2023 (3) TMI 309 - AT - Income Tax

Disallowance of Cartage Stores and Spares expenses - for want of relevant supporting vouchers - Though the AO has made @ 15%, CIT(A) restricted the same @ 10% - HELD THAT - In our considered opinion, the order of the CIT(A) in this regard is reasonable and does not need any interference on our part. Addition on account of Long Term Capital Gain has not been adjudicated by the CIT(A) though ground in this raised before him - Hence, in the interest of justice, we remand this issue to the of the CIT(A). CIT(A) is directed to pass an speaking order as per law.

Summary

Issues:
- Assessment made under section 143(3) for AY 2013-14 & 2014-15
- Disallowance of cartage expenses
- Disallowance of stores & spares expenses
- Non-adjudication of grounds raised by the appellant on account of LTCG

Analysis:
1. The appeals were consolidated and heard together for the sake of convenience. The AO disallowed expenses not supported by bills and vouchers, leading to a total disallowance of Rs.2,07,96,710. Additionally, a property transaction for Rs.2,42,28,800 in Chhatisgarh was noted, resulting in a Long Term Capital Gain of Rs.1,95,37,832.

2. Before the Ld. CIT(A), the assessee submitted detailed submissions and additional evidences under Rule 46A of the Income Tax Rules 1962. The Ld. CIT(A) deleted the addition on power and fuel expenses, reduced the cartage expenses disallowance to 10%, and restricted the stores & spares expenses disallowance to 10% due to noncompliance with notice u/s 133(6).

3. The ITAT noted that the disallowances made by the AO and confirmed by the Ld. CIT(A) were reasonable. The disallowance percentages were adjusted by the Ld. CIT(A) based on the nature of expenses and compliance issues. The ITAT remanded the issue of Long Term Capital Gain back to the Ld. CIT(A) for a speaking order.

4. In a similar case for AY 2013-14, the disallowances made by the AO were confirmed by the Ld. CIT(A). The ITAT upheld the Ld. CIT(A)'s decision, stating that the order was reasonable and did not require interference.

5. In conclusion, ITA No.4706/Del/2019 was partly allowed for statistical purposes, while ITA No.4705/Del/2019 was dismissed. The ITAT pronounced the order on 02nd February 2023.