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TMI Blog2021 (9) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... antiated by any corroborative evidence. In the present case, undisputedly, one of the entries of ₹ 75,000/- was found to be duly recorded in the books of accounts, therefore, in the agreement with the contention of the learned DR that such figures found on loose sheet could not be imaginary. Whether the entire receipt is correctly taxed or only the profit element should have been taxed. Admittedly, the AO has not invoked section 69/69A - only profit element should have been taxed - direct the AO to restrict the addition @ 10% of the gross receipts. This ground of assessee s appeal is partly allowed. Disallowance of expenditure, where payment has been made in cash exceeding ₹ 20,000/- .- HELD THAT:- Agreement with the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also passing order u/s 143(3) r.w.s. 147 of the Act without providing reasons recorded; 2. On the facts and in the circumstances of the case and in law the Ld. CIT (Appeals) erred in confirming the following additions made by the Assessing Officer: i) ₹ 19,17,500/- on account of sale of TMT scrap treating the same as unexplained income; ii) ₹ 57,387/- on account of expenses incurred on insurance and electricity wrongly invoking u/s 40A(3) of the Act; iii) ₹ 8,000/- on account of notional interest disallowed on transactions with M/s S.K. Traders; iv) ₹ 50,000/- on account of car expenses, telephone expenses and salary of staff on adhoc basis. 2. Facts giving rise to the present appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest. The Assessing Officer also made addition of ₹ 50,000/- on account of ad-hoc disallowance of the expenditure related to Car, Phone, service or staff. Thus, the AO assessed income at ₹ 24,29,887/- against returned of income of ₹ 3,96,980/-. 3. Ground no.1 of the assessee s appeal is against the reopening of the assessment. At the time of hearing, no arguments was addressed on this ground, therefore, this ground of appeal is dismissed. 4. Ground No.2 (i) is against the sustaining the addition of ₹ 19,17,500/-, the learned counsel for the assessee submitted that the authorities below were not justified in making addition, he submitted that the addition has been made purely on the basis of noting in the dia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no ambiguity under law that no addition can be made merely on the basis of loose paper without being substantiated by any corroborative evidence. In the present case, undisputedly, one of the entries of ₹ 75,000/- was found to be duly recorded in the books of accounts, therefore, I am in the agreement with the contention of the learned DR that such figures found on loose sheet could not be imaginary. The moot question arises whether the entire receipt is correctly taxed or only the profit element should have been taxed. Admittedly, the AO has not invoked section 69/69A of the Act. Therefore, I am of the considered view that only profit element should have been taxed. I, therefore, direct the AO to restrict the addition of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opposed the submission of the Ld. Counsel for the assessee and relied on the order of the authorities below. 14. I have heard the rival submission. I find merit in the contention of the assessee that both the additions has been made on the basis of surmises only. The AO has made disallowance purely on the basis of guess work. Therefore, the AO is hereby directed to delete the addition of ₹ 8,000/- on account of notional interest and ₹ 50,000/- made on account of ad-hoc disallowance out of car, telephone and salary of staff and other expenses. Thus, the ground no.2(iii) and ground no.2(iv) of the appeal are allowed. 15. In the result, the appeal of the assessee is partly allowed. Above decision was pronounced in the open ..... X X X X Extracts X X X X X X X X Extracts X X X X
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