Ad hoc disallowance of genuine business unsupported by adverse material cannot survive where reconciliation and business use remain unrebutted.

Ad hoc disallowance of genuine business expenditure is impermissible absent specific adverse material or contrary evidence. Repair bills wrongly booked under purchases had been reconciled, so the alleged bogus purchase addition was deleted. Salary expenditure was already paid to employees and no defect was shown, so the percentage-based disallowance was deleted. Car expenses were claimed for exclusive business use and remained unrebutted, so that disallowance was also deleted. The assessee's claim for deduction of the disputed expenses was therefore accepted.

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Issues: (i) Whether the addition made by treating the repair bills, shown under purchases, as bogus purchases was sustainable; (ii) whether ad hoc disallowance of salary expenditure was justified; (iii) whether ad hoc disallowance of car expenses was justified.

Issue (i): Whether the addition made by treating the repair bills, shown under purchases, as bogus purchases was sustainable.

Analysis: The assesseee explained that the repair bills had been wrongly booked under purchases and had already been reconciled before the Assessing Officer. On the available record, no contrary material was shown to support the addition.

Conclusion: The addition on account of alleged bogus purchases was not sustainable and was deleted in favour of the assessee.

Issue (ii): Whether ad hoc disallowance of salary expenditure was justified.

Analysis: Salary had already been paid to employees, and no basis was shown for making a percentage-based disallowance in the absence of any specific defect or contrary evidence.

Conclusion: The ad hoc disallowance of salary expenditure was not justified and was deleted in favour of the assessee.

Issue (iii): Whether ad hoc disallowance of car expenses was justified.

Analysis: The vehicles were stated to have been used exclusively for business purposes, and no contrary evidence was brought on record to disprove the claim.

Conclusion: The ad hoc disallowance of car expenses was not justified and was deleted in favour of the assessee.

Final Conclusion: The additions made by the lower authorities were set aside and the assessee's claim for deduction of the disputed expenses was accepted.

Ratio Decidendi: Ad hoc disallowance of genuine business expenditure is impermissible in the absence of specific adverse material or contrary evidence, and an addition cannot survive where the assessee's reconciliation remains unrebutted.

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