The AR of the assessee had also argued before the ld. AO to allow deduction on account of license fees paid amounting to Rs. 48,838/- and reasonable allowance for shortage of the petroleum products due to evaporation, pilferage etc. Considering the submission of the Ld.AR the Ld. AO reduced the license fees paid of Rs. 48,838/- and cost of shortage Rs. 4,71,669/- from the suppressed commission computed by him and thereby computed the addition at Rs. 11,34,710/- (sic) Rs. 10,85,872/- and added to the income of the assessee.

However, the Ld. CIT (A) rejected the submission of the assessee because neither the assessee not his AR had pointed out the above reasons before the Ld. AO during the course of scrutiny assessment proceedings. In fact, during the course of scrutiny assessment proceedings it was never stated before the Ld.AO that in the case of the assessee the loss due to evaporation is higher than the accepted norms because of old delivery equipments installed in the petrol bunks owned by the assessee. The Ld. CIT (A) further observed that even before him the factual details with evidence regarding the actual evaporation, shortages and discount allowed to regular customers were not brought on record. The Ld. CIT (A) further observed that the Ld. AO had obtained the details of the commission paid to the assessee by IOCL and BPCL which was not accounted in the books of accounts of the assessee. Further the Ld. CIT (A) was of the view that the Ld. AO has made elaborate and detailed examination by obtaining information from IOCL, BPCL and the Website of petroleum planning and Analysis Cell of the Ministry and the same could not be successfully controverted or challenged by the Ld.AR. Ld. The CIT (A) further was of the opinion that the argument submitted by the assessee is only academic and theoretical in nature and it does not have merit in the case of the assessee. The Ld. CIT (A) also observed that the assessee had not submitted any evidence to substantiate her submissions. With the above findings the Ld. CIT (A) confirmed the order of the Ld. AO and dismissed the appeal of the assessee.

At the outset, the Ld. AR submitted before us that in the assessment order at para 2(A), the Ld. AO had taken into consideration of the data relating to “M/s. Daida Ronikasundaraiah Filling Station”, Nakrekal, which is a retail outlet of BPCL and the dealership is granted to M/s. Devarakonda Lavanya and not to the appellant. The Ld. AR further submitted that assessee has enclosed the documents relating to Mrs. Devarakonda Lavanya in the paper book filed before the Tribunal on 13/5/2019 marked as item no 3, 4, 8 & 9. It was further submitted that the assessee had inadvertently omitted to mention in the appeal before the Tribunal that the above documents are filed as additional evidence. The Ld. AR further requested that since the additional evidence is filed before the Tribunal for the first time and since these documents establishes the fact that the turnover taken into consideration by the AO does not relate to the assessee the matter may be remitted back to the file of the Ld. AO for fresh consideration. The Ld. DR vehemently argued before us by stating that the additional evidence filed by the assessee under Rule 29 of the ITAT Rules may not be admitted because the assessee had miserably failed to point out the error if any before the Ld. AO as well as before the ld. CIT (A). the Ld. DR further argued before us that it is only a modus-oprandi adopted by the assessee in order to delay the litigation proceedings hence it was submitted that the additional evidence may not be admitted and the appeal of the assessee may be dismissed.

I have heard the rival submissions and carefully perused the materials on record. On considering the facts and circumstance of the case, I do not find the laxity shown by the assessee during the course of the assessment proceedings and first appellate proceedings to be appropriate. According to the assessee the data with respect to the computation of suppress commission does not belong to the assessee even though they had made elaborate submissions and interacted before the Ld.AO as well as before the Ld.CIT(A) to defend the case. In such a situation, I wonder as to why this discrepancy was not pointed out before the Ld. AO or even before the Ld. CIT (A) by the assessee or by her Ld.AR. It is quite possible that there may have been a hotch potch in adopting the correct data by the Ld.AO when information is obtained with respect to various dealers from different source. However, though the assessee had shown negligence during the course of the respective proceedings before the Ld. Revenue Authorities and even when I find the elaborate exercise undertaken by the Ld. AO to be quite appealing, I am of the considered view that it is not appropriate to adopt the data belonging to some other assessee while computing the addition in the hands of the assessee. Therefore, in the interest of justice, I hereby remit back the matter to the file of the Ld. AO for de novo consideration. I also advise the assessee to be vigil during the course of the proceedings before the Ld. Revenue Authorities in order to avoid such hotch potch.

Before parting, it is worthwhile to mention that this order is pronounced after 90 days of hearing the appeal, which is though against the usual norms, I find it appropriate, taking into consideration of the extra-ordinary situation in the light of the lock-down due to Covid-19 pandemic. While doing so, I have relied in the decision of Mumbai Bench of the Tribunal in the case of DCIT vs. JSW Ltd. In and 6103/M/2018 for AY 2013-14 order dated 14th May 2020.

In the result, appeal of the assessee is allowed for statistical purposes. Pronounced in the open Court on 10th July, 2020.