ITAT Cuttack Judgments — March 2019

The Tribunal held that the disallowance of business expenses and depreciation was incorrect. It reasoned that if the business was established and continuing, expenses incurred wholly and exclusively for business purposes should be allowed, irrespective of whether there was business income in the current year.

The Tribunal held that the interest income was inextricably linked to the business and should be treated as business income. It also found that the AO erred in treating the firm as an AOP and denying partner deductions without sufficient justification.

The Tribunal held that the AO flouted the rule of consistency by disallowing the agricultural income without proper justification, especially since it was accepted in prior years. Small agriculturists may not maintain detailed documentation.

The Tribunal held that the assessee should be allowed to discharge their onus under Section 68. To meet the ends of justice, the case was restored to the AO for adjudication after providing an opportunity of hearing.

The Tribunal restored the appeal to the CIT(A) to provide the assessee with a reasonable opportunity of being heard, while imposing a cost of Rs. 10,000 on the assessee for non-compliance.

The Tribunal held that the assessee had indeed furnished the audit report before the due date, as evidenced by the e-return acknowledgement. Therefore, the penalty under Section 271B was not leviable.

The Tribunal restored the appeal to the file of the CIT(A) to adjudicate the issue after providing a proper opportunity of hearing. The assessee was directed to cooperate with the CIT(A).

The Tribunal held that ad-hoc disallowances are justified when the assessee fails to produce relevant documentary evidence for expenses. However, the percentage of disallowance on certain purchases was reduced.