Applicability of S.194 when client makes payment to an advertising agency

Assessee is a private limited company engaged in the business of posting advertisement in various publication including newspapers. It has filed its return of income on 29.7.2005 declaring a total income of Rs.45,550. The case of the assessee was selected for scrutiny assessment and a notice under sec. 143(2) of the Act dated 26.7.2006 was issued and served upon the assessee. On scrutiny of the accounts, learned Assessing Officer found discrepancies in the receipts appearing in the TDS Certificate vis-à-vis shown by the assessee in the profit and loss account. He observed that in the TDS cert...