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2014 (7) TMI 387 - AT - Income TaxJustification for the ex-parte order passed u/s CIT(A) - Held that:- Backward calculation in the absence of any allegation about non-maintenance of books, non-furnishing of vouchers, non-compliance of the notices, cannot be accepted as the provisions of the Act are very specific and clear - AO can only resort to estimate of income under section 145, if conditions specified there in are satisfied - Expenditure can be verified under section 37(1) and only AO finds out that expenditure is not wholly and exclusively for the purpose of business, he can disallow such expenditure - Assessee has justified the expenditure by explaining the change of business profile, Increase in Call Centre Income and also by furnishing necessary statements and vouchers before the authorities - AO and CIT(A) erred in resorting to mathematical jugglery so as to deny the expenditure claimed by the assessee. There is no basis for A.O. disallowance of the so called inflated expenditure and CIT(A) also did not apply his mind in restricting the amount on an adhoc basis - he should have examined the contentions of the assessee and proved that they are not correct - Without doing anything on record, this sort of disallowance of expenditure claimed by the assessee cannot be accepted or justified – thus, the so-called disallowance of expenditure resorted by the AO is cancelled – thus, the addition of ₹ 2,20,00,000 sustained by the CIT(A) is set aside – Decided in favour of Assesee.
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