2002 (8) TMI 257 - AT - Income Tax

Summary

Issues involved:
1. Addition in lorry hire, tax paid rice, and gram flour accounts.
2. Disallowance of loss sustained on auction sale.
3. Disallowance of telephone expenses.
4. Charging of interest under sections 234B and 234C.

Issue 1: Addition in lorry hire, tax paid rice, and gram flour accounts:
The assessee appealed against additions made by the Assessing Officer (AO) in various accounts. The assessee argued that even though they had agreed to certain additions, it was conditional, and further additions made by the AO were not warranted. The Central Information Commissioner (CIT) did not adjudicate on the additions on merits. The Income Tax Appellate Tribunal (ITAT) directed the CIT to review these additions on merits and delete them if not warranted, without being influenced by the agreed additions.

Issue 2: Disallowance of loss sustained on auction sale:
The assessee claimed a loss of Rs. 3,07,333 due to setting aside an auction sale. The loss was connected to business and not a capital loss. The High Court declared the title acquired by the assessee invalid, resulting in a loss. The ITAT examined the evidence, including renovation expenses and court orders, and concluded that the loss was incidental to the business and allowed the claim.

Issue 3: Disallowance of telephone expenses:
The ground related to disallowance of Rs. 10,000 towards telephone expenses was not pursued by the assessee's counsel and was dismissed for non-prosecution.

Issue 4: Charging of interest under sections 234B and 234C:
The charging of interest under sections 234B and 234C was deemed consequential and would follow based on the ITAT's orders on the previous issues. The appeal was partly allowed, with the ITAT directing the CIT to review certain additions and allowing the claim of loss sustained on the auction sale.