SHRI D.P.AGRAWAL,JABALPUR vs. ADDITIONAL COMMISSIONER OF INCOME TAX RENGE -1, JABALPUR

Assessee has raised following grounds of appeal:-

Briefly stated facts, as culled out from the records, are that the assessee is an individual engaged in the business of running Steel Re-rolling Mill. Income of Rs.13,24,730/- was declared by the assessee in the return of income filed on 31.10.2007. Case picked up for scrutiny assessment. Notices under section 143(2) and 142(1) were issued. Learned Assessing Officer completed the assessment after making disallowance of Rs.1,50,000/- for coal consumption and disallowance of Rs.20,000/- each for telephone and conveyance expenses. Income assessed at Rs.15,14,733/-.

Aggrieved, assessee preferred appeal before the ld. CIT(A) and partly succeeded. Learned CIT(A) confirmed the disallowance for coal consumption at Rs.1 lac and sustained disallowance for telephone and conveyance at Rs.10,000 each. Aggrieved, assessee is now in appeal before the Tribunal against the addition confirmed by the ld. CIT(A).

Learned Counsel for the assessee submitted that as regards to coal consumption, even though learned CIT(A) appreciated the contention of the assessee and was not convinced with the findings of the learned Assessing Officer, but still part of the disallowance was confirmed. On the other hand, ld. Departmental Representative supported the orders of the lower authorities.

We have heard the rival contentions and perused the material available on record. Apropos ground nos. 1 & 2 relating to the issue of disallowance of coal consumption, we find that learned Assessing Officer, on the basis of the order of ld. CIT(A) in preceding assessment year, made the disallowance of coal consumption by comparing the sales figures for the two years. On the other hand, ld. CIT(A) sustained it to Rs. 1 lac. We observe that during the assessment year production was 2016 MT and coal consumption was 422.985 MT which is around 20.28%; whereas, in the earlier year the consumption of coal was around 24%. The production has increased, whereas the consumption of coal has slightly decreased. We fail to understand that ld. Assessing Officer merely made the addition by taking the basis of sales which is scientifically incorrect. The consumption of coal can be compared with the production and not with the sales. We also find that ld. Assessing Officer failed to examine the rates and consumption of coal on comparative basis even when the assessee has maintained all the quantitative records and has provided the details of purchase of coal along with comparative position of past three years. We, therefore, in the given facts and circumstances of the case, are of the considered opinion that no disallowance was called for at the end of the Assessing Officer for the alleged coal consumption. We accordingly delete the disallowance of Rs.1 lac confirmed by the ld. CIT(A). In the result, ground nos. 1 & 2 of the assessee’s appeal are allowed.

Apropos ground nos. 3 & 4 which relate to the telephone and conveyance expenses, wherein ld. CIT(A) partly allowed assessee’s ground by sustaining the disallowance to Rs.10,000/- each for telephone and conveyance expenses; whereas, the addition made by the ld. Assessing Officer was Rs. 20,000/- each. We observe that both the expenses of telephone and conveyance have some elements of personal expenditure and ld. CIT(A) has fair enough to give part relief to the assessee. We, therefore, find no reason to interfere with the findings of the ld. CIT(A) sustaining the disallowance of Rs.10,000/- each for telephone and conveyance. We accordingly dismiss ground nos. 3 & 4 raised by the assessee.

Ground no.5 is general in nature which does not require separate adjudication.

In the result, appeal of the assessee is partly allowed. Order pronounced in the Court on 16th March, 2018 at Jabalpur.