1991 (6) TMI 105 - AT - Income Tax

Issues Involved:

1. Addition of Rs. 21,840 representing profit on consignment sales.
2. Addition of Rs. 1,95,366 as income from trucks.
3. Addition of Rs. 31,847 under s. 43B for unpaid sales-tax liability.
4. Disallowance of car expenses to the extent of 1/4th.
5. Disallowance of telephone expenses to the extent of Rs. 4,000.
6. Addition of Rs. 7,530 in respect of miscellaneous expenses.
7. Addition of Rs. 55,600 in respect of replacement of tyres.
8. Addition of Rs. 4,35,367 in the Hing account.
9. Charging and sustaining of interest under s. 215/217 of the Act.

Detailed Analysis:

1. Addition of Rs. 21,840 Representing Profit on Consignment Sales:

The Tribunal noted that similar issues had been addressed in previous assessment years (1983-84, 1984-85, and 1985-86), where the additions were deleted. Respectfully following these precedents, the Tribunal deleted the addition of Rs. 21,840 for the current assessment year.

2. Addition of Rs. 1,95,366 as Income from Trucks:

The assessee's counsel submitted that a similar addition for the assessment year 1985-86 had been remitted back to the Assessing Officer for fresh disposal. The Tribunal, agreeing with this approach, remitted the matter back to the Assessing Officer for a fresh decision after affording a reasonable opportunity of being heard to the assessee.

3. Addition of Rs. 31,847 under s. 43B for Unpaid Sales-Tax Liability:

The Tribunal upheld the disallowance of Rs. 31,847 under s. 43B due to unpaid sales-tax liability, in line with the decisions of the jurisdictional High Court and the Special Bench of the Tribunal. However, the Tribunal directed the Assessing Officer to allow a deduction when the payment is made and to allow deductions for any amount paid out of the disallowed sum of Rs. 72,366 for the assessment year 1985-86.

4. Disallowance of Car Expenses to the Extent of 1/4th:

The Tribunal noted that for the assessment years 1984-85 and 1985-86, car expenses for personal use had been restricted to 1/5th. Accordingly, the Tribunal restricted the disallowance on account of car expenses to 1/5th of the total claim for the current year.

5. Disallowance of Telephone Expenses to the Extent of Rs. 4,000:

The Tribunal found that the total claim for telephone expenses for the assessment year 1985-86 was Rs. 56,040, with a disallowance of Rs. 2,000. For the current year, with a total claim of Rs. 57,772, the Tribunal directed the disallowance to be restricted to Rs. 2,000, granting the assessee relief of Rs. 2,000.

6. Addition of Rs. 7,530 in Respect of Miscellaneous Expenses:

The Tribunal found considerable force in the assessee's submissions that the payment of Rs. 7,530 to the Bombay police was essential for the smooth operation of its truck business. The expenditure was deemed wholly and exclusively for business purposes and allowable as a deduction under s. 37(1) of the Act. The Tribunal directed the deletion of this addition.

7. Addition of Rs. 55,600 in Respect of Replacement of Tyres:

The Tribunal noted that a specific ground regarding this addition had been raised before the CIT(A), who omitted to address it. The Tribunal directed the CIT(A) to deal with this ground on its merits.

8. Addition of Rs. 4,35,367 in the Hing Account:

The Tribunal analyzed the confusion arising from the identical number of bags sent by the assessee and M/s Sunder Lal. It was concluded that sufficient stock was available with the assessee at Bombay to account for the sales made before the consignment from M/s Sunder Lal arrived. The Tribunal directed the deletion of the addition of Rs. 4,35,367, finding no justification for the addition based on the Departmental authorities' reasons.

9. Charging and Sustaining of Interest under s. 215/217 of the Act:

The Tribunal held that interest under s. 215 or 217 is mandatory and that the lack of a speaking order does not vitiate the order itself. The Assessing Officer's direction to charge interest was upheld, but the Tribunal directed the Assessing Officer to recompute the interest chargeable based on the income finally determined as a result of the Tribunal's order.

Conclusion:

The appeal was allowed in part, with several additions being deleted and some matters remitted back to the Assessing Officer or CIT(A) for fresh consideration. The Tribunal's directives ensured that deductions and disallowances were aligned with precedents and statutory provisions.

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