Business expenditure disallowance on estimate limited where some trading activity was shown and expense overlap remained unproven.

Limited trading activity in building material was sufficient to show that the assessee had carried on some business during the year, but the record did not fully support the entirety of the claimed expenditure as wholly business-related. Because substantial receipts were from house property and there was overlap between business expenses and house property outgoings, a further lump sum disallowance on estimate was considered appropriate. The disallowance was therefore restricted to an additional estimated addition of Rs. 1,00,000, with relief granted to that extent.

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Issues: Whether the disallowance of expenditure claimed against the assessee's business income was justified, and to what extent a further disallowance could be sustained when some business activity was shown during the year.

Analysis: The assessee had declared limited trading activity in building material, so it could not be treated as having carried on no business at all. At the same time, the record did not fully substantiate the whole of the claimed expenditure as being wholly referable to business operations, particularly where substantial receipts were from house property and the lower authority had already identified overlap between claimed business expenses and house property-related outgoings. In this factual setting, the tribunal found it unnecessary to re-examine each expense item individually and considered a further lump sum disallowance on an estimate to be appropriate.

Conclusion: The disallowance was restricted by making only an additional estimated addition of Rs. 1,00,000/-, and the assessee obtained relief to that extent.

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