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2013 (6) TMI 629 - ITAT AGRAInterest & salary to partners disallowed - Held that:- Assessee made compliance and furnished information required by the A.O. & books of the account was also produced before the A.O. but Revenue has failed to point out that the notices issued u/s 142(1) was with some terms of the notices. Thus, merely non compliance of a notice u/s 142(1) having no terms or requirements is not sufficient reason for making assessment under Section 144 particularly in case partnership firm where the A.O. want to invoke Section 184(5) and Section 185 disallowing the interest and remuneration to partners firm, the assessment made by A.O. u/s 144 is not in accordance with the conditions laid down in Section 144. Thus A.O. has wrongly made assessment u/s 144 though in clause 5 of the assessment order he has taken the status as a "firm" not as "AOP". Thus allow the claim of the assessee. Unsecured loan advanced by the partner - Held that:- In the light of the judgments of India Rice Mills [1995 (12) TMI 55 - ALLAHABAD High Court],Surendra Mahan Seth 1996 (2) TMI 84 - ALLAHABAD High Court) and Metachem Industries (1999 (9) TMI 21 - MADHYA PRADESH High Court)the current capital introduced by partner in firm is established and thus the addition cannot be made in the hands of the firm. Following the above judgment the addition of Rs.11,83,637/- is deleted and balance addition of Rs.4,32,200/- (16,15,837-11,83,637/-) sustained by the CIT(A) is also deleted. Adhoc disallowance out of expenses - Held that:- Considering the nature of business of the assessee and fact that the assessee failed to produce complete bills, vouchers, the addition has been sustained by the CIT(A). The CIT(A) has rightly sustained the addition of Rs.2,50,000/-. Since this is a matter of estimation and the assessee and Revenue both have failed to point out any contrary material based on which a different estimation can be made at this stage, in the light of the fact, order of the CIT(A) is confirmed. Appeal of the assessee is partly allowed
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