The Tribunal held the assessee had discharged the initial onus to prove the veracity of the claim of expenditure and no defects were pointed out by the Assessing Officer or the Commissioner (Appeals) in respect of the audited books of the assessee inasmuch as the books of account had not been rejected. Hence, the ad hoc disallowance of expenditure could not be countenanced. Even if certain flaws were found during the assessee’s special audit conducted for the earlier year, the special audit report could not be the sole ground for disbelieving the expenditure claimed in the relevant year, without first discarding the evidence brought on record by the assessee to substantiate the claim and that too with cogent reasons. No ad hoc disallowance could be made without following the due process of law as contemplated under sections 145 and 144 of the Act. Therefore, the action of the Commissioner (Appeals) in disallowing 90 per cent. of the expenses was arbitrary and against the “rule of law”. The bills and vouchers were duly produced before the Commissioner (Appeals) and also sent to the Assessing Officer for his remand report. Not only were the expenses recorded in the books of account but the assessee was also able to prove the source of expenditure claimed. The assessee had demonstrated that the source of expenses was the revenues earned during the year. (AY. 2014-15)