TMI Blog2014 (8) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... as mistake apparent from record - the AO completed assessment u/s 143(3) of the Act without objecting to the claim of the assessee company pertaining to the electricity expenses for residence of the directors of the company. Also in Maharana Mills (P.) Ltd. vs Income-tax Officer [1959 (4) TMI 7 - SUPREME Court] - the object of providing the issue of notice in section 154 of the Act is that no order should be passed to the detriment of assessee without affording due opportunity of hearing to him and this provision is applicable where the assessment is enhanced by making certain disallowances or additions - the AO completed assessment u/s 143(3) of the Act and subsequently picked up the case again u/s 154 of the Act on debatable issue on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icity expenses to directors as reported in tax audit report is not of the nature which can be disallowed u/s 37 by invoking provisions of sec. 154. More so this issue is outside the scope of sec. 154 as highly debatable. 3. Briefly stated the facts giving rise to this appeal are that the case was selected for scrutiny and statutory notice u/s 143(2) of the Income Tax Act, 1961 was served on the assessee. After considering submissions and explanation of the assessee, the AO made disallowance on the additions pertaining to short and excess claimed in the P L account, miscellaneous expenses without supporting documentary evidence and disallowance u/s 35D of the Act being expenses written off and the AO assessed the taxable income of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Aggrieved, the assessee preferred an appeal before the CIT(A) which was also dismissed with following conclusion:- 4. After going though the facts of the case, observations of the AO and submissions of the AR of the appellant, it is observed that there is no dispute regarding the comments of the Auditors where in the amount of ₹ 60,402/- has been shown as personal in nature. The AR of the appellant has not brought any evidence or details on record to establish that two views were possible regarding the nature of these expenses, since the auditors have clearly given their comments which have not been disputed by the appellant even before the auditors. Accordingly, I do not find any reason to interfere with the order of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment proceedings u/s 143(3) of the Act, ld. AO has an opportunity to verify and examine the claim of the assessee in the light of relevant material and 3 CD report which was also availed by him and the AO also made additions on three counts. Therefore, it should be presumed that after examining and verifying other claims of the assessee, the AO has accepted all claims of the assessee except on which additions have been made. 10. Replying to the above, ld. DR submitted that there is no dispute regarding the comments of the auditors in 3CD Report wherein it was mentioned that the expenditure of amount of ₹ 60,402 has been shown as personal in nature and the assessee has not brought any evidence or details on record to establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the assessee company pertaining to the electricity expenses for residence of the directors of the company. Subsequently, the AO picked up the case and on the basis of 3CD report, the AO made a disallowance and addition by passing order u/s 154 of the Act. The claim of the assessee company is debatable as the same may be allowed or may not be allowed in view of corresponding reservation of the company pertaining to the allowances and benefits sanctioned and provided for the directors. In view of observation of the auditors in 3CD Report, it cannot be said that there was a mistake apparent from record. 13. In the case of Maharana Mills (P.) Ltd. vs Income-tax Officer [1959] 36 ITR 350 (SC), the Hon ble Supreme Court held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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