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2016 (8) TMI 642 - ITAT BANGALOREDisallowance made under section 40A(3) - Held that:- Assessing Officer has observed that the assessee failed to produce any evidence in support of his claim however the recording of the expenses in the unaccounted cash book maintained in the laptop has not been disputed by the Assessing Officer. Further the Assessing Officer has not examined the correctness of the claim by verification of the entries maintained in the laptop as well as by examining the recipient of the said amount. Since the corresponding addition has been made by the Assessing Officer in respect of ‘on money’ received by the assessee then the claim of ‘on money’ payments by the assessee also required to be examined by considering the fact whether the recipient has accepted this amount and offered the same as income for tax. Accordingly, in the facts and circumstances of the case when the Assessing Officer prima facie accepted the payment while making the disallowance under Section 40A(3) of the Act then for making a disallowance of the said amount under Section 37(1) of the Act a detailed and proper enquiry is required to be conducted. Accordingly, we are of the view that this issue requires a proper enquiry and consequently set aside to the record of the Assessing Officer for proper enquiry and verification and then decide the same. We make it clear that so far as the disallowance made under Section 40A(3) of the Act the same is found to be proper and therefore issue of enhancement for the balance amount made by the CIT (Appeals) is set aside to the record of the Assessing Officer. Enhancement of assessment inter alia on account of suppression of profit - Held that:- Prima facie it appears that this amount of ₹ 16 lakhs was part of the opening balance of the land purchased and was not part of the expenditure claimed during the year. The CIT (Appeals) has made this addition on the basis of the reply filed by the assessee without verification of the books of accounts whether this amount was paid by the assessee in the earlier year which was already accounted for in the books of accounts or not. Further it was also not verified whether while computing the profit the assessee has suppressed this amount on account of wrong claim or this amount was not part of the expenditure during the year under consideration. Accordingly in the facts and circumstances of the case, we set aside this issue to the record of the Assessing Officer to verify the relevant record and facts as explained by the assessee and then decide this issue as per law after affording an opportunity of hearing to the assessee.
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