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2022 (1) TMI 1255 - AT - Income TaxDisallowance of creditors - addition being 0.55% of closing creditors and debtors as bogus - HELD THAT:- Disallowance of creditors @ 0.55% of the total value is absolutely based upon the surmise and conjectures. If the AO is not satisfied about the books of the assessee, he can reject the same and make an estimate of the income based upon industry trend or past record of the assessee. No such exercise has been done by the AO. This is fatal to the assessment here. Moreover, outstanding creditors which are trade creditors can be added only under provisions of section 41(1) - No case has been made out that section 41(1) has been invoked and there is disallowances as per provisions of section 41(1). Hence, no merit in additions - we set aside the orders of the authorities below and direct that addition in this regard should be deleted. - Decided in favour of assessee.
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