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Issues Involved:
1. Application of proviso to section 13 of the Indian Income-tax Act. 2. Justification of the quantum of the addition. 3. Competency of an appeal to the Appellate Assistant Commissioner against the levy of penal interest under section 18A(6). Issue-wise Detailed Analysis: 1. Application of Proviso to Section 13: The assessee's cash book was deemed unreliable as it lacked essential records such as an out-turn register for groundnuts, weighment books, and delivery books. The Income-tax authorities found that several purchases were not properly proved, leading to the rejection of the books and an addition of Rs. 3,634 to the assessment based on a reasonable gross profit. The Tribunal upheld this addition, finding it less than what it would be if a 72% kernel production rate was applied. This decision was based on facts and did not raise any question of law. The Tribunal did not explicitly discuss the applicability of the proviso to section 13, as it was not specifically argued, and it was held that no question of law arises if the Tribunal's opinion is founded on the application of the proviso. 2. Justification of the Quantum of the Addition: The materials justifying the quantum of the addition were detailed in the Tribunal's order. The sufficiency of these materials is a factual matter and does not give rise to a point of law. Therefore, the Tribunal's decision on the quantum of the addition was upheld without any legal question being raised. 3. Competency of Appeal Against Levy of Penal Interest Under Section 18A(6): The primary legal question referred to the High Court was whether an appeal to the Appellate Assistant Commissioner against the levy of penal interest under section 18A(6) is competent. The assessee argued that penal interest is part of the assessment order and thus appealable under section 30. However, the court held that section 30 does not expressly provide for an appeal against an order imposing penal interest under section 18A(6). The imposition of penal interest is not part of the income assessment process under section 23 but is a separate matter regulated by section 18A(6). The court emphasized that the right of appeal must be explicitly conferred by statute, and the omission of section 18A(6) from section 30 was intentional. Therefore, no appeal lies against an order imposing penal interest under section 18A(6). The court also addressed concerns about potential hardship to the assessee, noting that the statute's provisions are clear and unambiguous, and equitable doctrines cannot override them. The scheme of section 18A ensures that any reduction in the assessment will proportionately reduce the interest, mitigating potential hardship. The court concluded that the rules allowing the Income-tax Officer to reduce or waive interest under certain circumstances, introduced after the penal interest order in this case, do not affect the statutory provisions. The court referenced a similar decision in Deo Sharma v. Commissioner of Income-tax, U.P., agreeing with the conclusion that no appeal lies under section 30(1) against an order under section 18A(6). Conclusion: The court answered the question in the negative, ruling that an appeal to the Appellate Assistant Commissioner against the levy of penal interest under section 18A(6) is not competent. The petitioner was ordered to pay the respondent's costs fixed at Rs. 250. The reference was answered in the negative.
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