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2013 (9) TMI 477 - AT - Income TaxAdhoc disallowance of Expenditure - Loading and unloading expenses - CIT disallowed expenditure @ 20% - Held that:- it is a case of search assessment under section 153(A) of the Act. It is admitted fact that there is no incriminating material found pertaining to disallowance of expenses - in regular assessment additions on adhoc disallowance of 20% are not sustainable - Section 37 of the Act provides that if the assessee has laid out or expensed wholly and exclusively for the purpose of business, the expenses are allowable. In the case under consideration, there is no dispute about the fact that the expenditure was laid out and expended wholly and exclusively for the purpose of business. The A.O. did not find any contrary material to this fact. Once it is found that the expenditure has been laid out and expended wholly and exclusively for the purpose of business, such adhoc disallowance out of loading and unloading merely on the basis of presumption that the assessee has enhanced the expenses to reduce tax liability unless contrary material is available on record, such addition is not sustainable in law - Decided in favour of assessee. Addition on account of DVO’s report - CIT confirmed disallowance - Held that:- there were no reasons to discard the books of account merely because the same were not found during the course of survey. The AO should have verified each and every entry from the books of account of the assessee on this issue before making reference to the DVO. However, no such findings have been given and the AO merely because the assessee did not produce bills and vouchers referred the matter to the DVO for estimating cost of construction. The findings of the AO are, therefore, not justified - It, therefore, appears that the matter requires reconsideration at the level of the AO - Decided in favour of assessee. Addition of Rs.10,000/- on account of investment from undisclosed sources. - The assessee was asked to correlate the payments from books of accounts but the assessee failed to do so. When the register is found at the time of search and the assessee has failed to reconcile this entry in the register and books of account, the addition is warranted. The assessee has failed to reconcile this entry before us also and also failed to submit any material that this was accounted for in the regular books of account - Decided against Assessee.
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