1990 (8) TMI 115

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....is relatable to clause (b) of section 147 of the Act. The petitioner filed this writ petition questioning the validity of the said notice on the ground that the said notice is exclusively based upon the objections of the audit party and that the objections or report of an audit party, cannot constitute "information" within the meaning of section 147(b) of the Act. In the counter-affidavit, it is admitted that the internal audit party pointed out certain facts and that the "same have been considered while the notice under section 148/147(b) was issued". It is further averted in the counter-affidavit that the facts pointed out by the audit party can constitute "information" within the meaning of section 147(b) of the Act. Along with the co....

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....ut that the deduction granted in a sum of Rs. 38,212 as provision for gratuity was erroneously granted by the Income-tax Officer inasmuch as section 40A(7) of the Act was not complied with by the assessee. Similarly, the audit party pointed out that the deduction of a sum of Rs. 23,386 on account of bonus was also wrongly granted inasmuch as it was not said that the said amount was paid within the statutory period. In Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996, the Supreme Court pointed out that the opinion of an internal audit party of the Income-tax Department on a point of law cannot be regarded as "information" within the meaning of section 147(b). It was pointed out that while the law can be brought to the notice....