1977 (12) TMI 55 - AT - Income Tax

Summary

Issues:
1. Addition of Rs. 15,425 on account of excessive shortage in Kapas A/c., Narma R.S. 89 A/c and Narma LSS A/c.
2. Disallowance of Rs. 735 out of Basa expenses.
3. Disallowance of Rs. 821 out of shop expenses.

Analysis:

Issue 1 - Addition of Rs. 15,425 on account of excessive shortage:
The assessee, a partnership concern with income from food grains, adhat, kapas, and narma, disputed the addition of Rs. 15,425 due to excessive shortage in various accounts. The Income Tax Officer (ITO) added this amount based on perceived excessive shortages compared to a comparable case. The assessee argued that the shortages were reasonable and varied based on quality and area factors. The Appellate Assistant Commissioner (AAC) upheld the addition, but the Tribunal found the shortages shown by the assessee to be reasonable based on historical data and deleted the addition.

Issue 2 - Disallowance of Rs. 735 out of Basa expenses:
The assessee claimed shop expenses of Rs. 4,735, including Basa expenses of Rs. 2,235. The ITO disallowed the entire Basa expenses and an additional Rs. 821, citing inadmissible expenses. The AAC partially allowed relief for Basa expenses but confirmed the disallowance of Rs. 735. The Tribunal found the disallowances justified based on the facts presented and declined to interfere with the decision.

Issue 3 - Disallowance of Rs. 821 out of shop expenses:
The disallowance of Rs. 821 out of shop expenses was confirmed by the AAC and upheld by the Tribunal as justified based on the information provided. The appeal succeeded in part, with the Tribunal deleting the addition of Rs. 15,425 related to excessive shortages but declining to interfere with the disallowances of Rs. 735 and Rs. 821 in Basa and shop expenses, respectively.