CIT Vs. INDRAPRASTHA GAS LTD

JUDGEMENT

(1.) THIS appeal, which has been preferred by the revenue, is directed against the order dated 23.08.2011 passed by the Income Tax Appellate Tribunal in ITA3206/Del/2011 pertaining to the assessment year 2005 -06. The only issue that arises for consideration in this appeal is with regard to the figure of 3.46% of the purchases which has been shown as a reconciliation difference by the assessee. According to the assessee/respondent, the said 3.46% of the purchases in respect of the assessment year 2005 -06, is merely reflective of the normal wastage, which includes loss in transit. According to the assessee/respondent, this figure of 3.46% does not include any gas in the pipeline. The Learned Counsel for the revenue contended that a similar issue had arisen in respect of the earlier years, namely, assessment years 2002 -03 to 2004 -05. In those years, the Tribunal, by virtue of the order in respect of the assessment year 2002 -03 in ITA 989/Del/2006 dated 25.07.2008 held that the reconciliation difference as a percentage of purchases varies between 4.01% to 4.47% in the assessment years 2000 -01 to 2004 -05, which is based on the balance sheets of the assessee. Consequently, the Tribunal held as under: -

(2.) THE relevant portion of the impugned order reads as under: -

(3.) We have considered the facts of the case and submissions made before us. We are of the view that the AO was bound to follow the directions of the Tribunal furnished for this year in decision dated 22.4.2009, in which it is mentioned that the matter has already been restored to the file of the AO for assessment years 2002 -03 to 2004 -05. Accordingly, the matter was also restored to the file of the AO for this year. However, in the order for assessment year 2002 -03 dated 25.07.2008, a clear finding was given that loss of about 4% of purchases is reasonable subject to verification. Instead of verifying the percentage of loss, the AO reproduced his earlier order. The loss of 3.4% is borne out by audited accounts, which is lower than the average loss of about 4%. Therefore, there seems to be no reasonable cause to make the disallowance of reconciliation loss by stating that the details of stock lying in pipe lines were not furnished in qualitative or quantitative terms. What had to be verified was whether the loss was in the vicinity of 4%, which has been held to be reasonable by the Tribunal. In these circumstances, we do not find any error in the order of the ld. CIT (Appeals) which requires correction from us.