Appeal dismissed, expenses disallowed, seized cash adjustment upheld.

The ITAT dismissed the appeal, upholding the CIT(A)'s orders on both issues. The judgment emphasized the importance of specific instances and legal provisions in determining the validity of expenses disallowance and the adjustment of seized cash against tax liability, ultimately ruling in favor of the assessee based on established legal principles and precedents.

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Issues:

1. Disallowance of expenses without specific instances of non-verifiable nature.
2. Adjustment of seized cash against advance tax liability and deletion of statutory interests charged.

Issue 1: Disallowance of Expenses

The Assessing Officer challenged the CIT(A)'s order deleting the addition of Rs. 1,70,233 made from disallowances in various expenditure heads. The AO disallowed 10% of expenses due to handmade vouchers during a search and seizure operation. The CIT(A) deleted the disallowance stating that no specific instances of non-verifiable expenses were pointed out, and no incriminating documents were found during the operation. The ITAT upheld the CIT(A)'s decision, noting the absence of specific cases of non-verifiable expenses or expenses not incurred for business purposes, making the disallowance unsustainable in law.

Issue 2: Adjustment of Seized Cash

The AO contested the CIT(A)'s direction to adjust seized cash against advance tax liability and delete statutory interests charged under sections 234A, 234B, and 234C. The CIT(A) upheld the assessee's grievance, highlighting the appellant's efforts to adjust the cash towards tax liability, which were not responded to by the authorities. Citing judicial precedents, the CIT(A) ruled in favor of the assessee, emphasizing that the AO's action in charging interest was unjustified. The ITAT agreed with the CIT(A), noting that the issue was covered by judicial precedents like CIT Vs. Ashok Kumar and CIT Vs. Kesar Kimam Karyalaya. The ITAT also pointed out that Explanation-2 to Section 132B, relied on by the AO, was not in force during the relevant assessment year. Consequently, the ITAT affirmed the CIT(A)'s decision, dismissing the appeal.

In conclusion, the ITAT dismissed the appeal, upholding the CIT(A)'s orders on both issues. The judgment emphasized the importance of specific instances and legal provisions in determining the validity of expenses disallowance and the adjustment of seized cash against tax liability, ultimately ruling in favor of the assessee based on established legal principles and precedents.

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