TMI Blog1975 (5) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... ant is a firm engaged in the business of manufacturing and sale of bifurcated rivets. Against the net profit as per profit and loss account, the assessee filed a return declaring a taxable income of Rs. 97,280 It was submitted before us that anticipated add backs were made while filing the return and this is how the figure as per the profit and loss account, as stated by the ITO at Rs. 88,477 seems at variance with the figure of return filed as recorded by the ITO himself in para 2 of his order. The assessment, however, came to be completed at Rs. 1,09,560. In such assessment, in addition to the ad backs by the assessee itself, the ITO disallowed Rs. 3,000 in respect of labour charges paid to M/s Davindra Industries, an associate concern, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g evidence, it would have adopted some other mode than to expose itself to an addition on the earlier years' pattern. We find that inspite of substantial increase in profit. the assessee was paying fixed labour charges Rs. 1,250 per month as in the earlier years to M/s Davindra Industries and such charges did not vary or increase with the profits as such. A copy of account of M/s Davindra Industries, Chandigarh in the assessee's books has been filed before us and it is stated to have been filed before the ITO too. On the facts before us, we find absolutely no justification for the ITO's action in making the addition of Rs. 3,000 in the trading account in respect of labour charges to the tune of Rs. 15,250. The AAC certainly has been in erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he argument Was that the assessee though might not have filed an appeal against disallowances in respect of car expenses and car maintenance account and some other add backs but it did not mean that it accepted such additions as justifiable. We are inclined to accept such contentions. On the facts of the case, therefore, we are of the opinion that the assessee was not obliged to file an estimate under s. 212(3a). 5. Shri D.S. Gupta submitted that the AAC firstly held that no appeal could he filed against charging of interest under s. 217 and then took upon himself to decide the case on merits also and both the issues came to be wrongly decided against the assessee. He relied on the following judgements for the proposition tha in an appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessee could come to its rescue for the proposition that an assessee can challenge levy of interest in an appeal otherwise legally filed and maintainable, we briefly notice the ratios of the judgments cited in this case as below. 8. The Gujarat High Court in the noted judgment has held that when an appeal is filed against the regular assessment, it would be open to the assessee to take all points which may legitimately not only reduce the taxable income a tax the to be paid or with regard to the proper head which the income should fall, but also reduce the quantum of penal interest, but no right of appeal has been given to the assessee to appeal simply against the quantum of penal interest. 9. In the Daimler Benz's case(2), t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961, against the imposition of penal interest alone as it is not an order of assessment. However, in an appeal filed against the assessment, the levy of penal interest also could be challenged. 11. In the Allahabad High Court's case noted above however, the view taken is the one canvassed by the Revenue. But clearly there being two views possible and there being conflicting judicial authorities on the point, we are inclined to take a view that in an otherwise validly filed appeal, levy of interest under s. 217 can be challenged. Since in the present case, it was not even suggested much less contended that the assessee's appeal was frivolous or wrong or not maintainable, the assessee was within its rights to contest the levy of interes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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