Ad hoc disallowance and unverified cash deposit additions require factual support; unsupported estimates and claims cannot stand.

Cash deposit additions under sections 68 and 69A read with section 115BBE were sent back for fresh verification because the factual record on supporting evidence needed examination; if the assessee's claim is verified, the addition is to be deleted. The deduction claim under Chapter VI-A, including section 80C, was also restored for verification, as the assessee asserted the relevant deposit was made in a PPF account and eligibility turned on proof. An ad hoc 25% disallowance of business expenditure was deleted because it was based only on a blanket estimate without identifying any specific non-business expense or factual basis.

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Issues: (i) Whether the addition relating to cash deposits under sections 68 and 69A read with section 115BBE required fresh verification; (ii) Whether the claim of deduction under Chapter VI-A, including section 80C, required verification; (iii) Whether the ad hoc disallowance of business expenditure could be sustained.

Issue (i): Whether the addition relating to cash deposits under sections 68 and 69A read with section 115BBE required fresh verification.

Analysis: The addition was sustained by the lower appellate authority on the footing that no documentary evidence regarding the cash deposits had been filed. The assessee asserted that supporting evidence had in fact been placed before the Assessing Officer. As the factual position needed verification, the matter was directed to be examined again by the Assessing Officer.

Conclusion: The issue was remanded to the Assessing Officer for fresh decision, with deletion of the addition to follow if the assessee's claim is found correct.

Issue (ii): Whether the claim of deduction under Chapter VI-A, including section 80C, required verification.

Analysis: The claim was rejected below for want of supporting evidence, while the assessee maintained that the relevant amount had been deposited in a PPF account and was therefore eligible for deduction. The factual correctness of this assertion required verification by the Assessing Officer.

Conclusion: The issue was restored to the Assessing Officer for verification and fresh adjudication, with allowance of the deduction if the claim is established.

Issue (iii): Whether the ad hoc disallowance of business expenditure could be sustained.

Analysis: The disallowance rested on a blanket estimate of 25% without identifying any particular expenditure or recording a clear finding that the expense was not business-related. A disallowance based only on surmises and without a definite basis could not be upheld.

Conclusion: The ad hoc disallowance was deleted.

Final Conclusion: The appeal was partly allowed, with one addition deleted and the remaining two disputed claims sent back for verification and fresh adjudication.

Ratio Decidendi: An ad hoc disallowance or addition cannot be sustained merely on conjecture or a blanket estimate without a specific factual basis or verification of the assessee's supporting evidence.

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