M/s. Sunita Transport Pvt.Ltd.,, Baroda v. The Income tax Officer, Ward-4(3),, Baroda

ITA 2656/AHD/2007 | 2002-2003
Pronouncement Date: 09-02-2012 | Result: Partly Allowed

Appeal Details

RSA Number 265620514 RSA 2007
Assessee PAN AAFCS4221D
Bench Ahmedabad
Appeal Number ITA 2656/AHD/2007
Duration Of Justice 4 year(s) 7 month(s) 25 day(s)
Appellant M/s. Sunita Transport Pvt.Ltd.,, Baroda
Respondent The Income tax Officer, Ward-4(3),, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 09-02-2012
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 09-02-2012
Date Of Final Hearing 25-01-2012
Next Hearing Date 25-01-2012
Assessment Year 2002-2003
Appeal Filed On 14-06-2007
Judgment Text
-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI D K TYAGI - JM AND SHRI A MOHAN ALANKAMONY AM ITA NO.2656/AHD/2007 (ASSESSMENT YEAR:-2002-03) M/S SNITA TRANSPORT PVT. LTD. OPP. YOGESHWAR PETROL PUMP DUMUD CHOKDI N.H. NO.8 BARODA V/S THE INCOME-TAX OFFICER WARD-4(3) BARODA PAN: AAFCS 4221 D [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI S N SOPARKAR AR REVENUE BY:- SHRI VINOD TANWANI SR. DR DATE OF HEARING:- 25-01-2012 DATE OF PRONOUNCEMENT:- 09-02-2012 O R D E R PER D K TYAGI (JM) :- THIS IS ASSESSEES APPEAL AGAINST THE ORDER DATED 15-02-2007 PASSED BY THE LEARNED CIT(A) -III BARODA FOR ASSESSMENT YEAR 2002-03. THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE IN THIS APPEAL:- [1] THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE A0 IN J TREATING AN AMOUNT OF RS.54 0 0 000/- AS INCOME OF THE APPELLANT. [2] THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN CONFIRMING THE DISALLOWANCE MADE BY THE AO OF RS.2 26 099/- ON ACC OUNT OF DEDUCTION FOR SHORTAGE IN MATERIAL TRANSPORTED IN T HE VEHICLES OF 2 THE APPELLANT FOR WHICH DEDUCTIONS ARE MADE BY THE CUSTOMERS FROM THE PAYMENTS OF APPELLANT. [3] THE LEARNED CIT(A) HAS ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN CHARGING INTEREST U/S 234B AND 234D OF THE ACT. [4] THE LEARNED CIT (A) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. [5] YOUR APPELLANT CRAVES A RIGHT TO ADD TO OR AMEN D ALTER SUBSTITUTE DELETE OR WITHDRAW ALL OR ANY OF THE GR OUNDS OF APPEAL. 2 AS REGARDS GROUND NO.1 IN THIS ASSESSEES APPEAL THE FACTS OF THE CASE ARE THAT THE RETURN OF INCOME FOR THE Y EAR UNDER CONSIDERATION HAS BEEN FILED BY THE ASSESSEE COMPAN Y ON 14-10- 2002 DECLARING THEREIN TOTAL INCOME OF RS.18 98 035 /-. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT ON 13-02-2003 ACCEPTING THE TOTAL INCOME AS RETURNED BY THE ASSESSEE COMPANY. T HE CASE HAS BEEN SELECTED FOR SCRUTINY AND ACCORDINGLY A NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 13-02-2003 WHICH WAS SERVED O N THE ASSESSEE. THE AO HAS NOTED THE FOLLOWING FACTS:- 2 THE CASE HAS BEEN SELECTED FOR SCRUTINY AND NOTI CE U/S. 143(2) OF THE ACT WAS ISSUED ON 13.02 2003 WHICH WAS DULY SER VED UPON THE ASSESSEE BY RAD ANOTHER NOTICE DT.28.2.2003 WAS I SSUED TO THE ASSESSEE BY HO WRD-4(3) WHICH WAS DULY SERVED UPON THE ASSESSEE. DUE TO CHANGE IN JURISDICTION THE CASE WAS TRANSFE RRED TO THIS CIRCLE AND NOTICE U/S 143(2) WAS ISSUED ON 23.10.03 WHICH WAS SERVED UPON THE ASSESSEE THROUGH RPAD IN RESPONSE TO NOTICES I SSUED ON TIME TO TIME SHRL MUKUND BAKSHI C.A. FROM M/S. MUKUND & ROHIT ATTENDED ALONG WITH SHRL PRASHANT ACCOUNTANT OF THE ASSESSE E TROM TIME TO TIME AND SUBMITTED THE DETAILS AND EXPLANATIONS CALLED T OR DURING THE PROCEEDINGS. 3 3 THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS O T TRANSPORTATION OF OIL/CHEMICALS THROUGH TRUCK TANKE RS. THE ASSESSEE COMPANY IS OWING ITS OWN TANKERS AND ALSO TAKES TAN KERS ON HIRE FROM OUTSIDE PARTIES AS AND WHEN REQUIRED. THE RETURN OF INCOME IS ACCOMPANIED BY LAX AUDIT REPORT U/S 44AB OF THE ACT IN FORM NO. 3CA AND 3CD COPIES OF AUDITED PROFIT AND TOSS ACCO UNT BALANCE SHEET ETC. ALONG WITH ITS ANNEXURES. 4 THERE WAS A SURVEY U/S 133A ON THE BUSINESS PREMI SES OF THE ASSESSEE ON 30.1.2003. DURING THE COURSE OF SURVEY THE TRIAL BALANCE WAS DRAWN FROM THE BOOKS OF ACCOUNTS OF ASSESSEE AP PEARING IN ITS COMPUTER. ON A COMPARISON OF THIS TRIAL BALANCE WIT H THE RETURN OF INCOME FILED BY THE ASSESSEE IT WAS GATHERED THAT ASSESSEE COMPANY HAS DEBITED BOGUS EXPENSES IN THE BOOKS OF ACCOUNTS THROUGH CERTAIN ACCOUNTS WHICH WERE NOT APPEARING IN THE AUDITED RE GULAR BOOKS OF ACCOUNTS. THESE EXPENSES WERE OUTSTANDING AS CREDIT ORS IN THE RETURN OF INCOME FILED BY THE ASSESSEE AND WERE PAID AS AN D WHEN CASH WAS REQUIRED BY THE ASSESSEE. THESE EXPENSES HAVE BEEN LISTED AND WERE REPRODUCED IN THE BODY OF ASSESSMENT ORDER AT PAGE- 3 FOR A.Y. 2001- 02 PASSED U/S 143(3) OF THE ACT. THE DISCREPANCY WO RKED OUT FOR THE CURRENT FINANCIAL YEAR WAS ON ACCOUNT OF TWO PARTIE S NAMELY M/S. AUTO CARE RS.22 93 085/- AND M/S AUTO LINK RS.335 /- TOTALING TO RS.22 93 420/-. 5 DURING THE COURSE OF SURVEY STATEMENT OF SHRL VI JAY R. NAIR MANAGING DIRECTOR OF ASSESSEE COMPANY WAS RECORDED U/S 13 3A OF THE ACT. VIDE QUEST. NO.5 HE WAS ASKED TO EXPLAIN ABOUT THE DISCREPANCY FOUND IN TRIAL BALANCE VIS-A-VIS AUDITE D BOOKS OF ACCOUNTS. AFTER GOING THROUGH THE AUDITED BOOKS OF ACCOUNTS AS WELL AS LIST OF CREDITORS HE STATED THAT ALL THE 34 PARTIES IDENTI FIED BY THE SURVEY TEAM WERE NONEXISTENT AND NON-GENUINE OUT OF THESE 34 P ARTIES THE TRANSACTIONS APPEARING FOR THE CURRENT FINANCIAL YE AR ARE WITH RESPECT TO ONLY TWO PARTIES STATED ABOVE. HE FURTHER STALED TH AT NO BILLS / VOUCHERS WERE AVAILABLE/ PREPARED FOR EXPENSES DEBITED AGAIN ST THESE CREDITORS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y . 01-02 THE STATEMENT OF SHRI VIJAY K. NAIR WAS RECORDED ON 24. 2.03 WHEREIN HE HAS ADMITTED THAT ENTRIES DEBITING BOGUS EXPENSES A ND CREDITING NON- GENUINE PARTY (AS IDENTIFIED BY SURVEY TEAM) WERE D IRECTLY LED ON COMPUTERS BY WAY OF JOURNAL ENTRY. THEREFORE THESE ACCOUNTS AND JOURNAL ENTRIES WHICH WERE NOT GENUINE WERE NOT APP EARING IN REGULAR BOOKS OF ACCOUNTS WHICH WERE PREPARED FOR AUDIT AND FOUND DURING THE COURSE OF SURVEY. 4 6 DURING THE COURSE OF ASSESSMENT PROCEEDINGS BASE D ON THE TRIAL BALANCE AS ON 31.0J.2002 TAKEN DURING THE COURSE OF SURVEY CERTAIN QUERIES WERE RAISED WITH RESPECT TO SOME MORE CREDI T AND DEBIT ENTRIES APART FROM THE ENTRIES DISCUSSED ABOVE. THE ASSESSE E'S REPRESENTATIVE HAS EXPLAINED THESE ENTRIES THROUGH SUBMISSIONS DUR ING THE HEARINGS HOWEVER THE ENTRY OF RS.23 67 750/- COULD NOT BE E XPLAINED WHICH WAS OUTSTANDING AS MISCELLANEOUS CREDITORS CREATED DURING THE YEAR. FURTHER THE ASSESSEE WAS ASKED TO EXPLAIN THE P&L ACCOUNT FOUND DURING THE COURSE OF THE SURVEY AS ON 28.02.2002 AN D THE HANDWRITTEN ENTRIES APPEARING THEREON. THE ASSESSEE'S REPRESENT ATIVE HAS COMPARED THE TRIAL BALANCE APPEARING AS IN THE AUDITED BOOKS OF THE ASSESSEE AND AS ROUND DURING THE COURSE OF THE SURVEY AND FOLLOW ING DISCREPANCIES HAVE BEEN NOTED. A) AUTO CARE RS.22 93 085/- B) AUTO LINK RS. 335/- C) MISCELLANEOUS SUNDRY CREDITORS RS.23 67 751/- 7 IT IS PERTINENT TO MENTION HERE THAT AFTER THE S URVEY PROCEEDINGS ON 30-01-2003 DUE TO THE DISCREPANCIES POINTED OUT IN PARA 4 THE ASSESSEE HAS FILED A REV ISED RETURN ON 24-03-2003 WHEREIN THE ASSESSEE HAS ADMITTED ALL THE ABOVE DISCREPANCIES AND HAS MADE DISCLOSURE OF ADDI TIONAL INCOME OF RS.54 00 000/- THE BREAK UP OF WHICH IS AS UNDER:- SR. NO. NAME OF ACCOUNT AMOUNT RS. DEBIT CREDITED TANKER HIRE EXP. DRIVER TRIP EXP SALARY EXP. REP. & MAINT. EXP. WAGES EXP. 1 MISC. CREDITORS 2367751 393013 788728 1186000 2 AUTO CARE 2293085 1628420 664665 3 AUTO LINK 335 335 4 EXPENSES OUT OF CASH 719262 19262 700000 TOTAL 5380433 2021433 808000 700000 665000 1186000 5 ROUNDED OFF: RS.54 LAKHS. AFTER CONSIDERING THE REPLY / EXPLANATION OF THE AS SESSEE THE AO MADE AN ADDITION OF RS.54 LAKHS TO THE INCOME OF TH E ASSESSEE HOLDING THAT THESE WERE BOGUS EXPENSES DEBITED BY T HE ASSESSEE FOR THE PURPOSE OF SUPPRESSING ITS TRUE INCOME CHAR GEABLE TO LAX. 3 AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE FI LED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE LE ARNED CIT(A) CONFIRMED THE ADDITION IN THE FOLLOWING MANNER:- 3.1 IN APPEAL THE ID. A.R SUBMITTED THAT THE ASSE SSEE HAD CATEGORICALLY STATED IN RESPONSE TO QUESTION NO.4 O F THE STATEMENT RECORDED ON 13-1-2003 THAT THE EXPENSES WERE WHOLLY AND NECESSARILY INCURRED FOR BUSINESS PURPOSES. THIS HAS NOT BEEN DISPROVED BY THE AO. IT WAS EMPHATICALLY ARGUED THAT THE FACT OF HAV ING INCURRED THE EXPENDITURE IS APPARENT SINCE NO EXCESS CASH OR UNA CCOUNTED ASSETS OR OTHER THINGS WERE FOUND DURING THE COURSE OF SURVEY . IT IS THEREFORE DOUBTED THAT THE EXPENSES SO DEBITED HAVE BEEN SPEN T FOR SOME PURPOSES. THE APPELLANT HAD MENTIONED DURING THE S URVEY ITSELF THAT THE EXPENSES HAVE BEEN INCURRED FOR BUSINESS PURPOS ES. UNDER THESE CIRCUMSTANCES THE CORRECT APPROACH WOULD BE TO DISA LLOW A PART OF THESE EXPENSES IDENTIFIED AS BOGUS EXPENSES AND NOT THE WHOLE OF SUCH EXPENSES. 3.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE ID. A. R AND THE FACTS OF THE CASE. THE APPELLANT HAS BASICALLY TRIED TO M AKE OUT A CASE THAT (A) THE DEPARTMENT HAS NOT DISPROVED THE STATEMENT OF THE ASSESSEE THAT THE EXPENSES WERE GENUINELY INCURRED FOR BUSINESS P URPOSES AND (B) THAT AS A RESULT OF INFLATION OF EXPENSES THE NET EFFECT WOULD BE SUPPRESSION OF THE TRUE INCOME AND GENERATION OF CA SH AND SINCE NO CASH WAS FOUND THEREFORE IT CANNOT BE SAID THAT T HERE WAS ANY SUPPRESSION OF INCOME OR INFLATION OF EXPENSES. 3.2.1 I AM AFRAID IT IS DIFFICULT TO AGREE WITH TH E CONTENTION OF THE APPELLANT. THE CART CANNOT BE PLACED BEFORE THE HORSE. IT IS NOT FOR THE A.O TO DISPROVE THE EXPENSES BUT RATHER THE ONU S SQUARELY LIES ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE EXPENS ES. IN THE INSTANT 6 CASE THE DEPARTMENTAL OFFICERS FOUND DURING THE CO URSE OF SURVEY THAT THE ASSESSEE HAD DEBITED HUGE AMOUNT OF EXPENSES WH ICH IT COULD NOT ACCOUNT FOR OR CORROBORATE OR PROVE AS GENUINE WITH THE HELP OF SUPPORTING EVIDENCE. IN SUCH A SITUATION THE A.O W AS BOUND TO CONSIDER THE EXPENSES SO CLAIMED AS NON-GENUINE AND BOGUS. IN REALITY THE ASSESSEE HAS HIMSELF ADMITTED THE BOGUS NATURE OF SUCH EXPENSES. IT HAS REVISED ITS RETURN FOR A.YS 1999-2000 TO 2002-0 3 AND INCREASED ITS RETURNED INCOME BY THE-QUANTUM OF BOGUS EXPENSES FO UND TO BE DEBITED IN ITS BOOK FOR THE RESPECTIVE PREVIOUS YEA RS. RES IPSA LOQITOR - THE FACTS AND THE ACTION OF THE ASSESSEE ITSELF SPE AK MUCH LOUDER THAN WORDS. SECONDLY IT IS NOT NECESSARY THAT EACH AND EVERY INSTANCE OF BOGUS EXPENSES AND CONSEQUENT GENERATION OF CASH IN THE BOOKS SHOULD RESULT IN DISCOVERY OF SUCH CASH. THE ENTRIES IN TH E BOOKS AND THE ACTIONS OF THE ASSESSEE THEMSELVES PROVIDE SUFFICIE NT POINTER TO THE CORRECT STATE OF AFFAIRS. AS MENTIONED EARLIER THE ASSESSEE HAS REVISED ITS RETURN AND DISCLOSED THE SAME AS PART OF ITS TA XABLE INCOME. TO NOW CLAIM THAT SINCE NO CASH WAS PHYSICALLY FOUND DURIN G THE SURVEY THEREFORE THERE WAS NO INFLATION OF EXPENSES WHICH COULD GENERATE THE CASH IS FACETIOUS. INDEED IN ITS REVISED RETURN O F INCOME IN THE COMPUTATION THIS SUM OF RS.54 00 000/- HAS BEEN A DDED BACK BY THE ASSESSEE ITSELF AS CLAIM OF EXPENSES AGAINST NON-E XISTENT PARTIES. IN VIEW OF THE ABOVE I DO NOT FIND ANY MERIT IN THE C ONTENTION OF THE APPELLANT ON THIS GROUND. THE ACTION OF THE AO IN A DDING BACK THIS AMOUNT OF RS.54 LAKHS IS HELD TO BE JUSTIFIED AND I S CONFIRMED. THIS GROUND OF APPEAL THUS FAILS. 4 NOW THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARN ED COUNSEL OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 5 THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORD. WE FIND THAT THE ASSESSEE HAS OFFERED THIS SUM OF RS.5 4 00 000/- FOR 7 TAXATION BY FILING REVISED RETURN. WE THEREFORE F AIL TO UNDERSTAND AS TO HOW THE SAME CAN BE CHALLENGED NOW . WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE LEARNED CIT(A) AND THE SAME IS HEREBY UPHELD. GROUND NO.1 O F THE ASSESSEES APPEAL IS DISMISSED. 7 AS REGARDS GROUND NO.2 THE FACTS OF THE CASE AS NOTED BY THE AO ARE THAT DURING THE COURSE OF SURVEY TRIAL BALANCE AS ON 31-03-2002 WAS DISCOVERED IN WHICH A DEBIT BALANCE OF RS.11 86 028/- WAS SHOWN ON ACCOUNT OF SHORTAGES. IN THE AUDITED BALANCE-SHEET THE ASSESSEE ULTIMATELY DEBI TED A SUM OF RS.11 85 777/- UNDER THE HEAD SHORTAGES. THE ASS ESSEES EXPLANATION TO THE EFFECT THAT THE SUM REPRESENTED RECOVERY MADE BY THE CLIENTS OF THE ASSESSEE DUE TO CERTAIN SHORT AGES IN THE QUANTITY OF FUEL AND OTHER PETROLEUM PRODUCTS TRANS PORTED BY THE ASSESSEE WAS CONSIDERED BY THE AO BUT NOT FOUND ACC EPTABLE SINCE IN THE EARLIER YEARS THE ASSESSEE HAD RECOVE RED SUCH SHORTAGES FROM THE DRIVERS BUT IN THE YEAR UNDER CO NSIDERATION NO RECOVERY WAS MADE. ACCORDINGLY THE SUM OF RS.11 85 777/- DEBITED TO P&L ACCOUNT WAS DISALLOWED. 8 THE LEARNED CIT(A) CONFIRMED THE DISALLOWANCE OF RS.2 26 099/- OUT OF TOTAL DISALLOWANCE OF RS.11 85 777/- IN THE FOLLOWING MANNER:- 4.1.2 IN THE PRESENT APPEAL THE ARGUMENTS TAKEN A T THE ASSESSMENT STAGE WERE REITERATED. IT WAS ARGUED THAT SINCE PET ROLEUM PRODUCTS ARE SUSCEPTIBLE TO LOSS THROUGH EVAPORATION AND HANDLIN G DURING THE COURSE OF TRANSPORTATION THE CLIENTS AGREED TO BEAR THE L OSS UPTO CERTAIN LIMIT. 8 IN CASE THERE WAS HIGHER EVAPORATION LOSS OR SHORTA GE IN THE QUANTITY OF PRODUCT DELIVERED THIS WAS TO BE BORNE BY THE ASSE SSEE COMPANY. THE VALUE OF SUCH SHORTAGE WAS WITHHELD BY THE CLIENTS FROM THE FINAL PAYMENTS. IN THE PAST THE ASSESSEE WAS GENERATING CASH THROUGH BOGUS EXPENSES. HOWEVER IN THIS PROCESS WHENEVER THERE W AS SHORTAGE OF CASH IN THE BOOKS A FRESH INJECTION OF CASH WAS SH OWN BY WAY OF PURPORTED RECOVERY FROM THE DRIVERS. IN ACTUALITY NO RECOVERY WAS EVER MADE FROM THE DRIVERS SINCE THE SALARY OF THE DRIVE RS WAS VERY PALTRY AND THE QUANTUM OF SHORTAGES WAS VERY HIGH. IF RECO VERIES WERE ACTUALLY TO BE MADE FROM THE DRIVERS IT WOULD BE I MPOSSIBLE TO FIND ANY PERSON WILLING TO WORK IN THE ASSESSEE COMPANY. HENCE RECOVERY OF QUANTUM OF SHORTAGES FROM THE DRIVERS WAS ONLY A FICTION AND A DEVICE EMPLOYED BY THE ASSESSEE IN THE PAST. 4.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE ID. A. R AND THE FACTS OF THE CASE. THE DISALLOWANCE RELATES TO SHORT PAYM ENTS MADE BY THE CLIENTS OF THE APPELLANT ON ACCOUNT OF SHORT DELIVE RY OF PETROLEUM PRODUCTS. IN THE BUSINESS OF TRANSPORTATION OF PETR OLEUM PRODUCTS IT IS A WELL KNOWN FACT THAT DURING TRANSPORTATION A SMAL L PERCENTAGE OF LOSS OCCURS ON ACCOUNT OF EVAPORATION LEAKAGE PILFERAG E ETC. IN THE INSTANT CASE ALSO THE CLIENTS HAVE DEDUCTED THE VALUE OF M ATERIAL SHORT DELIVERED. PROM THE LIST OF CLIENTS IT IS SEEN THA T THE BULK OF THE TRANSPORTATION CHARGES (RS.4.56 CRORCS) OUT OF GROS S RECEIPTS OF RS.6.51 CRORES RELATES TO TRANSACTIONS WITH ONLY ONE PARTY I.E. M/S. RELIANCE LOGISTICS LTD. SIMILARLY OUT OF TOTAL SHORTAGE OF RS.11 85 777/- SHORT PAYMENT RECEIVED FROM M/S. RELIANCE LOGISTICS LTD. MOUNTED TO RS.8 21 956/-. OTHER REPUTED PARTIES WHO HAVE DEDUC TED CERTAIN AMOUNTS FOR SHORT DELIVERY ARE M/S. ASIAN PAINTS LT D. BERGER PAINTS LTD. JAY ANT AGRO ORGANICS LTD. DEEPAK NITRATE LT D. INDIA GLYCOLS I LTD. GOODLAS NEROLAC LTD & NIRMA LTD. THESE REPUT ED COMPANIES HAVE FURNISHED CERTIFIED COPIES OF ACCOUNTS WHEREIN THE SHORT RECOVERY HAS BEEN DULY REFLECTED. TOTAL OF SHORT RECOVERIES FROM SUCH REPUTED COMPANIES COMES TO RS.9 59 678/'-. THE OTHER PARTIE S HAVE NOT FURNISHED COPIES OF ACCOUNTS. THE MODUS OPERANDI AD OPTED BY THE ASSESSEE HAS BEEN EXPLAINED AND IS CONSISTENT WITH THE STATEMENT GIVEN AT THE TIME OF SURVEY. THE PURPORTED RECOVERY FROM THE DRIVERS WAS RESORTED TO IN THE PAST FOR MANAGING CASH FLOW IN T HE BOOKS. SUCH SHORTAGES HAVE BEEN DEBITED TO THE SHORTAGE ACCOU NT AND THE PARTIES' ACCOUNTS HAVE BEEN CREDITED WITH THE CORRESPONDING FIGURE. THIS MODUS OPERANDI HAS BEEN ACCEPTED BY THE A.O IN THE EARLIER ASSESSMENTS FRAMED PURSUANT TO THE SURVEY. THERE IS NO INDICATION OR EVIDENCE OR ANY MATERIAL ON RECORD TO SHOW THAT ANY RECOVERIES WERE IN 9 FACT MADE FROM THE SALARIES OF THE DRIVERS. IN MY O PINION SUFFICIENT JUSTIFICATION DOES NOT EXIST FOR DISALLOWING THE AM OUNT OF RS.11 85 777/-. AT THE MOST SUM OF RS.2 26 099/- ( RS.11 85.777 - RS.9 59 678) WOULD BE DISALLOWED SINCE THE ACCOUNTS HAVE NOT BEEN VERIFIED AND VOUCHED BY THE PARTIES DEDUCTING THE P AYMENT. ACCORDINGLY OUT OF DISALLOWANCE OF RS.11 35 777/- DISALLOWANCE OF RS.2 26 099/- IS CONFIRMED AND THE REMAINING AMOUNT OF RS.9 59 678/- IS DIRECTED TO BE DELETED. 9 THE LEARNED COUNSEL OF THE ASSESSEE REITERATED TH E SUBMISSIONS AS WERE MADE BEFORE THE LEARNED CIT(A). THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDER OF THE AO. 10 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORD. WE FIND THAT THE DISALLOWANCE OF RS.11 85 028/- MADE B Y THE AO RELATES TO SHORT PAYMENTS MADE BY THE CLIENTS OF TH E ASSESSEE ON ACCOUNT OF SHORT DELIVERY OF PETROLEUM PRODUCTS AS HE DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE THAT THIS AM OUNT COULD NOT BE RECOVERED BY HIM FROM THE CLIENTS. THE LEARNED C IT(A) HAS GIVEN RELIEF OF RS.9 59 678/- TO THE ASSESSEE ON TH E BASIS OF CERTIFIED COPIES OF ACCOUNTS OF REPUTED COMPANIES VIZ. M/S RELIANCE LOGISTICS LTD. M/S ASIAN PAINTS LTD. BER GER PAINTS LTD. AND JAY AND AGRO ORGANICS LTD. ETC. FURNIS HED BY THE ASSESSEE BEFORE HIM ACCORDING TO WHICH THIS AMOUNT WAS IN FACT DEDUCTED BY THEM FOR SHORT SUPPLY OF MATERIAL. BY F URNISHING THESE CERTIFIED COPIES OF ACCOUNTS OF THESE PARTIES THE ASSESSEE WAS ABLE TO ESTABLISH THE GENUINENESS OF THE FACT T HAT IN THE BUSINESS OF TRANSPORTATION OF PETROLEUM PRODUCTS A SMALL PERCENTAGE OF LOSS DO OCCUR ON ACCOUNT OF EVAPORATI ON LEAKAGE AND PILFERAGE ETC. AND THE PARTIES TO WHOM THIS S HORT SUPPLY IS MADE DO DEDUCT THE VALUE OF MATERIAL SHORT SUPPLIED TO THEM. 10 THEREFORE THE LEARNED CIT(A) HAS RIGHTLY GIVEN THE RELIEF TO THE ASSESSEE. SINCE THE ASSESSEES CLAIM HAS BEEN FOUND TO BE BONAFIDE BY THE LEARNED CIT(A) SUSTENANCE OF ADDIT ION OF RS.2 26 099/- SIMPLY BECAUSE THE ASSESSEE HAS FAILE D TO FILE SIMILAR EVIDENCE IN RESPECT OF THIS AMOUNT AS HAS B EEN FURNISHED IN RESPECT OF AMOUNT OF RS.9 59 678/- DOES NOT APP EAR TO BE PROPER. THERE CAN BE MANY REASONS FOR ASSESSEE BEIN G NOT ABLE TO FILE THE EVIDENCE IN RESPECT OF THIS AMOUNT OF RS.2 26 099/-. THEREFORE THIS ADDITION ALSO IS HEREBY DIRECTED TO BE DELETED. THIS GROUND RAISED BY THE ASSESSEE IS ALLOWED. 13 GROUND NO.3 IN THE APPEAL RELATES TO LEVY OF INT EREST U/S 234B AND 234D OF THE ACT. THIS GROUND IS CONSEQUENT IAL. 14 GROUND NO.4 RELATING TO INITIATION OF PENALTY PR OCEEDINGS IS PREMATURE AND IS NOT REQUIRED TO BE ADJUDICATED NOW . THE SAME IS DISMISSED. 15 IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 09-02-2012 SD/- SD/- (A MOHAN ALANKAMONY) ACCOUNTANT MEMBER (D K TYAGI) JUDICIAL MEMBER DATE : 09-02-2012 COPY OF THE ORDER FORWARDED TO: 11 1. M/S SNITA TRANSPORT PVT. LTD. OPP. YOGESHWAR PE TROL PUMP DUMUD CHOKDI N.H. NO.8 BARODA 2. THE INCOME-TAX OFFICER WARD-4(3) BARODA 3. CIT CONCERNED 4. CIT(A)-III BARODA 5. DR ITAT AHMEDABAD BENCH-C AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD