TaxTMI 
TaxTMI 
2012 (12) TMI 201
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.... stock of natural gas." 2. At the outset, it was pointed out by the ld. Counsel that the issue is squarely covered in favour of the assessee by the decision of the ITAT in assessee's own case for AY 2005-06. He pointed out that the assessee company is engaged in the business of distribution of natural gas as fuel. That for the year under consideration, in the original assessment order, the AO had made the addition of Rs. 2,37,66,448/- on account of reconciliation difference in the closing stock of gas. On appeal before the ITAT, it was explained by the assessee that the reason for unreconciled difference is on account of shortage/loss of natural gas for which the assessee had explained the following reasons:- "a) Natural gas is....
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....f the gas in the pipeline. This cannot be estimated accurately. e) There is no allowable tolerance in the accuracy of the meters and to the extent of this allowable tolerance, there can be a shortage." 3. It was explained by the assessee that the shortage is approximately 4% only and more or less similar shortage is shown in the preceding and subsequent years. After considering the submission of the assessee, the ITAT set aside the matter back to the file of the AO with the following observations:- "We also found that reconciliation difference as a percentage of purchase varies between 4.01% to 4.47% in the assessment years 2000-01 to 2004-05, which is information placed on the public balance sheet of the assessee. Accordingly, the....
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.... When the second round of appeal reached ITAT in AY 2005-06, the ITAT considered the whole issue and upheld the order of the CIT(A) wherein he has deleted the addition. In this year also, the CIT(A), in the second round of appeal, has deleted the addition and the revenue is in appeal. Thus, the facts of the year under consideration are absolutely identical to the facts in AY 2005-06 and, therefore, the decision of ITAT for AY 2005-06 would be squarely applicable. For the sake of ready reference, we reproduce herein below the arguments of parties and the finding of the ITAT for AY 2005-06:- "2. Before us, the ld. DR referred to the finding of the AO to the effect that the assessee has not furnished the details of quantity of gas available....
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....ely, whether the percentage of loss at about 3.46% of purchases had to be subjected to verification, as reasonable loss. Accordingly, it is argued that the addition made by the AO may be restored. 2.1 In reply, the ld. counsel referred to the finding of the Tribunal in its case for assessment year 2002-03. In this order, it has been mentioned that the reconciliation difference as percentage of purchases varies between 4.01% to 4.47% in assessment years 2000-01 to 2004-05, which is an information based on balance-sheet of the assessee. The percentage of loss which works out to be 4% of the purchases during the year under consideration appears to be reasonable, subject to verification. The intent of these observations was to find out the p....