2004 (6) TMI 236

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....g the assessment proceedings the AO noticed purchases of Rs. 27,39,407 from 17 different parties. The AO noticed that three parties were not found at the address given by the assessee, namely, M/s Ansu Associates, Rolex Enterprises and Konica Steel. The AO asked to produce these parties but the same could not be produced before the AO. The AO has also issued summons under s. 131 to six parties which were returned by the postal authority with the remark "not known". In case of Prapti Corpn., summons issued was served but nobody remained present on the date of hearing. The AO has also made enquiries from bank and Shroff Pari Rakesh Kumar Natwarlal in respect of bill discounted. The AO noticed that the discounting cheques were issued to partie....

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....re IT Act is also very important. In the said report, suggesting the amendment in s. 69C, has clearly mentioned that 'At present, unaccounted expenditure is treated as income under s. 69C of the Act, but there is no corresponding provision for disallowance of such expenditure. Hence, while the assessees are presently being brought to charge under s. 69C, they are able to set off the expenditure as deduction under the general provision of s. 37 of the Act'. Till the law is amended the correct interpretation of the Act as it presently stands has to be given. The AO was, therefore, required to give a deduction of Rs. 27,39,410 for such expenditure. I direct the AO to give such deduction of Rs. 27,39,410 and in the result, the addition would be....