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2014 (11) TMI 398 - AT - Income TaxAdhoc disallowance of expenditure – Held that:- Assessee is able to furnish necessary purchases, sales details and books of accounts were not rejected - in the absence of any incriminating material, general disallowance of expenditure at 50% as was done by AO cannot be sustained - no disallowance can be made in those years as assessee has filed regular returns earlier and those were accepted - there was a scrutiny assessment for AY 2004-05 in which assessee’s books of accounts were accepted without any disallowance - there is justification in assessee’s additional ground and the grounds raised at disallowance of 25% of claim in these assessment years – Decided in favour of assessee. Considering assessee’s turnover and nature of expenditure involved, the disallowance can be restricted to 10% of the expenditure claimed, being personal in nature as assessee’s business is done in a proprietary concern – the order of the CIT(A) is modified that from disallowance of 25% on expenditure 10% of the expenditure is allowed – Decided partly in favour of assessee. Cash credits – Held that:- Credit in the case of Mr. K. Panduranga Reddy who is an income tax assessee with PAN AOWPK1766P required re- examination – thus, the matter is restored to the file of AO for examination – Decided in favour of assessee. Loss on trading – Held that:- CIT(A) was rightly of the opinion that there was nothing wrong on the part of assessee to enter into forward contract transaction to protect his business interests - assessee has entered into forward contract transactions as assessee is dealing with bullion market where the fluctuations are on a daily basis - Since Ld. CIT(A) examined the transactions and also gave a finding that these are forward contract transactions to care against loss through the price fluctuations, the same is eligible to be treated as business loss and is covered by the proviso to section 43(5) – Decided against revenue. Addition of GP – Held that:- Revenue could not justify why gross profit addition has to be resorted without rejecting books of accounts - In fact, it is a search case and all the books of accounts and data were also impounded/seized by Revenue - In the absence of any incriminating material or in the absence of any other details, there is no justification for resorting to gross profit addition – the order of the CIT(A) is upheld – Decided against revenue.
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