ORDER
B.M. Kothari, A.M.
1. This appeal by the assessee is directed against the order of CIT(A) for asst. yr. 1991-92.
2. The first ground raised by the assessee is that the assessment order as framed by the learned AO and as confirmed by the CIT(A) is bad in law and on facts. At the time of hearing, the learned counsel submitted an application dt. 7th March, 2000 under r. 11 of the Appellate Tribunal Rules, 1963, for raising an additional ground, reading as under :
“1. That the learned CIT erred in not adjudicating the ground No. 7 of the ground of appeal before CIT(A) regarding status, of the appellant, on the plea that matter has been separately dealt with in appeal for asst. yr. 1988-89.”
3. The learned counsel submitted that the additional ground so raised by the assessee is purely a legal question and is included in the general ground No. 1 already taken in the aforesaid appeal. The refusal to grant renewal of registration and treating the firm as AOP is unjustified, arbitrary in the facts and circumstances of the present case particularly when registration has been subsequently granted under s. 186 in the base year, i.e. 1988-89 by the AO himself. The learned counsel also submitted that question relating to status can be validly raised in the composite appeal disputing various additions as well as the status. For this proposition, he relied upon the judgment of the Hon’ble Rajasthan High Court in Ansari Jewellers vs. CIT (1987) 167 ITR 380 (Raj) and judgment of Gujarat High Court in Dalpatbhai Damjibhai vs. CIT (1994) 205 ITR 144 (Guj).
4. The learned counsel drew our attention to the finding given by the learned CIT(A) in the present case for asst. yr. 1991-92. The CIT(A) has dealt with this point as under :
“The AO has assigned the status of AOP to the appellant-firm, but this is the subject-matter of separate appeal and has been dealt with vide my order No. 60/1994-95 of even date separately for asst. yr. 1988-89 and hence I do not feel the necessity of adjudicating this point in this appeal.”
5. The learned counsel invited our attention to the order passed by the AO under s. 186(1)/250 of the IT Act, 1961, asst. yr. 1988-89. The learned AO after considering the entire relevant facts and circumstances granted registration to the appellant firm in the base year 1988-89. A copy of this order has been placed at pp. 23-33 of the assessee’s paper book. The learned counsel submitted that this order passed by the AO for asst. yr. 1988-89 has achieved finality and has not been subjected to any revision under s. 263 or under s. 147 of the Act. The counsel further pointed out that the continuation of registration for the year under consideration, namely, asst. yr. 1991-92 was refused only on the ground that the registration was refused to the assessee-firm for asst. yr. 1988-89. Since now the registration for base year 1988-89 has been allowed by the AO after considering the matter afresh pursuant to an order of the CIT(A), the matter is finally concluded in favour of the assessee. The assessee is entitled to grant of continuation of registration in asst. yr. 1991-92 and the AO should be directed to take the status of the assessee-firm as that of a registered firm.
6. The learned Senior Departmental Representative after going through the order of the AO, dt. 20th December, 1996, for base year 1988-89, agreed with the assessee’s submission that once registration is granted to the assessee-firm for the base year, the firm would be entitled to grant of benefit of continuation of registration in subsequent years. The learned Senior Departmental Representative also did not dispute the factual position that the other conditions for grant of benefit of continuation of registration under s. 184(7) have already been complied with Shri Gurjar also did not object to the entertainment of additional ground.
7. We have considered the submissions made by the learned representatives of the parties and have perused the various documents submitted in the compilation to which our attention was drawn during the course of hearing.
8. It is well settled law that the assessee can challenge the point relating to status as well as various additions in a composite appeal. Such a view is fortified by the two judgments relied upon by the learned counsel, including the judgment of the jurisdictional High Court in the case of Ansari Jewellers vs. CIT (supra). It is an undisputed fact that the firm has been granted registration under s. 186(1)/250 vide order dt. 20th December, 1996 in asst. yr. 1988-89. That order has achieved finality. The firm has complied with all other conditions under s. 184(7). The firm is, therefore, clearly entitled to grant of benefit of continuation of registration under s. 184(7) of the IT Act, 1961. The AO is directed to take the status of the assessee as registered firm for the year under consideration.
9. Ground Nos. 2 and 3 relate to confirmation of addition of Rs. 8,000 and Rs. 5,390 in diesel account and petrol expenses respectively on account of alleged excessive shortage. The assessee has maintained proper books of account. The entire purchases are supported by vouchers. The complete quantitative details have been maintained. The office of Indian Oil Corporation vide their letter dt. 26th June, 1996, have confirmed that 1 per cent handling loss should be allowed to the dealers on total receipts. Thus the oil company regards 1 per cent shortage as normal shortage. Shortage claimed by the assessee in diesel and petrol account in the year under consideration is less than 1 per cent. The books of account have been audited. No trading additions have been made in the past years. On a careful consideration of the entire relevant facts, we are of the view that there is no justification for sustaining any part of the addition in the declared trading results of diesel account and petrol account. The AO is, therefore, directed to delete the additions of Rs. 8,000 and Rs. 5,390 confirmed by the CIT(A) in diesel account and petrol account respectively.
10. The next ground relates to confirmation of an addition of Rs. 2,500 in oil a/c. It was submitted by the assessee before the learned Departmental authorities that it is practically impossible to issue bill to each and every customers for sale of a small quantity of oil. The bill for sale of oil is issued in the evening. The disallowance of Rs. 2,500 on total sale of oil of Rs. 10,06,225 is merely an attempt to tinker with the declared trading results. The quantity of oil given to the respective employees at the petrol pump in the morning is measured and supplies made by them along with sale of petrol of scooter and moped are recorded at the end of the day after taking into consideration the stock of oil at that time. The rate is fixed and the same is well known to the scooter/moped owners. We are of the view that the disallowance of Rs. 2,500 cannot be validly sustained. The AO is directed to delete the same.
11. The next ground relates to confirmation of the disallowance of Rs. 1,000 out of tent expenses and Rs. 1,022 out of telephone expenses. The assessee submitted that during summer season, a tent is placed above the petrol pump for protecting the customers from heat. Total payment of tent charges was Rs. 4,875 which is verifiable from the bills given by tent house. The details of payments made to tent house has been furnished at p. 13 of the paper book. We, therefore, do not find any justification for sustaining a disallowance of Rs. 1,000 out of tent expenses.
12. As regards disallowance of Rs. 1,022 out of telephone expenses, no arguments were advanced by the learned counsel of the assessee. Hence, the disallowance of Rs. 1,022 out of telephone expenses is confirmed.
13. In the result the appeal is partly allowed.