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2012 (10) TMI 282 - AT - Income TaxDis-allowance of expenses on adhoc basis without pinpointing any item which is of personal in nature - vehicle expenses motor car expenses depreciation on motor car - Held that - Assessee failed to establish that the entire vehicle expenses and motor car expenses were incurred wholly and exclusively for business purpose. The possibility of the assessee for use of non business purposes cannot be ruled out. However dis-allowance sustained in appeal by CIT(A) is on a higher side and dis-allowance is restricted to 10% of the claim. Addition made on ground of low household expenses - Held that - The undisputed fact is that the A.O. has made an estimation of household expenses which is not based on any evidence or material on record. In view of these circumstances we direct the A.O. to delete the addition. Dis-allowances on account of shortage in material - Held that - It is evident that assessee has submitted evidences before the A.O. that the vendor does not entertain the claim of the assessee whether the shortage is less than 100 kg. This is also a fact that the assessee has to buy the material in bulk and sell it in retail. It is not denied that the shortage/ deficit in the case of the assessee is less than 0.5% of the total purchases. It is also not denied that the explanation of the assessee that the shortage/deficit has been accepted in the earlier years in the order passed u/s. 143(3). There cannot be any thumb rule that no shortage will be allowable to the assessee - A.O. is directed to delete the addition - Decided partly in favor of assessee.
Issues:
1. Disallowance of expenses - Telephone, vehicle, and depreciation. 2. Addition on account of low household withdrawals. 3. Disallowance of shortage amount. Issue 1: Disallowance of Expenses The assessee challenged the disallowance of expenses related to telephone, vehicle, and depreciation. The Assessing Officer (A.O.) disallowed 20% of the expenses on an ad hoc basis due to lack of proper records. The CIT (A) upheld the disallowance, citing the possibility of personal use. The assessee argued that all vouchers were produced, relying on the Dineshchandra Shah case. The Tribunal found the disallowance justified but reduced it to 10% for fairness, directing the A.O. to modify the assessment accordingly. Issue 2: Addition on Account of Low Household Withdrawals The A.O. estimated household expenses based on family size and standard of living, adding Rs. 86,000 for low withdrawals. The CIT (A) upheld this estimation. The assessee contended that the addition was presumptive and incorrect in family size. The Tribunal found the estimation baseless and directed the A.O. to delete the addition, allowing this ground of the assessee. Issue 3: Disallowance of Shortage Amount The A.O. added Rs. 1,20,991 due to a shortage of material without supplier documents. The CIT (A) supported this decision. The assessee provided evidence of past accepted shortages and stock registers. Citing previous accepted shortages and the nature of business, the Tribunal directed the A.O. to delete the addition, aligning with the Dineshchandra Shah case. Consequently, the appeal of the assessee was partly allowed. This judgment by the Appellate Tribunal ITAT Ahmedabad involved challenges to various disallowances and additions made by the A.O., with the Tribunal providing detailed analysis and decisions on each issue raised by the assessee.
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