1980 (3) TMI 128 - AT - Income Tax

Summary

Issues: Disallowances of expenses - Coal & fuel, land revenue, manufacturing expenses

The judgment by the Appellate Tribunal ITAT GAUHATI involved appeals by the assessee challenging disallowances made by the ITO in the assessment years under appeal. The ITO disallowed expenses under various heads, including coal & fuel expenses, land revenue, and manufacturing expenses. The AAC upheld these disallowances based on past practices. The assessee contended that each assessment year should be considered independently, and disallowances should be based on the facts of the specific year. The Departmental Representative supported the lower authorities' decisions. The Tribunal noted that each assessment year is distinct, and disallowances must be justified based on the merits of that year. They held that disallowances made without proper basis should be deleted. The Tribunal cited a Calcutta High Court case emphasizing the need for the ITO to apply an independent mind and not automatically follow earlier orders.

On the disallowance of coal & fuel expenses, the AAC sustained the disallowance despite the coal and fuel being utilized in the garden, citing past practices. However, the Tribunal disagreed, emphasizing the need for disallowances to be justified on a yearly basis and deleted the disallowance due to lack of proper basis. Regarding the disallowance of land revenue, the AAC relied on earlier directions, but the Tribunal reiterated the need for independent assessment each year and deleted the disallowance. Similarly, on the disallowance of manufacturing expenses, the AAC upheld the disallowance based on past years, but the Tribunal ruled in favor of the assessee, emphasizing the importance of assessing each year independently and deleted the disallowance.

The Tribunal's decision highlighted the principle that each assessment year should be treated as separate and disallowances must be based on the specific facts of that year. The judgment serves as a reminder that disallowances cannot be made on a blanket basis without proper justification. The case underscores the importance of the assessing officer applying an independent mind and not automatically following past decisions. Ultimately, the appeals by the assessee were allowed, and the disallowances were deleted based on the lack of proper basis and the need for independent assessment each year.