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TMI Blog2013 (12) TMI 1097X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.2009, in the status of a firm declaring an income of Rs. 28,88,455/-. The case of the assessee was selected for scrutiny assessment and a notice u/s 143(2) of the IT Act, 1961, was issued on 23.8.2010. The ld. Assessing Officer has passed an assessment order u/s 143(3) on 26.12.2011. He has made an ad hoc disallowance of Rs. 5,00,000/- out of the expenditure claimed by the assessee. The discussion for making this addition is running into only 5 lines which read as under: "On the perusal of the Profit & Loss Account, it is observed that the assessee has debited expenses under various heads. Assessee also produced bills & vouchers for verification of the same. On verification, some of the expenses were found to be unverifiable for want of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the accounts of the assessee, or where the method of accounting provided in sub-section (1) or accounting standards as notified under sub-section (2), have not been regularly followed by the assessee, the Assessing Officer may make an assessment in the manner provided in section 144." 6.1 From the bare reading of this section, it would reveal that it provides the mechanism how to compute the income of the assessee. According to sub-clause (i), the income chargeable under the head "Profits and gains of the business or professions or income from other sources" shall be computed in accordance with the method of accountancy employed by an assessee regularly subject to the sub-section (2) of section 145 of the Act. Sub-section (2) provides th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the disallowance. The assessee has further pointed out that in A.Y. 2005-06 an ad hoc disallowance of Rs. 1,45,000/- was made which was restricted to Rs. 90,000/- by the ld. CIT (A) but ITAT has deleted the disallowance, in A.Y. 2006-07, ad hoc disallowance of Rs. 2,00,000/- was made, it was restricted to Rs. 1,00,000/-by the ld. CIT (A) but ITAT has deleted the disallowance. The ld. first appellate authority has gone through all these details and thereafter observed that Assessing Officer has not discussed the details of expenses and how assessee fail to prove the genuineness of the expenses. In our opinion the Scheme of the Act does not authorize the Assessing Officer to make a disallowance according to his wishes, rather it provide th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, 2005-06 and 2006-07 but Tribunal has held that the assessee is to be treated as a firm and consequent benefit of salary and interest would be given to the partners. The finding of the ld. Tribunal read as under: "4. We have heard rival submissions and have gone through the relevant material available on record. We find merit in the argument of the learned counsel. From 1-4-1994 sections 184/185 have been amended and the earlier procedure of examining genuineness of firm has been dispensed with. As per the amended law, the firm shall be allowed registration if a certified copy of a deed, duly signed by all the partners showing the shares of the partners is filed, the firm is allowed to be registered. U.P. Excise policy does not prohibit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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