1994 (12) TMI 133 - AT - Income Tax

Summary

Issues involved: Appeal against CIT(A) order for asst. yr. 1990-91 - 1. Estimation of yield and sales price, 2. Disallowance of miscellaneous expenses.

Estimation of Yield and Sales Price: The assessee, a firm in the business of manufacturing colored stones, maintained proper books of accounts and stock register. The Assessing Officer estimated yield at 25% due to lack of day-to-day manufacturing account, making a trading addition of Rs. 1,02,711. CIT(A) reduced the yield estimate to 22%. Assessee's counsel argued for deletion of addition based on historical yield data and nature of natural stones. Departmental Representative cited similar firms with higher yields. The ITAT Jaipur upheld the assessee's contention, noting consistent accounting practices and lack of previous adverse inferences by Revenue authorities. The trading addition was deleted in full.

Disallowance of Miscellaneous Expenses: The ITAT Jaipur also addressed the disallowance of Rs. 500 from miscellaneous expenses. It was held that ad hoc disallowances without cogent reasons are unsustainable. Assessing Officer should objectively review unvouched expenses for fairness, reasonableness, and alignment with the business nature and volume. The ITAT directed that the Rs. 500 disallowance be reversed. As a result, the appeal succeeded in favor of the assessee.