Tribunal partially allows appeal, deletes addition, confirms disallowances, remands for verification.

The Tribunal partly allowed the assessee's appeal, deleting the addition of Rs. 21,99,867 and remanding the issue of Rs. 3,03,393 for verification. Disallowances for personal use of telephone and car expenses were confirmed. The appeal was partially successful, with specific instructions for further verification by the AO.

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Issues Involved:
1. Disallowance of the difference in the account of sundry creditor M/s ITC Ltd.
2. Disallowance of 1/5th of telephone and car expenses.
3. Treatment of various other disallowances made by the Assessing Officer (AO).

Detailed Analysis:

Issue 1: Disallowance of the Difference in the Account of Sundry Creditor M/s ITC Ltd.
The AO observed a discrepancy between the balance shown by the assessee and the confirmation received from M/s ITC Ltd., resulting in an excess credit of Rs. 25,91,620/- in the assessee's books. The assessee provided a reconciliation statement, attributing the difference to amounts debited by ITC but not credited by the assessee, cheques issued but not presented, and differences in opening balances. However, the AO concluded that the assessee had shown excess purchases by Rs. 21,99,867/- and further inflated purchases by Rs. 3,91,753/-, leading to an addition of Rs. 25,91,620/- to the declared income.

The Tribunal noted that the difference of Rs. 1,24,282/- pertained to an earlier year and should not be added in the current assessment year. The addition of Rs. 35,921/- was also incorrect and should be reduced by the AO. Regarding the main addition of Rs. 21,99,867/-, the Tribunal accepted the assessee's explanation that the credit notes were not accounted for due to a dispute over the returned goods, which were still shown as stock in the assessee's books. The Tribunal found this explanation reasonable given the nature of the business and deleted the addition. The issue of Rs. 3,03,393/- related to cheques issued but not presented was remanded to the AO for verification.

Issue 2: Disallowance of 1/5th of Telephone and Car Expenses
The AO disallowed 1/5th of the expenses incurred on telephone and car expenses, attributing it to personal use. The Tribunal found the disallowance reasonable and confirmed the same.

Issue 3: Treatment of Various Other Disallowances
The Tribunal addressed other disallowances made by the AO, which were confirmed by the CIT(A) on the grounds of personal use. The Tribunal upheld these disallowances, finding them reasonable.

Conclusion:
The Tribunal partly allowed the assessee's appeal for statistical purposes. The addition of Rs. 21,99,867/- was deleted, and the issue of Rs. 3,03,393/- was remanded for verification. Disallowances related to personal use of telephone and car expenses were confirmed. The appeal was thus partly successful, with specific instructions for further verification by the AO.

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