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2018 (5) TMI 1155 - ITAT CUTTACKAddition u/s 68 - Held that:- AR referred to the paper book evidence in the audit report at page 1 to 11 and also the statement of loan creditors along with income tax details from page 12 to 30 disclosed in the income tax returns and computation of income and their financial statements. AR emphasized that the creditors are genuine and creditworthiness of the transaction and identity of the parties can be proved. AO has overlooked these facts. We are of the opinion that the assessee should be provided an opportunity of explain this loan creditors along with documentary evidence, filed before us and before the AO. Hence, we restore this issue to the file of AO for reconsideration Disallowance of 1% of purchase material - Held that:- Assessee has claimed certain expenditure in respect of material purchase but failed to support with evidence before the assessing authority, therefore, the AO has no alternative but to make the disallowance on the basis of estimated percentage. Even before us, the AR could not submit the details in respect of purchases which has been called for the lower authorities. Accordingly, we are of the opinion that the CIT(A) having considered these facts and the findings of AO has confirmed the action of AO which is in accordance with law - Decided against assessee Contract expenses - AO has disallowed 1% of total purchases of materials and also disallowed contract expenses on adhoc basis @2% of the total expenses - Held that:- As the assessee is a going concern and has been claiming from the earlier years, therefore, considering the overall aspects and circumstances and the trade practices followed by the assessee, we are of the opinion that the disallowance of 2% of work expenses where AR’s submission is that work expenses are subject to the provisions of TDS and has been deducted, are on higher side. Accordingly, we set aside the order of the CIT(A) and restrict the addition to the extent of 1% of work expenses and order accordingly. Payment by cheque - Held that:- We considering the material facts and submissions of the assessee are of the opinion that the assessee has issued the cheque in favour of the creditor which is not in dispute. Therefore, we are of the opinion that the matter has to be examined by the AO and accordingly, we remit this issue to the file of AO to verify the transaction
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