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Issues:
1. Disallowance of net representative liability amount in parties' suspense account. 2. Disallowance of various expenses for a specific period. Issue 1: Disallowance of net representative liability amount in parties' suspense account: The case involved the appeal against the order of the CIT(A) for the block period from 1st April, 1987 to 16th September, 1997. The dispute centered around the disallowance of a net representative liability amounting to Rs. 9,31,512 in the parties' suspense account. The Assessing Officer rejected the claim of the assessee regarding this liability, emphasizing the lack of confirmation from parties or corroborative evidence. The CIT(A) upheld this decision, citing traces of actual purchase and sale transactions and absence of supporting evidence. However, the ITAT found discrepancies in the calculations and inconsistencies in the treatment of balances, leading to the conclusion that the matter required further examination. The ITAT set aside the CIT(A)'s order and directed the Assessing Officer to reevaluate the claim based on seized materials, either accepting it in full or rejecting it entirely, ensuring a fair opportunity for the assessee to present their case. Issue 2: Disallowance of various expenses for a specific period: The appeal also addressed the disallowance of expenses claimed by the assessee for the period from 1st January, 1995 to 9th October, 1995. The Assessing Officer partially disallowed various expenses, including vehicle, travelling, office, telephone expenses, and depreciation amounts. The assessee argued that expenses should be allowed based on the proportion of gross income, contrary to the Assessing Officer's approach of proportion to the time period. The ITAT noted that the disallowances were made on an estimated basis and directed a reevaluation. It instructed the Assessing Officer to allow fixed expenses based on the time period and variable expenses based on gross income proportion. Additionally, the ITAT granted the assessee an opportunity to provide evidence supporting claims for specific expenses like car finance, business expenses, and depreciation. The Assessing Officer was directed to consider the evidence and provide a fair hearing to the assessee. In conclusion, the ITAT partially allowed the appeal for statistical purposes, highlighting the need for a thorough reevaluation of both the disallowed net representative liability amount and the various expenses claimed by the assessee for a specific period. The judgment focused on ensuring a fair assessment based on seized materials and supporting evidence, emphasizing procedural fairness and detailed examination of the financial transactions involved.
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