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2019 (4) TMI 1109 - ITAT KOLKATAAdhoc disallowance of expenses - Rejection of books of accounts - best judgment assessment u/s 144 - HELD THAT:- AO could have ventured into estimation only after rejecting the books of accounts of the assessee u/s 145(3) and thereafter by best judgment assessment u/s 144 of the Act. Here in this case, the AO has not passed any order u/s 144 of the Act. AO thus without rejecting the books of account of the assessee has gone for estimation on suspicion and conjectures that the assessee may be inflating its expenses with the self-made vouchers. While scrutinizing the expenditure if the expenses claimed are not having any nexus to the business of the assessee or if there is deficiency in the vouchers or there is no bills supporting the incurrence of an expenditure, at the most expenses to the extent that are not supported by the vouchers can be held to be non-genuine and can be disallowed by the AO; and item-wise the AO could have disallowed the expenditure rather than going for adhoc disallowance of percentage basis of the expenses claimed by the assessee which action of the AO is arbitrary in nature and cannot be sustained. Set aside the Ld. CIT(A) order wherein also he had restricted the expenses claimed @ 5 percentage of expenses which is also adhoc disallowance. Therefore, the addition is directed to be deleted.
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