INCOME TAX ACT, 1961

Section 69C

Income from undisclosed source - Addition under section 69C - Unexplained expenditure -

Assessee was engaged in distribution business of milk and other products of Saras Dairy. AO made various disallowances of expenses on account of power and fuel expenses, repair and machinery, wages, conveyance, telephone and other expenses. Assessee contended that he owned six trucks for distribution of the products of Saras Dairy and used to reimburse petrol and diesel expenses at fixed rate as per the arrangement with the drivers, therefore, assessee was not having any bills and vouchers regarding fuel expenses. As regards the maintenance and repair expenses, assessee claimed repair expenses of six trucks was reasonable. However, AO made disallowance of 20% of these expenses. CIT(A) confirmed the disallowance. Held: View of AO that assessee had not produced any documentary evidence in support of the expenses as well as in support of the explanation that he was having any arrangement with the drivers to pay them a fixed amount on account of fuel expenses was not tenable. Since all these expenses are otherwise essential for carrying out the business activity by assessee, therefore, the claim of the assessee could not be considered as absolutely bogus or falls. Accordingly, disallowances made by AO at 20% appeared to be on higher side and excessive, therefore, the same was restricted to 10%.

REFERRED :

FAVOUR : Partly in assessee's favour

A.Y. :

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