Concealment of Income in case of loss

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Maqbulhusen Malaiwala (Querist)
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28 July 2010 I have one query.

A person is having business income. during the income his sales return Rs.1.25 lacs as compared to his sales of Rs.1.00 Lacs & having loss of Rs.7.50 lacs.

The assessee has borrowed huge amount from various institutions & paid hafty interest. It is not possible to identify whether the money is used for the purpose of business or for personal.

Can assessing officer disallow such interest expenditure & can assessing officer treat such disallowance as concealment of income.

If possible pls. quote judgement/case law on the same.

Regards & Thanks in Advance
Maqbulhusen Malaiwala

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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28 July 2010 Disallowance of expenses will not per se amount to furnishing inaccurate particulars of income so as to attract penalty under section 271(1)(c).
Citation : -CIT Vs. Ajaib Singh & Co. (2002) 253 ITR 630 (P&H)

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