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expenses were not incurred for the purpose of business or outside the assessee's books of count. He further observed that the A.O. has accepted the declared turnover of the assessee but has disallowed 5% of the labour charges mainly on the basis of presumption. He has also considered the decrease in turnover and lower net profit ratio of 1.52% as compared to the earlier years while restricting the disallowance to 1% of the total labour expenses.

8. We have heard the ld. Representatives of the parties and records perused. We find that the A.O. has disallowed 5% out of total labour expenses on the ground that there are certain discrepancies and mistakes in maintenance of the vouchers which were produced in support of claim of labour charges. The CIT(A) restricted the disallowance to the extent of Rs.1,39,360/- being 1% of the total expenses on the ground that the A.O. did not appreciate the facts of the case. However, the CIT(A) considered the other aspect of the business and also considered the profit rate and found that 1% disallowance is sufficient to cover up the lapses pointed out by the A.O. In the light of the detailed discussion made above while deciding ground no.2 in respect of disallowance out of purchase of material, following the said discussion, we do not find any infirmity in the order of CIT(A). Order of the CIT(A) is accordingly confirmed.