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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: HONBLE KUL BHARAT & HONBLE MANISH BORAD
PER MANISH BORAD, AM.
The above captioned appeal filed at the instance of assessee
pertaining to Assessment Year 2013-14 is directed against the
orders of Ld. Commissioner of Income Tax (Appeals) (in short
‘Ld.CIT(A)’], Ujjain dated 24.07.2017 which are arising out of the
Ravi Prakash Langer ITA No 717/Ind/2017
order u/s 143(3) of the Income Tax Act 1961(In short the ‘Act’)
dated 09.02.2016 framed by ACIT-2(1), Ujjain.
When the case was called up the authorized representative on
behalf of Ld. Counsel for the assessee requested for the
adjournment. However looking to the smallness of the issue with
the help of Departmental Representative as well as available records
on file the case has been heard.
Assessee has raised following grounds of appeal; “1. That the Ld.A.O erred in making addition of Rs.223584/- on account of disallowance of genuine & reasonable shortage (evaporation loss) claimed against sales of Petrol & Diesel and the Hon'ble CIT (Appeals) erred in confirming the same that too without considering the facts of the case and also not in accordance with the law. The evaporation of petrol/diesel is within recognized norms of the petroleum companies. 2. The appellant craves leave to add/alter/amend any of the grounds of the appeal at the time of or before the hearing of the case”.
Brief facts of the case as culled out from the records are that
the assessee is engaged in the retail business of trading in
petroleum product. Return of income e-filed on 29.09.2013 and
revised on 31.10.2013 declaring total income of Rs.64,87,406/-
derived from business, house property, capital gain and other
Ravi Prakash Langer ITA No 717/Ind/2017
sources. The case was picked up for scrutiny through CASS and
notice u/s 143(2) was duly served upon the assessee. Assessment
completed u/s 143(3) of the Act at Rs.69,27,800/- and agriculture
income at Rs.1,64,727/- after adding additions on (i) disallowance
on travelling expenses at Rs.17,631/- (ii) Vehicle running &
maintenance expenses and interest paid on car loan at Rs.37,079/-
(iii) depreciation claimed on cars at Rs.43,057/- (iv) delayed
payment of PF/ESI at Rs. 1,19,040/- and (v) shortage claimed on
petrol & diesel at Rs.2,23,584/-.
Aggrieved assessee preferred appeal before Ld. CI(A) and partly
succeeded Ld. CIT(A) confirmed the addition of Rs.2,23,584/- made
by Ld.A.O observing as under;
“4.5 Ground No.5:-Through this ground of appeal the appellant has challenged the addition of Rs.2,23,584/-on account of shortage of diesel and petrol. The appellant has claimed the shortage of petrol and diesel. The evaporation of petrol/diesel is a recognized norm of the petroleum companies and even when they verify the quantity of the petrol/diesel available with respective petrol pump owners, than concession is given to the respective parties on account of such evaporation. In the case the quantity available with the petrol pump owner is found to be at variance by the petroleum companies, stringent actions are taken against the 3
Ravi Prakash Langer ITA No 717/Ind/2017
petrol pump owners. In view thereof petrol pump owner take all measures in respect of quantity of the petrol and diesel, in that situation it is incumbent upon the assessee not to claim excessive evaporation on account of petrol' and diesel. The percentage may vary due to certain factors as weather conditions, evaporation at the time of filling petrol/diesel in storage tanks from tankers and at the time of dispensing to consumers from dispensers etc.
In the case of appellant shortage for the year under consideration, in the case of petrol and diesel were asunder:- Particulars Total Sales Shortage Shortage Permissible Excess (1 ltr.) (Quantity claimed shortage claimed in 1 ltr.) (%) (%)as per (1 ltr.) IOC norm Diesel 2021117 4188 0.2072 0.20 146 Petrol 1848908 14008 0.7576 0.60 2915
From the above it is clear that the appellant has claimed excess loss on account of evaporation and other factors as prescribed by the lOC. The AO has rightly calculated the excess loss on account of petrol at Rs.2,16,306/- (2915 liters x Rs. 74.23). Similarly, the AO bas also rightly calculated the excess loss on account of diesel at Rs.7,278/(146 liters x Rs.49.85). Therefore, the addition made by the AO amounting to Rs.2,23,584/- is Confirmed. Therefore, the appeal on this ground is Dismissed”.
Now the assessee is in appeal before the Tribunal.
Ld. Departmental Representative vehemently argued and
supported the findings of lower authorities. 4
Ravi Prakash Langer ITA No 717/Ind/2017
We have heard the argument and perused the records placed
before us. The sole grievance raised by the asseessee in its appeal
is against the confirmation of Rs.2,23,584/-made by Ld.CIT(A) on
account of shortage of diesel and petrol.
We find that disallowance of Rs.2,23,584/- have been made by
Ld.A.O for the alleged excess loss claimed by the assessee on
account of evaporation and other factors. We observed that the
assessee is running a petrol pump of Indian Oil Corporation and
sales various petroleum products. Regular books of accounts have
been maintained and financial statements are duly audited u/s
44AB of the Act. The assessee is also regularly maintaining
quantitative details of various items kept at the petrol pump and
quantitative details are maintained as per the directions of Indian
Oil Corporation. We also observe that the alleged shortage has not
been claimed as expenditure in the profit and loss account and
adjustment of shortage/loss has only been shown in the
quantitative details. It is true that some standards have been made
by Indian Oil Corporation for the permissible shortage/evaporation
loss for petrol and diesel but it is an admitted fact that they are 5
Ravi Prakash Langer ITA No 717/Ind/2017
merely guidelines and not standards which are mandatory for
limiting the percentage of shortage and therefore the percentage of
shortage/loss vary on various factors including weather conditions.
We also observe that the shortage of diesel is 0.2072% as against
the permissible limit of 0.20%and shortage in case of petrol is
0.7576% as against permissible limit of 0.60%. The variation is not
so high which could raise the question on the genuineness of the
books of accounts and quantitative records maintained by the
assessee. Even otherwise Ld.A.O has nowhere recorded that the
books of accounts have been rejected u/s 145(3) of the Act and
profits have been estimated.
In these given facts and circumstances of the case Ld.A.O was
not justified in making the impugned disallowance without invoking
the provisions u/s 145 of the Act and he therefore should have
accepted the book results which were duly audited and supported
by proper quantitative details. We therefore set aside the findings
of lower authorities and direct the Ld.A.O to delete the addition of
Rs.2,23,584/-. We accordingly order so and allow Ground No.1
raised by the assessee. 6
Ravi Prakash Langer ITA No 717/Ind/2017
Ground No.2 is general in nature which needs no
adjudication.
In the result appeal of the assessee is allowed.
The order pronounced in the open Court on 26.12.2018.
Sd/- Sd/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER �दनांक /Dated : 26 December, 2018 /Dev
Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file.
By Order, Asstt.Registrar, I.T.A.T., Indore