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Issues:
1. Reduction of disallowance of expenditure on fuel. 2. Deletion of disallowance out of salary. Reduction of disallowance of expenditure on fuel: The appeal filed by the Department against the order of the CIT(A) regarding the reduction of disallowance of expenditure on fuel from Rs. 1,31,870 to Rs. 21,870 was considered. The AO had initially disallowed a higher amount of expenditure on wood and fuel, which was reduced by the CIT(A) on appeal. The Tribunal analyzed the evidence on record, noting that the assessee had achieved higher job receipts and gross profit in the relevant year compared to previous years. The Tribunal observed that the assessee had submitted complete details of wood and fuel expenses, and the expenditure on these items depended on the quality of dyeing and materials used. Since the AO did not find any defects in the details submitted by the assessee, the Tribunal held that the addition was unwarranted. It was also noted that past GP rates and fuel consumption declared by the assessee had been accepted by the Revenue previously. Therefore, the Tribunal upheld the CIT(A)'s decision and dismissed the Department's appeal on this ground. Deletion of disallowance out of salary: The issue of deletion of disallowance out of salary amounting to Rs. 62,000 was also addressed in the judgment. The assessee had claimed total expenditure on salary and wages, which had decreased despite an increase in job receipts. The AO questioned the genuineness of the number of employees, leading to additions in the assessment. However, the CIT(A) deleted these additions in appeal. During the Tribunal proceedings, both parties reiterated their arguments. The Tribunal considered that since there had been no disallowance in the past regarding such salary payments, disallowance based on ad hocism could not be upheld. Moreover, the decrease in salary expenditure despite an increase in job receipts supported the assessee's claim. Therefore, the Tribunal concluded that the Department's appeal was to be dismissed in this regard. ---
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