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2015 (11) TMI 1063 - AT - Income TaxReopening of assessment - disallowance of 30% of the expenditure - Held that:- Reopening of assessment in the impugned years 2002-03 to 2005-06 are bad in law as there being no nexus or live-link with the reasons recorded and the 'formation of belief' to come to a conclusion that there was escapement of income and also since the assessment has been reopened beyond the period of 4 years when there is no failure on the part of the assessee to fully and truly disclose all material facts in the original assessment itself, and there being 'no tangible material' for the reopening of the assessment, the CIT(A) erred in confirming the order of the Assessing Officer. The issues considering the merits are purely academic in nature and therefore it is not necessary to consider the disallowance of expenditure in the impugned assessment years. The orders of AO and CIT(A) are accordingly set aside. For AY. 2007-08 except car hire charges, which has increased more than 100% and professional charges and reimbursement of professional charges, all other charges are more or less commensurate with the expenditure in earlier years. Therefore, we are of the opinion that the expenditure cannot be disallowed on adhoc basis as far as these other expenditures are concerned. Car hire charges, the same has been increased from ₹ 78,580/- in earlier year to ₹ 1,99,933/-. The reasons were not explained and in the absence of any vouchers, we are of the opinion that 20% of the car hire charges can be disallowed. Professional charges and reimbursement of expenses to consultants, there is also manifold increase in this expenditure. Whether the amounts were covered by provisions of TDS or not could not be verified in the absence of any details. Moreover, justification for payment of professional charges was also not available on record. In the absence of any justification of expenditure claims and further in the absence of books of accounts available at this point of time, we are of the opinion that disallowance of 10% of expenditure would meet the ends of justice. Accordingly, the disallowance stands modified as directed above. - Decided partly in favour of assessee.
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