Disallowance of expenses can not be made by Assessing Officer without verifying books of accounts

The Commissioner of Income Tax (Appeals), Ludhiana, recorded a finding that the Assessing Officer has reported that the voluminous nature of entries cannot be verified. Once the Assessing Officer himself has failed to verify the entries, there is no reason to disallow the distribution expenses. It is a rule of thumb which was applied by the Commissioner of Income Tax (Appeals), Ludhiana to allow expenses to the tune of 40%, which has been found to be unjustified by the Tribunal. The Tribunal has allowed the expenses to the extent of 60%. The Assessing Officer himself has not verified the entri...