Aslam Parveez Vs CIT (ITAT Bangalore)
Bangalore ITAT Deletes Disallowance of ₹99.24 Lakh – Genuine Business Expenses Cannot Be Rejected on Ad Hoc Basis When Supported by Evidence
The Bangalore ITAT held that hulling/curing charges incurred by a coffee trader for processing raw coffee beans into marketable coffee were wholly and exclusively for business purposes and allowable under section 37(1). The Tribunal observed that the assessee had produced ledger extracts, invoices and bank statements, establishing the genuineness of the expenditure. Since the assessee outsourced coffee processing on a job-work basis due to the absence of its own curing facility, the expenditure could not be treated as unexplained merely because the Assessing Officer doubted the nature of the business. Accordingly, the disallowance of ₹88,00,966 was deleted.
The Tribunal also deleted the 25% ad hoc disallowance of agricultural expenses amounting to ₹11,23,929. It noted that the assessee had furnished complete details of diesel, fertiliser and pesticide expenses, labour, transportation, agricultural loan interest, along with supporting bills, vouchers, bank statements and cash records. The Revenue had not identified any specific unsupported expenditure. The ITAT held that ad hoc disallowances are unsustainable where proper documentary evidence is available, and directed the Assessing Officer to delete the addition. The appeal was partly allowed, with the substantive additions deleted while unargued procedural grounds were dismissed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
