Case Law Details
Shivam Tractor Vs ITO (ITAT Raipur)
ITAT Raipur held that ad-hoc disallowance of expenditure without specifying expenditure which was either not incurred for the purpose of business or was not substantiated by documentary evidence/material is unsustainable in law.
Facts- The assessee company, which is engaged in the business of trading tractors, trolleys, and spare parts, had filed its return of income for A.Y. 2013-14, declaring an income of Rs. 4,93,500/-. The case of the assessee was, thereafter, selected for scrutiny assessment u/s. 143(2) of the Act. AO vide his order passed u/s. 143(3) assessed the income at Rs. 27,39,900/- after making various additions/disallowances.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that the A.O. had, without placing on record any material, summarily observed that the assessee firm had sold the gyrovator out of its unaccounted purchases. In my considered view, if the purchase of the gyrovator was accounted for in the books of accounts of the assessee firm, then addition in its case was liable to be restricted only to the extent of profit which it would be made by carrying out the sale of the same outside its books of account. However, as the aforesaid fact would require verification, therefore, in all fairness, the matter is restored to the file of the A.O. with a direction to re-adjudicate the same after carrying out necessary verification as regards the authenticity of the claim of the assessee firm.
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