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2019 (11) TMI 652 - AT - Income TaxDisallowance on ad-hoc basis on account of various expenses incurred during the year - HELD THAT:- It is pertinent to note that the books of accounts produced by the assessee during the course of assessment proceeding were never doubted and were not rejected. The addition is only on the basis of presumption and assumption that decrease in sales amounts to decrease in expenses. The ledger accounts were very much produced before the Assessing Officer and the same was before the CIT(A). Merely on the basis of conjecture, the ad-hoc addition cannot be made without any tangible reason to do so. Addition on account of advances from the customers - HELD THAT:- The assessee has produced relevant documents before the Assessing Officer but the Assessing Officer has not taken any cognizance of these documents. In fact, the assessee duly filed the details of advances received from customers alongwith the details of current liabilities and also the sales invoices raised in the subsequent years and the record shows that these advances have been cleared in the subsequent years. Thus, the genuineness, creditworthiness and identity of the customers in fact was proved by the assessee. Therefore, this disallowance was not proper on part of the Assessing Officer as well as the CIT(A). Disallowance on the account of excess interest paid on loan - HELD THAT:- The expenses were recorded in the books of accounts of the assessee and were offered to tax as income as interest received by M/s. KLJ Resources Ltd. and Prayag Polymers Pvt. Ltd. The assessee does not appear in the list of related party disclosure of M/s. KLJ Resources Ltd. and Prayag Polymers Pvt. Ltd. It is interesting to note that the AO neither questioned genuineness of loan nor alleged that the expenses are not incurred for business purpose. In fact, from the perusal of documents it can be seen that these expenses were incurred for business purpose only. Therefore, Ground No.4 is allowed. Disallowance on the account of Diwali expenses - HELD THAT:- It is pertinent to note that these expenses were documentarily proved before the Assessing Officer, which was not questioned at the time of assessment proceedings by the Revenue authorities. Thus, these expenses are genuine and were properly claimed by the assessee. The Assessing Officer as well as the CIT(A) has not taken the cognizance of the documents. Hence, Ground No.5 is allowed.
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