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2015 (12) TMI 1768 - AT - Income TaxDisallowance of 50% of the indirect expenses incurred in cash - AO has passed ex parte assessment order u/s 144 - Best Judgement assessment - Held that:- Assessing Officer must not act dishonestly or vindictively or capriciously. He must make, what he honestly believe to be a fair estimate of the proper figure of assessment and for this purpose he must be able to take into consideration, local knowledge, reputation of the assessee about his business, the previous history of the assessee or the similarly situated assessee. It is also pertinent to mention that judgment is a faculty to decide matter with wisdom, truly and legally. Judgment does not depend upon the arbitrary, caprice of an adjudicator, but on settled and invariably principles of justice. Thus, in a best judgment, even if, there is an element of guess work, it should not be a wild one, but shall have reasonable nexus to the available material and circumstances of each assessee. Admittedly the assessee was not in a position to produce supporting evidence, then ad hoc disallowance on account of such failure ought not to be made more than 20% of the expenses. - Decided partly in favor of assessee.
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