TMI Blog2012 (10) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... uted fact is that the A.O. has made an estimation of household expenses, which is not based on any evidence or material on record. In view of these circumstances we direct the A.O. to delete the addition. Dis-allowances on account of shortage in material - Held that:- It is evident that assessee has submitted evidences before the A.O. that the vendor does not entertain the claim of the assessee whether the shortage is less than 100 kg. This is also a fact that the assessee has to buy the material in bulk and sell it in retail. It is not denied that the shortage/ deficit in the case of the assessee is less than 0.5% of the total purchases. It is also not denied that the explanation of the assessee that the shortage/deficit has been accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dual engaged in the business of trading of iron and steel bars. He filed return of income on 17-7-2006 declaring total income of Rs.2,43,526/-. The case was selected for scrutiny and the assessment was completed u/s. 143(3) of the Act determining total income at Rs.5,58,988/- by making various disallowances/additions. Aggrieved by the action of A.O. assessee preferred an appeal before CIT (A) where he was allowed partial relief. The assessee is therefore now in appeal before us. 4. Ground No.1: The A.O. observed that the assessee has debited a sum of Rs. 15,865/- under vehicle expenses , Rs.40,349/- as motor car expenses and claimed depreciation on motor car amounting to Rs.58,304/- .As the assessee could not produce log book and bifur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehicle and car expenses is justified. However, we are of the view that the disallowance made by the ITO and sustained in appeal by CIT (A) is on a higher side. We are therefore of the view that in the interest of justice and fairness, it would be fair and reasonable to restrict the disallowance out of the vehicle expenses motor car expenses and depreciation on motor car to 10% of the claim. We therefore direct the A.O. to modify the assessment accordingly. Thus this ground is partly allowed. Ground No.2 Low Household expenses. 6. From the details filed by the assessee before the A.O., the A.O. observed that his family consisted of 7 members and the cumulative withdrawals for the year was Rs.1,18,000/-.The A.O. was of the view that c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor member is without any basis. The number of family members as estimated by the A.O. is also incorrect. Having regard to the totality of the facts of the case, we are of the view that an addition cannot be made merely on the basis of estimation especially when there was no material on record to suggest that the household expenses that is claimed to have been incurred by the assessee were not correct. In view of these circumstances we direct the A.O. to delete the addition. This ground of the assessee is thus allowed. Ground No.3: Shortage to the tune of Rs. 1,20,991/- 8. On perusal of the tax audit report, the A O. observed that the assessee has shown shortage of 7531.500 kg. The assessee explained that shortage was inevitable becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortage in material at the time of purchases. The assessee further relied on the following decisions. 1) Dineshchandra Shah vs. ITO (ITA No.2947/Ahd/2008) 2) Narmada Steel Ltd. vs. ACIT (2008) 21 SOT 32 (Asr.)(URO) 3) ACIT vs. Mercury Metals (P )Ltd. (2004) 90 TTJ (Ahd) 196. 9. The Ld. D.R. on the other hand relied on the decision of the lower authorities. 10. We have heard the Ld. D.R. and perused the material on record. The undisputed fact is that the assessee purchases the material in bulk and sales are made in retail. The assessee has maintained the stock register and the same has been audited by the Chartered Accountants. No discrepancies have been noticed in the stock register. It is also a fact that the assessee has shown sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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