2018 (8) TMI 925

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....A No. 443/LKW/2013 in respect of the Assessment Year 2001-02. 2. The following questions of law have been formulated for consideration and decision by this Court:- "(I) Whether the ITAT was legally justified in making adhoc disallowance to consumable stores being part of manufacturing while accepting the manufacturing and trading results when there is no such provision in law under the Income Tax Act, 1961 to make partial disallowance on ad-hoc basis without rejecting books of accounts? (II) Whether the ITAT was correct in law in confirming the ad-hoc disallowance solely by taking percentage basis of consumption stores consumed in succeeding year ignoring the facts that the assessee is registered with the excise departm....

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....which were not questioned by the assessee. 4. Aggrieved by the aforesaid assessment order dated 31.03.2004 passed by the AO under Section 143(3) of the Act, the assessee filed an appeal before the CIT(Appeals)-I, Kanpur. The CIT(A) vide his order dated 28.03.2013 held that bills and vouchers were neither produced before the AO nor before the Commissioner himself. No stock register for such consumables was maintained. The CIT(A) also held that the assessee had failed to offer any plausible explanation in respect of disproportionate rise in the expenditure incurred on consumables as compared to the increase in sales/production. The CIT(A) was of the view that merely because most of the payments were made by the cheque (as claimed by the as....

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.... below. 7. Heard Sri Suyash Agrawal, learned counsel for the assessee and Sri Krishna Agrawal, learned counsel for the Revenue. 8. The appellant-assessee in support of its claim in respect of consumable stores did not produce any supporting evidence either before the AO or before the CIT(A) or before the Tribunal. All three authorities including ITAT, which is the last fact finding authority under the Act have concurrently held that the appellant-assessee could not substantiate its claim for such a high rise in the expenditure on this account if it was considered with the expenditure on this head incurred in the immediate preceding financial year. The learned CIT(A) as well as the learned Tribunal have made comparative study of the ex....