2026 (6) TMI 1388

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....20-21. By that order, the appeal against the assessment order passed under section 143(3) of the Income-tax Act, 1961 on 22 September 2022 was partly allowed. 2. The assessee is aggrieved by the order of the first appellate authority in sustaining the disallowance of Rs.88,00,966 claimed under section 37(1) as hulling/curing charges, treating the expenditure as unexplained, despite the assessee producing ledger extracts, invoices and bank statements to show that the expenditure was incurred wholly and exclusively for business purposes. 3. The assessee is also aggrieved by the ad hoc 25 % disallowance of agricultural expenses, of Rs. 1123929/- originally claimed at Rs.47,46,934, despite furnishing expense-wise details and supporting ev....

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....oth disallowances before the learned CIT(A)/NFAC. The first appellate authority confirmed the disallowance of Rs.88,00,966 on the ground that sufficient opportunities had been granted during assessment proceedings, but the assessee had not produced the required details. As regards agricultural expenses, the disallowance was restricted to 25% of Rs.44,95,718 after granting relief in respect of bank interest. Accordingly, the appeal was partly allowed. 7. Before us, the learned Authorised Representative submitted that the assessee had filed a detailed paper book before the learned CIT(A)/NFAC and had furnished complete details of the expenditure of Rs.88,00,966. It was explained that the assessee purchases raw coffee beans from planters an....

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....ulling and grading, and thereafter selling the processed coffee. These expenses were therefore incurred wholly and exclusively for the purposes of business and cannot be treated as unexplained. Accordingly, we direct the Assessing Officer to delete the disallowance of Rs.88,00,966. Ground No. 1 is allowed. 10. As regards the agricultural expenses, the Assessing Officer had made an ad hoc disallowance of 25% of the expenses on the ground that complete details were not available. However, before the appellate authorities and before us, the assessee furnished details of diesel expenses of Rs.2,19,391, fertiliser and pesticide expenses of Rs.15,48,675, interest on agricultural loan, and labour and transportation expenses of Rs.26,69,683, alo....