TMI Blog2020 (7) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... are lower than what has been claimed and allowed by the Revenue in past two years for which the requisite data is available on record and therefore, the same being found comparable cannot be form a rational basis for rejection of books of accounts so maintained by the assessee. Rejection of books of account is hereby set-aside and the consequent trading addition is hereby deleted. Disallowance of various expenses - CIT(A) has restricted such disallowances to 10% which is consistent with the disallowances made in the past years and which has been accepted by the assessee. In the result, we are not inclined to interfere with the findings of the ld CIT(A) and the same is hereby confirmed. Disallowance of salary expenses - claim of the assessee is that the same is fully verifiable for ESI, PF records and has been duly offered to tax, where applicable in their personal tax returns. The matter is accordingly remitted to the file of the Assessing officer to verify the same and where the same is found to be in order, allow the necessary relief to the assessee. - ITA No. 1037/JP/2019 - - - Dated:- 23-7-2020 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trol Pump which was allotted to her in F.Y. 2002-03 by IOCL, on compassionate ground being widow of Kargil War Martyr. As the appellant is a widow lady with a village background, she had no business acumen to carry out the business operations personally. In the circumstances, she had to carry out these business activities through her employees' only. It was submitted that all the sales and purchases and other over-head expenses were being accounted for and vouched meticulously and were subjected to close and periodical checking at various levels by the appellant, besides regular and periodically checking by the Petroleum Authorities from time to time. The turn-over is regulated through computerized machines only. In the circumstances, all the sales, purchases and other expenses etc. were fully and properly vouched and verifiable as there is no scope for any pilferage or tempering of the stocks etc. for any reason including the 'evaporation shortages' etc. with the help of Marketing Discipline Guidelines' issued by Indian Oil. During the course of the assessment proceedings, these facts were brought home explicitly which were found to be correct in the assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this year, the weight loss was 0.55% 0.18% in Petrol and Diesel respectively as against 0.60% and 0.20% in the past. The Authorities Below did not dispute such figures. Thus this finding is factually incorrect, warranting no adverse view. Lastly, while giving the instance of inconsistent weight loss by evaporation in the months of December 773 litres as compared to 717 in the month of March, they had opined that no proper record of the weight loss had been kept, necessitating the rejection of book results u/s 145(3) of the Act. In fact, such findings are factually and practically incorrect. The variation in the weight loss in the months of December and March may be for hundred and one reasons; depending upon the temperature and handling manner etc. More-over these figures are not correct as pointed out in the written submissions. And lastly, the alleged inconsistent variation in weight loss is very insignificant i.e. about 56 liters worth ₹ 3,909/- hardly justifying such huge addition to the tune of ₹ 10 lac or so. Obviously such huge addition is devoid of merits and deserves to be deleted. 4. It was further submitted that the ld. CIT(A) had upheld the rejection of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant during the year. Obviously working of profit in this manner is most unreasonable and un-fair for the following reasons: (a) It is an admitted fact that all the sales and purchases were fully vouched and verifiable. In absence of the owner at the business spot, the employees were conducting business under 'strict' supervision and monitoring. More-over the business was being conducted as per Marketing Discipline Guidelines issued by Indian Oil and were subjected to periodical checking etc. Further, during the course of scrutiny, no mistake or discrepancy what-so-ever was noted. No interference was made in the figures of sales and purchases etc. Thus the turn-over had been accepted as per Books and the Audit Report. The department had also taken the same figures of Sales and Purchases as per books and the Audit Report etc. In the circumstances, it is patently established that all the sales and purchases are fully vouched and verifiable. (b) The quantities and the rates of the sales and purchases are also regulated by the computerized machines and are subjected to periodical checking by the Authorities of Indian Oil. No discrepancy could ever been pointed out by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry manner without analyzing its nature and the volume etc. is bad in law and deserves to be deleted summarily. Further, as per past history of the case also, such expenses were allowed fully as the owner did not attend the business operations personally so the personal element in these expenses was completely ruled out. Having considered this fact and the fact that all the expenses were incurred for business purposes exclusively and are fully and properly vouched, no disallowance what-so-ever was called for. The disallowance of these expenses @10% being un-called for and excessive, these deserve to be deleted. 7. It was further submitted that regarding the disallowance of ₹ 1,55,880/- out of salary expenses as confirmed by the ld. CIT (A), it may be noted that the salary expenses were fully vouched and verifiable with the help of documentary evidences like ESI, P.F and Labor Records etc. as discussed at length in the written submissions made before the ld. CIT (A). It is noted that the authorities below had incorrectly mentioned that no signature of the employees was obtained in the salary sheets in support of such payments. In fact, such signatures were obtained separatel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was on higher side in the month of December, 2011 as compared to June, 2011 and in normal circumstances, evaporation during the month of June would have been higher than that of December but the assessee did not offer any satisfactory explanation. Further, the assessee failed to produce sales bills for petrol, diesel and lubricants. It was accordingly submitted that due to the aforesaid discrepancies, the book result were rejected by invoking section 145(3) of the Act and gross profit was estimated at 1.95% as against 1.5% declared by the assessee based on previous year results. It was further submitted that on appeal, ld. CIT(A) has already reduced the G.P rate to 1.9% and therefore, in the given facts and circumstances of the case, no further relief may be allowed to the assessee. 10. Regarding disallowance of various expenses made by the Assessing Officer, it was submitted that the ld. CIT(A) has already reduced such disallowance to 10% and given that the expenses are not fully verifiable, the said findings of the ld. CIT(A) should be confirmed. Regarding the salary expenditure, our reference was drawn to the findings of the ld. CIT(A) wherein it has been sated that no si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cember and has come to a conclusion that the evaporation shortages so claimed for the whole year is not acceptable. We find that there may be fluctuation in evaporation loss on month-on-month basis, however, if we look at the comparative yearly shortage percentage vis- -vis past years as under: Asstt. Year Petrol (Ltrs.) Diesel (Ltrs.) Sale Shortage Rate of Shortage Sale Shortage Rate of Shortage 2010-11 1567964 9412 0.60% 1624439 3245 0.20% 2011-12 1468456 8807 0.60% 1654733 2990 0.18% 2012-13 1520239 8359 0.55% 1955831 3550 0.18% we find that the assessee has claimed shortage of 0.55% in Petrol during the year as against 0.60% in the past two years and similarly, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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