Assessment : A.Ys. 1993-94 to 1995-96 : Business expenditure : Disallowance : Not to be based only on admissions of assessee : Admission not conclusive evidence.

[Ester Industries Ltd. v. CIT, 316 ITR 260 (Del.)]

For the A.Ys. 1993-94 to 1995-96, the disallowances made by
the Assessing Officer were reversed by the CIT(A) and the additions were
deleted on the ground that the assessment order did not justify the additions.
The Tribunal reversed the order of the CIT(A) and restored the order of the
Assessing Officer on the ground that the assessee both in its original as well
as in its revised return had made admissions which formed the basis of the
additions made by the Assessing Officer.

On appeal, the assessee contended that had the assessee
been given an opportunity by the AO, it could have demonstrated that no
additions or disallowances were called for. The Delhi High Court allowed the
appeal and held as under :

“(i) The Tribunal ought to have examined the issue as to
whether the fact that the assessee had made an admission with respect to an
addition in its original return or in the revised return would ipso facto
bar the assessee from claiming an expense or disputing an addition, if it is
otherwise permissible under law.

(ii) The Assessing Officer did not call upon the assessee
to furnish any explanation at the time of making additions. The Tribunal
should have examined the matter based on the point that an admission is an
extremely important piece of evidence but it could not be said to be
conclusive. It was open to the person who made the admission to show that it
was incorrect.

(iii) The Tribunal’s order was to be set aside and it was
directed to rehear the parties.”