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of <h1>Appellate Tribunal favors assessee in wholesale tea dealer case, overturning lump sum income addition and disallowance of expenses.</h1> <h3>LADAKCHAND JIVRAJ & SONS. Versus INCOME TAX OFFICER.</h3> The Appellate Tribunal ruled in favor of the assessee in the case involving a wholesale tea dealer. The Tribunal found no justification for a lump sum ... - Issues: Lumpsum addition due to low percentage of G.P., Disallowance of Kharajat expenses, Charge of interest under s. 215 of the ActLumpsum addition due to low percentage of G.P.:The case involved a wholesale tea dealer whose Gross Profit (G.P.) percentage decreased from 7.9% to 5% in the assessment year. The Assessing Officer (AO) made a lump sum addition of Rs. 30,000 due to the inability of the assessee to provide quantity details in kilograms. The Commissioner of Income Tax (Appeals) [CIT(A)] reduced the addition to Rs. 15,000, citing defects in the quantity accounts. However, the Appellate Tribunal found that there was no justification for the addition as the assessee had consistently shown varying G.P. rates in line with market conditions. The Tribunal noted that the AO failed to provide evidence of unaccounted goods or unreliable sales rates, leading to the deletion of the addition.Disallowance of Kharajat expenses:The AO disallowed Rs. 3,000 out of Kharajat expenses to prevent possible leakage from various expense claims. The CIT(A) reduced the disallowance to Rs. 1,000, considering some items as unvouched. However, the Appellate Tribunal found no justification for any disallowance, emphasizing the lack of verification or vouching of claimed expenses. Consequently, the Tribunal deleted the disallowance, highlighting the necessity of proper verification before resorting to disallowances.Charge of interest under s. 215 of the Act:The last issue pertained to the charge of interest amounting to Rs. 2,119 under section 215 of the Income Tax Act. The Tribunal deemed this charge as consequential and directed its modification. The Appellate Tribunal modified the CIT(A)'s order and instructed the AO to pass appropriate orders for the assessee and its partners. As a result, the appeal was allowed, and the cross-objection was dismissed, concluding the judgment.
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