TMI Blog1986 (8) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... venue audit party in their audit note. The ITO felt that the audit more constituted "information" within the meaning of s. 147 (b). So reassessment proceedings were initiated by issue of notice under s. 148 on 24th June, 1982. The assessee filed return in response to the notice under s. 148 declaring the income as originally returned. Before the ITO it was contended by the assessee that out of Rs. 49,942 debited under the head "advertisement", a sum of Rs. 17,097 was spent on jackpot stamps and cost of materials for raffle and that these expenses were in the nature of "discount" only and not coming within the mischief of s. 37(3A). It was further urged that the balance under "advertisement" being below Rs. 40,000 there was no case of disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee preferred the present appeal. At the time of hearing the assessee's counsel filed notice under s. 154/155 of the IT Act, 1961 dt. 20th Dec., 1980 issued by the ITO and the assessee's reply dt. 9th Jan., 1981 in response to the said notice. The arguments of the assessee's counsel were to the following effect: The assessment was originally completed on 31st July, 1979. After the completion of the assessment, on 20th Dec., 1980, the ITO issued a notice under s. 154/155 stating that the expenditure under 'advertisement' omitted to be restricted under s. 37(3A) and expenditure amounting to Rs. 7,041 omitted to be added back to the taxable income and asked for the assessee's objections, if any. The assessee had given a detailed reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance prescribed under s. 37(3A) has to be done. This has not been done. Excess allowed is therefore Rs. 7,041. The tax effect in the hands of firm and partners is Rs. 2,000 (Approx.)" From the above it would be seen that the audit party has not only brought to the notice of the ITO the existence of s. 37(3A) and its non-application by the ITO to the facts of the assessee's case but also interpreted the same holding that there was an excess allowance of Rs. 7,041. Had the audit party stopped at the point of drawing the ITO's attention to s. 37(3A) and its non application it would not have been it by the decision of the Supreme Court in (1979) 119 ITR 996 (SC). But the audit has gone a steep beyond it in quantifying the disall ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
