TaxTMI 
TaxTMI 
2014 (8) TMI 311
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssment without providing any opportunity of hearing as mandatory u/s 154(3) is unsustainable in law. 2. That under the facts and circumstances, Rs. 60,402/- being reimbursement of electricity 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 th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... date none appeared nor any written submission was received. It is presumed that the assessee has nothing to say in this regard as mistake is very much apparent." 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 Rs. 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 the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Act, a notice to the assessee is mandatory, specially when the assessment is enhanced or refund is reduced. 9. The AR pointed out that during the 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 expe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot be dealt with as mistake apparent from record. In the present case, 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. 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 ....