9911796707
TMI Blog1996 (11) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Act for the assessment year 1974-75 is valid in law?" The assessee is a company carrying on business at Madras. The assessment for the assessment year 1974-75, for which the previous year ended on December 31, 1973, was completed under section 143(3) of the Act. Subsequently, the Income-tax Officer noticed that the expenditure allowed by way of remuneration to directors under section 40(c) of the Act was in excess of the ceiling prescribed and that the weighted deduction under section 35B was improperly allowed on an amount of Rs. 1,34,411 which represented commission paid to U. K. and Nepal parties. He, therefore, reopened the assessment under section 147(b) of the Income-tax Act, and in the reassessment, added Rs. 44,827 under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o reopen the assessment under section 147(b) of the Act. It was submitted that the earlier year's assessment was reopened on the basis of the audit note, but in so far as the present assessment year is concerned, reopening was done not on the basis of the audit note, but on the basis of the previous year's records. Therefore, it was submitted that the conclusion arrived at by the Tribunal that the Income-tax Officer was influenced by the audit note relating to the earlier assessment year is not sustainable. On the other hand, learned counsel appearing for the assessee, while supporting the order passed by the Tribunal, submitted that even though the audit report pointing out the question with regard to the application of section 40(c), re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction under section 35B of the Act. Therefore, according to the Tribunal, when the Income-tax Officer was influenced by the earlier year's records, he would have been also influenced by the audit note on the basis of which the earlier year's assessment was reopened. Therefore, the Tribunal came to the conclusion that ultimately that the Income-tax Officer would have been influenced by the earlier year's audit note. It is no doubt true that there is no audit objection for the present assessment year under consideration. But the facts on record would go to show that only on going through the earlier year's records, the Income-tax Officer came to the conclusion that section 40(c) was not applied and weighted deduction was granted in excess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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