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2020 (2) TMI 1658 - AT - Income TaxDisallowance u/s.143(1) based on the audit report - addition of club expenses - mistake of the auditor/clerical error in the Tax Audit Report cannot be the basis for disallowance of expenses which has been legally spent by the assessee wholly and exclusively for business purposes - HELD THAT:- As no adjustment/disallowance/addition of the expenditure claimed by the assessee on account of club expenses could not have been disallowed without issue of notice u/s. 143(2) of the Act as held by the Hon’ble High court in Peerless General Finance Co. Ltd. [2009 (10) TMI 429 - CALCUTTA HIGH COURT] - Further, we note that the assessee had already suo moto disallowed expenditure incurred on CSR activities, interest on late payment of TDS, penalty of PF and penalty of entry tax total - So, the allowability of club expenses which assessee claimed could not have been disallowed without giving proper opportunity to the assessee, which omission on the part of AO [CPC] is against the principles of Natural Justice and it cannot be sustained. Therefore,we allow the appeal of the assessee and direct deletion of addition. Appeal of assessee allowed.
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