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TMI Blog1993 (8) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... out of vehicle expenses from 1/3 to 1/4 and also erred in reducing telephone expenses from Rs. 39,750 to Rs. 3,500. (iv) The CIT (A) erred in deleting the addition of Rs.90,000 made by the A.O. on the basis of system of accounting regularly followed by the assessee. (v) The CIT(A) erred in deleting the disallowance of Rs. 14,500 for not charging interest from sister concern. (vi) The CIT(A) erred in deleting interest charged under section 215 of the Income-tax Act. 2. Ld. representatives of the parties are heard. Ground No. (i)--- 3. The facts as to claim of Rs. 25,515 on account of Mehta Sukhadi and of Rs. 3,137 on account of tanker bharai have been lucidly stated by the CIT(A) in paras 1 to 7 of his order. He has explained a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd further estimated the income from tanker at Rs. 1,25,000. He did not at all take notice of the fact that the tanker in possession of the assessee in the Assessment year 1988-89 was purchased in the Assessment year 1981-82 and was depreciated much in value in the instant Assessment year 1988-89. He did not remain satisfied by making such unreasonable and exorbitant estimate but made addition of the entire amount of Rs. 1,25,000 to the income of the assessee without allowing deduction of Rs. 38,951 which was shown by the assessee as income from the tanker and was included in the return of income at Rs. 4,15,504 which was taken as the basis for computation of the income by the AO. 5. The CIT(A) considered these facts. He also took into ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Tribunal to support such perversity of the AO. We are constrained to make such observations because this is not the solitary instance of perversity in the assessment which when set right by the CIT(A) has been agitated by the Department in appeal before the Tribunal. It is needless to say that such attitude of the Department not only creates terror in the minds of the assessees and compels them to be dishonest but also results in waste of public time and money. Ground No. (iii)--- 7. The logic of the AO is that since there was increase in the size of the families of the partners of the assessee firm, personal use of the vehicles owned by the assessee firm was likely to increase, he thereby made disallowance of 1/3 of depreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e immediate preceding assessment year 1987-88. He, further, found that the total expenditure on telephones was claimed by the assessee at Rs. 1,26,315 for the intstant assessment year. He, therefore, following the assessment order for the immdiate preceding year restricted the disallowance to Rs. 3,500. 10. There is merit in the contention of the Id. counsel for the assessee that the assessee was mainly a broker and as such was doing its business not only from the business premises but also from the residence of the partners and the employees day and night by use of telephones. According to him, it was unrealistic to assume that out of the total expenditure of Rs. 1,26,315 on telephones, there was expenditure of Rs. 39,750 for personal us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the assessee. He expected the assessee to change its method of accounting which was being observed for the last many years and, therefore, he made addition of Rs. 90,000 to the income of the assessee. 12. The CIT(A) considered these facts and reached the conclusion that the addition of Rs. 90,000 was unjustified. 13. We find no merit in the grievance of the Revenue that the CIT(A) should not have deleted the addition. 14. There is mandate in section 145(1) of the Act that income chargeable under the head " Profit gains of business or profession " shall be computed in accordance with the method of accounting regularly implied by the assessee. Such mandate of law is not acceptable to the AO. He did not accept the method of acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an only observe that the AO has acted in an arbitrary manner to the extent of abuse of powers. It is painful to note that if such types of assessments are being made and are being supported by the Department by way of taking a second appeal before the Tribunal, there would be no end of such abuse of powers. Ground No. (vi)--- 18. The CIT(A) found that there was no direction in the assessment order for charging interest under section 215 of the Act, even then it was charged in the demand notice. He, therefore, deleted such demand. The Department is aggrieved by even such a plain and simple order. It is needless to say that there cannot be any notice of demand in variance with any order passed under the Act. It is clearly mentioned in s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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