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2016 (1) TMI 1244 - AT - Income TaxLevy of penalty u/s 271(1)(c) - disallowance of business expenses - Held that:- AO has made an adhoc disallowance of ₹ 2,00,000/- which has subsequently been reduced to ₹ 1,00,000/- by the Coordinate Bench of ITAT. The said disallowance is out of the total expenses of ₹ 18,57,263/- which basically means 95% of the expenses have been held to have incurred for the purpose of business and only 5% have been held for non-business purposes. The ld. AO has not given any finding regarding specific expenditure/ transactions which has resulted in the said disallowance. He has merely done a broad comparison of expenses vis-a-vis. Last year and held that since the expenditure during the year is on a higher side. A lump sum amount of ₹ 2,00,000/-is disallowed. In our view unless and until the AO records a finding of fact that certain identifiable expenditure or the transactions are bogus or for non-business expenses, the said disallowance on an adhoc basis in the quantum proceedings cannot be the basis for levy of penalty u/s 271(1)(c) of the Act. - Decided in favour of assessee
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