2014 (1) TMI 1595 - HC - Income Tax

Net disclosed income of diesel and oil expenses - Held that - The respondent assessee was to receive the gross freight amount from BPCL with whom he had a contract - The net amount was paid by the BPCL to the assessee and the payment was made directly to the Petrol Pump on the basis of Fleet Card -BPCL had issued monthly statements showing recovery towards diesel charges - The contract with BPCL also reflected that the same was as per the contract - The lower authorities have correctly decided the issue based on findings - Decided against Revenue. Suppression of income - Held that - The TDS certificate as well as certificate issued by Yatayat Sangam Petrol Pump clearly reflects that the amount has been received by them directly from BPCL and not from the assessee - The CIT(A) was satisfied with the explanation - Decided against Revenue.

Summary

Issues:
1. Addition of Rs. 24,06,834 made by the Assessing Officer on account of net disclosed income of diesel and oil expenses.
2. Deletion of the addition of Rs. 19,73,500 made by the Assessing Officer on account of suppression of income.

Analysis:
1. The first issue revolves around the addition of Rs. 24,06,834 made by the Assessing Officer concerning the net disclosed income of diesel and oil expenses. The CIT [A] had called for a remand report from the Assessing Officer and concluded that the said amount was a superfluous addition as payments were made directly by BPCL to the Petrol Pump based on Fleet Card deductions. The Tribunal upheld this decision, emphasizing that the respondent was to receive gross freight from BPCL but was paid the net amount directly to the Petrol Pump. The Tribunal concurred with the findings of CIT [A], leading to the dismissal of the Revenue's appeal as both authorities correctly favored the assessee based on the contractual obligations and payment mechanisms involved.

2. The second issue pertains to the addition of Rs. 19,73,500 made by the Assessing Officer due to the alleged suppression of income based on the variance between the gross freight per TDS Certificate and the freight recorded in the assessee's books. The CIT [A] observed that the amount was received directly from BPCL by the Petrol Pump, not the assessee, leading to the deletion of this addition to avoid double counting. The Tribunal acknowledged the interrelation of this issue with the first one and upheld the CIT [A]'s decision, citing the satisfactory explanation provided by the assessee for the discrepancies in recorded receipts. Both authorities appropriately handled this issue, concluding that no substantial question of law was raised, resulting in the dismissal of the Tax Appeal without costs.

In summary, the High Court upheld the decisions of the lower authorities in favor of the assessee, dismissing the Revenue's appeal on both issues of the addition of net disclosed income of diesel and oil expenses as well as the suppression of income due to discrepancies in freight receipts, as no substantial questions of law were found to be raised.