Cash expenses not amenable for cross verification; ITAT disallows 5% expense

Kempsz Trading Pvt. Ltd. Vs DCIT (ITAT Bangalore) The assessee is engaged in the business of quarrying, processing/selling exporting of a granite block and slabs. During the course of scrutiny proceedings, the AO noticed that the assessee has incurred following expenses by way of cash 1) Royalty and Quarry Expenses by cash on daily basis Rs.11,86,318/- 2) Royalty expenses of Rs.1,61,51,863/- 3) Quarry expenses of Rs.1,74,36,731/- Aggregate of all the three – Rs.3,02,74,912/-. The AO asked the assessee to explain as to why the payments have been made in violation of provisions of sec.40A(...