1981 (12) TMI 45 - AT - Income Tax

Summary

Issues involved:
1. Addition of Rs. 16,611.25 on account of sales at reduced rates in the last fortnight of the year.
2. Disallowance of deduction claimed for payment made to Excise Department for raids conducted for unearthing illicit liquor production.
3. Disallowance of Rs. 500.

Detailed Analysis:
1. The first issue in this appeal pertains to the addition of Rs. 16,611.25 on account of sales at reduced rates in the last fortnight of the year. The Income Tax Officer (ITO) discovered a discrepancy in the sales amount shown in the books compared to the actual sales, leading to the addition. The assessee explained that the sales were at reduced rates to clear stocks before the license expired. The Commissioner of Income Tax (Appeals) (CIT (A)) disagreed with the ITO's addition and enhanced it by Rs. 8,661. However, the Appellate Tribunal found merit in the assessee's explanation, citing a similar precedent, and held that the addition was unjustified. Consequently, the Tribunal directed the deletion of the addition of Rs. 16,611.

2. The second issue concerns the disallowance of a deduction claimed by the assessee for a payment made to the Excise Department for raids conducted to unearth illicit liquor production. Both lower authorities disallowed the deduction due to lack of supporting vouchers. The Appellate Tribunal criticized the Revenue's approach, emphasizing that in such cases where dealers assist in raids, strict proof may not be feasible. The Tribunal highlighted the need to assess the genuineness and reasonableness of the expenditure. As the lower authorities did not evaluate these aspects, the Tribunal remanded the issue back to the CIT (A) for a detailed assessment based on the genuineness and reasonableness of the expenditure.

3. The third issue involves the disallowance of Rs. 500, as raised by the assessee. Upon reviewing the findings of the CIT (A), the Appellate Tribunal declined to interfere with the addition, indicating that the assessee failed to establish a case for challenging the disallowance.

In conclusion, the appeal filed by the assessee was partly allowed, with the Tribunal ruling in favor of the assessee on the first issue and remanding the second issue back to the CIT (A) for further evaluation.