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2014 (6) TMI 105 - ITAT AHMEDABADRestriction of various expenses - Disallowance of expenses - 25% of labour wage and 20% of direct expenses – Held that:- Following Sh. Sandeep S. Nanvati [2014 (5) TMI 919 - ITAT AHMEDABAD] - The CIT(A) restricted the disallowance on the ground that the AO rejected the books of account on the ground that evidences regarding rendering of services and co-relation of expenses with volume of work done has not been established by the assessee without asking the assessee to carry out such exercise and therefore drawing adverse conclusion was not correct - expenses have been incurred in cash and that in the statement of facts, the assessee does mention that all bills and vouchers were not possible to be produced since these had been destroyed after the floods - many of the vouchers are self-made - there was likelihood that some portion of the expenditure could not be justified and it would be reasonable if disallowance of Rs 3,00,000/- was made out of the claim of labour charges and other expenses – Decided against Revenue. Deletion of unaccounted purchases – Held that:- CIT(A) was of the view that the notices issued by the AO were served on the concerned parties which establishes identity of the parties - The assessee produced ledger accounts, bills and payment details before the AO which establish the genuineness of the transaction - the assessee could not be held responsible for non-receipt of replies from the parties when the assessee provided all the related evidences - in any case, the confirmations were received though belated and copy was submitted which takes care of the reason for disallowance - the disallowance was made by the AO on a wrong footing – revenue could not produce any material to show further steps taken by the AO to verify the genuineness of purchases even when no reply was received from the suppliers though no summons or notices were duly served upon them – it cannot be inferred that the purchases were bogus – the order of the CIT(A) is upheld – Decided against Revenue. Restriction of disallowance of business expenses – Telephone and vehicle expenses – Held that:- The disallowance was made by the AO because of inability of the assessee to produce vouchers in respect of above expenses - no material was brought on record by the Revenue to show the basis on which the AO made the disallowance at the rate of 20% - the assessee could not bring any material to show that the expenses claimed under these heads were reasonable when compared to the past accepted position and volume of the business secured during the year – thus, there is no reason to interfere in the order of the CIT(A) – Decided against Revenue.
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