2018 (5) TMI 1719 - AT - Income Tax

Disallowance of job-work and cost of repairs - Held that - Assessee is engaged in the business of repair and services of the vehicles - after considering the nature of business of the assessee and total volume of business conducted by assessee and income so declared, facts and circumstances of the case in the light of it being a old case of A.Y. 2001-2002 and only small disallowance is under consideration, addition should be deleted - Decided in favor of assessee.

Summary

Issues:
Challenging disallowance of expenses on job work and cost of repairs incurred by assessee for A.Y. 2001-2002.

Analysis:
The appeal was against the disallowance of ?13,68,500 out of job-work and cost of repairs. The CIT(A) had upheld the disallowance made by the Assessing Officer (A.O.), leading to the appeal before the Tribunal. The Tribunal had earlier restored the issue of disallowance back to the A.O. for further examination. The A.O. gave the assessee an opportunity to prove the genuineness of the expenses but noted that the books of account and petty cash book were not produced. The A.O. then made the addition of ?13,68,500. The assessee contended that all entries were recorded in the books of account and supported by vouchers, with small expenses recorded in the petty cash book. However, the CIT(A) dismissed the appeal stating that the petty cash book was not produced as promised.

The assessee argued that they had submitted additional evidence before the CIT(A), including ledger accounts, vouchers, and petty cash book details, which were not considered. The Tribunal noted that the nature of the business required incurring such expenses and that the earlier order of the CIT(A) did not exist in the eye of the law as it was set aside by the Tribunal. The Tribunal found that the explanation and material produced by the assessee were not properly considered. Considering the nature of the business, the volume of business conducted, and the income declared, the Tribunal decided to delete the addition of ?13,68,500. The Tribunal allowed the appeal of the assessee, setting aside the orders of the authorities below and deleting the disallowance.

In conclusion, the Tribunal allowed the appeal of the assessee, deleting the addition of ?13,68,500, considering the nature of the business, the volume of business conducted, and the evidence produced by the assessee, which was not properly considered by the authorities below.