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2019 (6) TMI 46 - AT - Income TaxAddition u/s. 41 (1) or u/s. 68 - addition of sundry creditors and unsecured loan - difference between the sundry creditors as on 31.03.2013 and 31.03.2012 in respect of 4 creditors as unexplained - notices u/s. 133 (6) returned unserved - HELD THAT:- Observation of the Assessing Officer in the assessment order that all the letters were returned back is incorrect. Since in the instant case the purchases are not doubted and the assessee has made payments to the creditors in the subsequent years through banking channels and the purchases made from some of the above parties in the subsequent years were not doubted and the notices u/s. 133 (6) issued to the 3 parties were never returned back meaning thereby these were served on the parties, therefore, addition in our opinion on account of difference in the opening and closing balance of sundry creditors in absence of non production of the creditors is not justified. It is also not understood as to under which provision the addition has been made i.e. either u/s. 41 (1) and section 68. Since in the instant case it is not understood as to whether the addition has been made u/s. 41(1) or 68 and since the Assessing Officer has accepted purchases as genuine and the amount outstanding in the name of sundry creditors have been paid through banking channels in subsequent years and purchases made from the said parties in subsequent years has been accepted by the revenue without any doubt and since the notices issued to the three parties were never returned back as per the letter addressed by the Assessing Officer to the assessee, therefore, merely because the said creditors were not produced before the Assessing Officer for his examination, in our opinion, cannot be a ground for making the disallowance. - Decided in favour of assessee Disallowance of 25% of the various expenses claimed in the P & L account (except bank interest and bank charges) - assessee did not furnish the bills and vouchers - CIT(A) restricted the same to 10% of the expenses - HELD THAT:- While disallowance of expense on adhoc basis is justified on account of non submissions of bills and vouchers, however, considering the totality of the facts of the case disallowance of 10% of the expenses sustained by the CIT(A) appears to be on the higher side. We, therefore, restrict such disallowance to 7.5% of expenses. This ground raised by the assessee is partly allowed.
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