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2022 (9) TMI 586 - Income Tax
Unverifiable expenses - disallowance being 30% of the direct expenses claimed by the assessee - HELD THAT:- Profit and loss account now filed by the assessee is not even signed by the assessee or his authorized representative as a true copy and in the absence of any books of account maintained by the assessee as admitted during the course of assessment proceedings before the AO we are of the view that no credence can be given to the same.
Insofar as arguments raised on behalf of the assessee challenging the applicability of Section 69C of the Act, we find that disallowance out of direct expenses claimed by the assessee was made by the AO to the extent of 30%; and, having regard to the observation/findings recorded by the AO in the assessment order, the same was made on account of unverifiable elements involved in the direct expenses claimed by the assessee since there was a failure on the part of the assessee to furnish the details and documents in order to support and substantiate his claim for the said expenses.
Reference to Section 69C made by the AO, therefore, was totally unwarranted and it appears that the reference to Section 69C was made by the AO through inadvertent mistake. In our opinion, such inadvertent reference made by the Assessing Officer to Section 69C could not or should not come in a way to sustain the disallowance in question made by the Assessing Officer which otherwise was justifiably made on account of unverifiable elements involved in the direct expenses claimed by the assessee. As such, considering all the facts of the case, we are of the view that the disallowance made by the AO out of direct expenses was fully justified and there was no infirmity in the order of the CIT(A) in confirming the same. We, therefore, uphold the impugned order of the CIT(A) on this issue and dismiss this appeal filed by the assessee.