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Issues Involved: Dispute over estimated disallowances on repair and maintenance, business promotion expenses, and traveling expenses.
Repair and Maintenance Disallowance: The assessee, engaged in chemical manufacturing, claimed expenses under various heads without producing supporting bills and vouchers. The Assessing Officer (A.O.) made estimated disallowances without providing a basis for the disallowance. The CIT(A) upheld the disallowance, leading to the appeal. The tribunal noted that while the A.O. could consider disallowances due to lack of evidence, such disallowances must be based on material and not arbitrary. Since the A.O. failed to provide any basis for the disallowance, the tribunal set aside the CIT(A)'s order and deleted the additions. Business Promotion Expenses Disallowance: Similar to repair and maintenance expenses, the A.O. had made estimated disallowances without any basis for business promotion expenses. The tribunal emphasized that the A.O. must justify disallowances with material and not arbitrary figures. As no such justification was provided, the tribunal set aside the CIT(A)'s order and deleted the additions made under this head. Traveling Expenses Disallowance: The A.O. also made estimated disallowances for traveling expenses without providing a basis for the disallowance. The tribunal reiterated that any disallowance must be supported by material and not arbitrary figures. Since the A.O. did not present any evidence to justify the disallowance, the tribunal set aside the CIT(A)'s order and deleted the additions made under this head. Conclusion: The tribunal allowed the appeal of the assessee, emphasizing that while the A.O. could consider disallowances for unsupported expenses, such decisions must be substantiated with material and not arbitrary figures. In this case, as the A.O. failed to provide any basis for the disallowances, the tribunal set aside the CIT(A)'s order and deleted the additions made, ruling in favor of the assessee.
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