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2016 (1) TMI 1089 - AT - Income TaxUnexplained expenditure u/s.69C - FAA had reduced the addition to 20% - Held that:- AO had made the addition on the basis of information received from the Sales tax department, but, he did not make any independent inquiry. He did not follow the principles of natural justice before making the addition. The FAA had reduced the addition to 20%, but he has not given any justification except stating that same was done to plug the probable leakage revenue. Considering the peculiar facts and circumstances of the case,we are reversing the order of the FAA. Effective ground of appeal is decided in favour of the assessee Disallowance made under conveyance expenses/office expenses/travelling expenses, telephone expenses and warehouse/godown rent - Held that:- FAA had analysed the said agreement and had reached the conclusion that the assessee had no connection with that agreement. As the assessee had not proved that he had paid the warehousing charges therefore, the FAA rightly upheld the disallowance. For claiming deduction u/s.37(1) of the Act the assessee has to lead evidences in his support-he has to produce documentary evidence to prove that expend was actually incurred and was incurred wholly and exclusively for the purpose of business in the case of Ramanand Sagar (2002 (2) TMI 52 - BOMBAY High Court )the Hon’ble Bombay High Court has held that the burden of proof is on the assessee to establish beyond doubt that the expenditure is solely incurred for the purpose of business. In the case before us, the incurring of expenditure disallowed by AO and upheld by the FAA itself is not proved. - Decided against assessee Addition on capital introduced - Held that:- We find that the assessee had filed the cash flow statement and the balance sheet in his support, that the FAA had not analysed the documents properly, that availability of cash was prima facie established. In our opinion, it requires further investigation. Therefore, in the interest of justice we are remitting back the issue to the file of the AO for fresh adjudication, who will decide the matter afresh after affording a reasonable opportunity of hearing to the assessee. Addition on account of bogus purchase - Held that:- AO had added ₹ 10.50 lakhs to the income of the assessee for the year under appeal and FAA had reduced it to ₹ 2.10 lakhs. We have deleted the addition made under the head bogus purchases while deciding the appeals filed by the assessee for both the AY.s. So, deciding the effective ground of appeal against the AO, we uphold the partial deletion made by the FAA.
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