2011 (6) TMI 679 - AT - Income Tax

Summary

Issues:
1. Deduction of sale value from the opening written down value of cars
2. Non-consideration of depreciation for the purchase of new cars
3. Summary disallowance of expenses

Analysis:

Issue 1: Deduction of sale value from the opening written down value of cars
The appellant, engaged in cab operation, filed a return declaring income. During scrutiny, the Assessing Officer proposed estimating the sale price of four cars and deducting it from the opening written down value. The appellant claimed depreciation for new cars, but evidence was not produced. The Assessing Officer also proposed a 10% disallowance on various expenses. The Commissioner of Income-tax (Appeals) upheld the Assessing Officer's decision, stating the appellant failed to provide necessary documents during scrutiny. However, the ITAT Chennai found that the appellant was not given sufficient opportunity by the authorities to present its case. The ITAT set aside the previous decisions and remitted the issues back to the Assessing Officer for reconsideration.

Issue 2: Non-consideration of depreciation for the purchase of new cars
The Assessing Officer proposed disallowance of depreciation for new cars due to lack of evidence for the purchase. The Commissioner of Income-tax (Appeals) agreed with this decision. The ITAT Chennai noted discrepancies in the assessment process, where the appellant was not given proper opportunities to present evidence. The ITAT directed the Assessing Officer to reevaluate the issue and instructed the appellant to cooperate and provide necessary records for justifying its claims.

Issue 3: Summary disallowance of expenses
The Assessing Officer proposed a summary disallowance of 10% on various expenses claimed by the appellant. The Commissioner of Income-tax (Appeals) upheld this decision, stating the appellant did not utilize opportunities to furnish required documents. The ITAT Chennai, however, found that the appellant was not given adequate chances to present its case. As a result, the ITAT set aside the previous decisions and remanded the issues back to the Assessing Officer for fresh consideration. The appellant was instructed to cooperate and provide satisfactory records for the claims.