2015 (6) TMI 598 - AT - Income Tax

Addition on account of premium of Kerosene Oil - CIT(A) deleted the addition - Held that - CIT(A) has carefully found that there is substance in the arguments of the Ld. Counsel that on the basis of discrepancies / defects pointed out by the AO on examination of the seized material it was not possible to draw the inference that the assessee had received premium on the account of sale of kerosene oil. We find that CIT(A) was agreed with the Counsel that the AO was not justified to rely on the letter of complaint addressed to the Asstt. Commissioner (Foods), once no action was taken by the AC (Foods) on the basis of that letter the assessee continued to have the license to distribute the kerosene oil. Similarly discrepancies such as non filing of challans, difference in position of stock as per two registeres or some difference in the quantity of sales as per different registered found at the time of search could not be used as the basis to infer that the assessee was receiving premium by indulging into black marketing of kerosene oil. Ld. CIT(A) further observed that there was also substance in the counsel s argument that the purchases/ sales / gross profit relating to kerosene oil business as shown in the regular books of accounts stood undisturbed by the AO. Keeping in view the facts and circumstances, we are of the view that AO has not pointed out any defect in the trading account pertaining to the oil business nor provisions of section 145 of I.T. Act were applied in assessee s case. Thus, without rejection of the trading account of the assessee, any addition on account of premium from the sale of the same oil which already stood reflected in the trading account was not legally justified. CIT(A) has rightly held that the evidence found in the form of loose papers / diary form the premises of M/s Kumar Oils and M/s Shyam lal Bala Prasad could not be utilized as a valid evidence against the assessee once the assessment in the case of M/s Kumar Oil was made on the returned income NIL. CIT(A) has rightly held that as per the provisions of section 158BC of the Act the evidence recovered from the premises of M/s Kumar Oils and M/s Shyam Lal Bala Prasad could not be made the basis for making addition of undisclosed income in the hands of the assessee - Decided against revenue. Addition on account of extra premium - CIT(A) deleted the addition - Held that - Keeping in view of the facts and circumstances of the case as explained above, and also in view of the well reasoned Order passed by the Ld. CIT(A) on the issue in dispute, we find no infirmity in the impugned Order on this issue and hence, we uphold the same by dismissing the appeal filed by the Revenue - Decided against revenue.

Summary

Issues Involved:
1. Applicability of reliance on certain judgments by the assessee.
2. Deletion of addition of Rs. 44,60,881/- on account of premium of Kerosene Oil.
3. Deletion of addition of Rs. 25,000/- on account of extra premium.

Issue-Wise Detailed Analysis:

1. Applicability of reliance on certain judgments by the assessee:
The Revenue contended that the Ld. CIT(A)-II, Dehradun erred in law by accepting the reliance placed by the assessee on certain judgments which were not applicable to the assessee's case. The Tribunal, however, did not find substantial discussion or separate analysis on this specific issue in the judgment. The focus was more on the factual matrix and the evidence presented during the proceedings.

2. Deletion of addition of Rs. 44,60,881/- on account of premium of Kerosene Oil:
The Tribunal examined the facts and submissions, particularly the discrepancies and defects pointed out by the AO based on the seized material. The Ld. CIT(A) concluded that these discrepancies did not substantiate the inference that the assessee received a premium on the sale of kerosene oil. The Tribunal noted that the AO did not identify any defects in the trading account related to the oil business, nor were the provisions of section 145 of the I.T. Act applied to the assessee's case. Without rejecting the trading account, any addition on account of premium from the sale of the same oil, which was already reflected in the trading account, was deemed legally unjustified.

The Tribunal upheld the Ld. CIT(A)'s view that the evidence in the form of loose papers and diaries from third parties (M/s Kumar Oils and M/s Shyam Lal Bala Prasad) could not be used as valid evidence against the assessee, especially since the assessment for M/s Kumar Oils resulted in a NIL income. The Tribunal referenced the ITAT, Mumbai Bench's decision and the Supreme Court's decision in CBI vs. VC Shukla, emphasizing that such evidence could not form the basis for additions in the assessee's hands without corroborative evidence. Consequently, the deletion of the addition of Rs. 44,60,881/- was upheld.

3. Deletion of addition of Rs. 25,000/- on account of extra premium:
The Tribunal, considering the facts and circumstances and the well-reasoned order of the Ld. CIT(A), found no infirmity in the deletion of the addition of Rs. 25,000/- on account of extra premium. The Tribunal upheld the Ld. CIT(A)'s decision, dismissing the Revenue's appeal on this issue as well.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the Ld. CIT(A)'s order which deleted the additions of Rs. 44,60,881/- and Rs. 25,000/- on account of premium and extra premium of Kerosene Oil, respectively. The Tribunal emphasized the lack of corroborative evidence and the improper basis for the additions made by the AO. The judgment was pronounced in the Open Court on 25.3.2015.