2009 (8) TMI 3 - HC - Income Tax

Disallowance of expenses Expenses on of total fuel and firewood has been allowed in the earlier year but rejected in the current year by the AO whereas CIT(A) and ITAT allowed the expenses AO disallowed the expenses and made addition from inward and outward freight expenses on the basis that no bills were produced for such expenses CIT(A) and ITAT allowed the expenses on the GRN s (Goods Return Notes) issued by the transporters Held that - concurrent findings recorded by the CIT(A) as well as the Tribunal are based on appreciation of evidence order maintained.

Summary

Issues:
- Disallowance of fuel and firewood expenses
- Disallowance of inward and outward freight expenses

Analysis:
1. Disallowed Fuel and Firewood Expenses:
The appeal was filed by the revenue against the order of the Income Tax Appellate Tribunal (ITAT) deleting the addition of expenses made by the Assessing Officer. The Tribunal upheld the deletion of the addition. It was noted that the claim for firewood purchase was supported by documentary evidence like weighment slips. The Tribunal found that the assessee maintained proper records regarding the purchase of firewood. The Tribunal observed that the Departmental Representative (DR) failed to rebut this finding of fact. Consequently, the Tribunal found no infirmity in the order of the Commissioner of Income Tax (Appeals) granting relief to the assessee on this issue.

2. Disallowed Inward and Outward Freight Expenses:
The Assessing Officer disallowed inward and outward freight expenses, which was later deleted by the Commissioner of Income Tax (Appeals) and upheld by the Tribunal. The Tribunal noted that the assessee had maintained comprehensive and systematic records to demonstrate that the freight expenses were incurred exclusively for business purposes. The Tribunal found that the DR did not contest this finding of fact. Therefore, the Tribunal concluded that the adhoc disallowance made by the Assessing Officer was not sustainable. Consequently, the Tribunal upheld the order of the Commissioner of Income Tax (Appeals) deleting the disallowance of freight expenses.

3. Conclusion:
After hearing the arguments, the Court found that the concurrent findings by the Commissioner of Income Tax (Appeals) and the Tribunal were based on the evaluation of evidence. As no substantial question of law arose from the case, the appeal was dismissed.