2016 (2) TMI 1181

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..... relate to the addition of Rs. 15,000/- and Rs. 3,52,500/- on the basis of certain entries from the Pen Drive seized from the possession of the partner of the assessee, Shri Chetan Gupta by the Punjab Vigilance Bureau, Ludhiana and handed over to the Income-tax Department. In both the years, on the basis of the entries in the Pen Drive, the AO initiated the proceedings u/s 147 in the case of the assessee and ultimately completed the assessment in the respective year making the addition in the case of the assessee which were confirmed by the CIT (A). 4. I have heard the rival submissions and carefully considered the same along with the orders of the tax authorities below. I have also gone through the decision of the Tribunal in the case of .....

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..... und no.1 in assessment year 2002-03 is allowed. 6. Ground No.2 in assessment year 2002-03 relate to the disallowance of Rs. 2,82,804/-. 7. I heard the rival submissions in this regard and I noted that the AO found that the assessee has claimed deduction for an expenditure of Rs. 18,85,360/- to have been incurred for the purpose of the business but the AO disallowed 15% of this expenditure amounting to Rs. 2,82,804/-. The AO disallowed this expenses merely on ad hoc basis by observing that as the books of accounts could not be produced the expenses cannot be verified even though he did not dispute details of various expenses as demanded by him. It is not the case that the expenses have not been incurred wholly and exclusively for the purpo .....

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..... ment has not been completed u/s 143(3). The provisions of section 147 empowers the AO to make the addition in respect of any other income which escaped the assessment provided addition has been made in respect of the income for which the reasons to believe were recorded. The Pen Drive has been found from Chetan Gupta during the course of search and seizure operation conducted by the Punjab Vigilance Bureau at Ludhiana pertaining to the Ludhiana City Centre scam. It is proved that the assessee was having office in Punjab. In the subsequent assessment year i.e. assessment year 2005-06, I noted that no such disallowance in respect of the depreciation was made by the AO while completing the assessment. I, therefore, set aside the order of the C .....

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