Section 40A(2)(b) Addition allowed against Expense only & Not against Income

KEC Delco Dutsan (JV) Vs ITO (ITAT Delhi) The issue under consideration is whether the addition made u/s 40A(2)(b) in case of estimation of income without doubting expenses incurred by assessee is justified in law? ITAT states that, on going through the mandate of section 40A(2)(b), it is clear that the disallowance under this section is made in respect of the expenses incurred or payments made which are not deductible. This section has no application to income aspect of the assessee. As the AO has made disallowance u/s 40A(2)(b) in respect of income which the assessee in his opinion ought to ...