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2018 (8) TMI 670 - ITAT CUTTACKAdditions on account of expenses for low recovery of chromium - AO observed that, an arrangement was made with the assessee company to reduce its taxable income - Held that:- The Assessing Officer has doubted the deduction claimed on the ground that the assessee is a sister concern of Tata Steel Limited and according to him, the agreement entered into with the assessee company was a ploy to reduce the income of the assessee. It is trite law that suspicion howsoever grave cannot takes place of proof. The Hon’ble Supreme Court in [1954 (10) TMI 12 - SUPREME COURT] has held that “As regards the second contention, we are in entire agreement with the learned Solicitor-General when he says that the Income Tax Officer is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a Court of law, but there the agreement ends; because it is equally clear that in making the assessment under sub-section (3) of section 23 of the Act, the Income Tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under section 23(3). The rule of law on this subject has, in our opinion, been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh vs. CIT” There is no material brought on record by the revenue to show that the agreement between the assessee and M/s. Tata Steel Limited for manufacture of high carbon ferro chrome is sham. - No disallowance can be made - Decided in favor of assessee.
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