1977 (1) TMI 82 - AT - Income Tax

Summary

Issues:
1. Disallowance of bad debts (Assessment year 1971-72)
2. Vegetable oil account (Assessment years 1971-72 & 1972-73)
3. Mustard oil account (Assessment year 1971-72)
4. Atta tax paid account (Assessment year 1972-73)
5. Sugar account (Assessment year 1973-74)
6. Losses in Badam oil account & Khandsari sugar account (Assessment year 1973-74)

1. Disallowance of Bad Debts (Assessment year 1971-72):
The assessee claimed bad debts totaling Rs. 1,370, which was disallowed by the authorities initially. The assessee argued that the debts were unrecoverable due to untraceable parties and the small amounts involved. The Tribunal found the assessee's contention reasonable, stating that pursuing litigation for such petty amounts was impractical. The claim of the assessee was allowed based on the lack of efforts to recover the debts and the trivial nature of the accounts.

2. Vegetable Oil Account (Assessment years 1971-72 & 1972-73):
The Income Tax Officer made additions to the declared gross profits of the assessee in both assessment years, which were upheld by the Appellate Assistant Commissioner. However, the Tribunal found that the additions were unjustified. Referring to a previous year's decision where similar additions were deleted due to proper maintenance of accounts, the Tribunal concluded that the additions to the vegetable oil account were unwarranted, especially considering the consistent acceptance of the assessee's book results by the Department.

3. Mustard Oil Account (Assessment year 1971-72):
In this account, an addition to the declared gross profit was made by the Income Tax Officer and upheld by the Appellate Assistant Commissioner. The Tribunal noted that in previous years, no additions were made, and the rate of gross profit was considered reasonable. Consequently, the addition was deemed unnecessary and deleted.

4. Atta Tax Paid Account (Assessment year 1972-73):
The Income Tax Officer added to the gross profit declared by the assessee, a decision upheld by the Appellate Assistant Commissioner. However, the Tribunal found that the rate of gross profit was consistent with previous years, where similar rates were accepted by the Department. Therefore, the addition was deemed unjustified and deleted.

5. Sugar Account (Assessment year 1973-74):
An addition was made to the gross profit declared by the assessee, which was upheld by the Appellate Assistant Commissioner. The Tribunal reviewed past assessments and found that similar additions were deleted previously due to proper maintenance of accounts and vouched transactions. Considering the history and the consistency of gross profit rates, the Tribunal deleted the addition in this assessment year.

6. Losses in Badam Oil Account & Khandsari Sugar Account (Assessment year 1973-74):
The authorities disallowed the claimed losses in these accounts, citing lack of proof and verifiability. However, the Tribunal noted that the assessee provided detailed evidence of sales and purchases, which were not found to have discrepancies. With no specific items being flagged as unverifiable and considering the acceptance of other accounts, the Tribunal accepted the claims of the assessee, leading to the allowance of the appeals.