Handling loss in petrol pump allowed as it was within permissible limit under Essential Commodities Act

Addition for handling loss in petrol pump allowed as it was within permissible limit of 0.75% prescribed by Essential Commodities Act

ABCAUS Case Law Citation
ABCAUS 3548 (2021) (09) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the addition made by Assessing Officer (AO) on account of alleged unreported sales.

The assessee was engaged in the business of running a Petrol Pump.

The AO held that from the audited books of account, it was deciphered that the handling loss of Unleaded Petrol as shown in closing stock was 6.3% of the total value sold by the assessee. 

The AO held that according to the Essential Commodities Act, the upper limit of allowable handling loss is 0.75% only. Therefore, the AO disallowed the differential quantity on account of unreported sales.  

The CIT(A) confirmed the same on the ground that the assessee did not bring any new facts on record to justify the higher handling loss.

The Tribunal observed that as per chart filed by the assessee, that there are two types of sales i.e., normal sales and premix sales.

The Tribunal noted that as contended by the assessee, the handling loss of the assessee during the year was just 0.68% when both type of sales are taken In the instant appeal, the assessee had challenged the order of CIT(A) in confirming consideration.

The Tribunal also noted that as per the assessee, the amount appearing in tax audit report was just a clerical mistake which was admitted by the auditor.

The Tribunal remanded the matter to the file of AO to reconcile the stock and allow the handling losses on re-computation.

Thus, the ITAT allowed the appeal in favour of the assessee.

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