2012 (9) TMI 1146 - AT - Income Tax

Summary

Issues involved: Appeals filed by Revenue against CIT(A) orders for AY 2003-04 and AY 2004-2005.

For AY 2003-04:
The AO made additions on account of suppressed sales, gross profit rate, and lease rent. The CIT(A) deleted the additions, leading to the Revenue's appeal. The AO estimated production and sales outside books based on raw material consumption, which the assessee contested due to the nature of rubber components. The First Appellate Authority upheld the assessee's contentions, emphasizing the lack of opportunity given to the assessee and the flawed basis for estimating sales. The AO's error in not considering lease rent while calculating the GP ratio was corrected by the CIT(A), resulting in the dismissal of the Revenue's appeal.

For AY 2004-05:
The AO disallowed personal expenses claimed by the assessee, alleging fictitious loss and concealment of income. The CIT(A) found the expenses justified, especially regarding wages paid to leased workers, and dismissed the Revenue's appeal. The AO allowed certain expenses like director's remuneration, PF, and ESI, but disallowed a significant portion of personal expenses. The CIT(A) upheld the genuineness of the expenses based on evidence provided by the assessee, emphasizing that the AO cannot substitute his views for that of the businessman.

In both cases, the appeals of the Revenue were dismissed, and the orders of the CIT(A) were upheld.