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TMI Blog2016 (2) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... invested by the assessee in his business concern from his personal account which is the sale proceeds of such shares which he got from WILL. Therefore, the nature and source of the fund was received from the mother of the assessee is proved. As regards the balance sum of ₹ 16,000/- (Rs.4,44,795/- - ₹ 4,28,795/-), no arguments were advanced by the assessee before us. Hence, we dismiss the claim of the assessee in this regard. - Decided partly in favour of assessee Ad hoc disallowance @ 20% out of car expenses, depreciation on car and telephone expenses treating the expenses incurred for personal use - Held that:- On mere presumption the AO just made the additions on ad hoc basis without any basis. The AO himself opined that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne Expenses ₹ 7,523/- although the expenses related wholly and exclusively to business activities. Without prejudice the disallowances are excessive. 3. The assessee is the proprietor of M/s. Lohia Ispat Udyog. The return of income for the assessment year was filed on 12.10.2007 declaring a total income of ₹ 1,39,760/-. The case was taken up for scrutiny assessment under section 143(3) and notices under section 143(2) were issued. During the scrutiny assessment, the A.R. of the assessee appeared from time to time and furnished books of accounts, bills/vouchers which were examined by the AO. During the course of assessment proceedings, the AO found a fresh capital said to have been introduced by the assessee to an extent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a witness whereby, the AO disbelieved the said WILL and the amounts transferred to business account were added to the income of assessee. 3.3 The assessee claimed expenditure of motor car to an extent of ₹ 1,09,933/- but the AO disallowed the same to the extent of ₹ 21,987/- being 20% against ₹ 1,09,933/-. The assessee claimed depreciation on motor car for ₹ 63,280/-. The AO disallowed the same to the extent of ₹ 12,656/- being 20% of the claim and the AO disallowed the telephone expenses at ₹ 15,046/- as against the claim of ₹ 75,229/-. Thereby, the AO assessed the taxable income at ₹ 6,33,744/-. Against the same, the assessee preferred an appeal before the ld. CIT(A). 4. The ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at page no.16 of the paper book where all her investments in shares totaling to ₹ 4,28,795/- and the same were transferred to the assessee s business concern from his personal account and accordingly pleaded to allow ground no.1 in favour of the assessee. The ld. DR vehemently contended that the AO is right in observing that the contents of the WILL are nothing but a concocted story, which, by no means, can be acceptable and relied on the orders of the ld. CIT(A) and the AO and prayed to confirm the addition made by the AO and dismiss the ground of the assessee. 6. Heard and perused the orders of the lower authorities and considered the arguments of both the representatives. Now the question before us whether the AO and the ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cession as declared by the testator, i.e. the mother of the assessee. In respect of page no.16, where the Profit Loss account belonging to the mother of the assessee is produced, wherein it shows that she has invested in shares, particularly, in MKJ Development Ltd., Starlight Credit (I) Ltd. and Kherapati Vanijya Ltd. which altogether come to ₹ 4,28,795/-. Therefore, in our view, the amount to an extent of ₹ 4,28,795/- is validly proved to have been invested by the assessee in his business concern from his personal account which is the sale proceeds of such shares which he got from WILL. Therefore, the nature and source of the fund was received from the mother of the assessee is proved. As regards the balance sum of ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elephone expenses on ad hoc basis. Therefore, the ld. Counsel prayed for deletion of the above disallowances. In reply, the ld. DR supported the orders of the lower authorities and argued that the ld. CIT(A) is justified in restricting the disallowance to 10% of the expenses. After hearing the submissions of both the representatives, we are of the view that on mere presumption the AO just made the additions on ad hoc basis without any basis. The AO himself opined that the expenses of personal use could not be ascertained in the absence of log book. The ld. CIT(A) himself has admitted that the AO has not identified any specific item of personal expenses. The ld. CIT(A), without going into the details of the expenses and the basis of disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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