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Issues Involved:
1. Ex parte decision against principles of natural justice. 2. Disallowance of Rs. 5,109 as entertainment expenses under s. 37(2A). 3. Treatment of additional sales-tax liability of Rs. 10,580 as penalty. 4. Disallowance of Rs. 6,292 out of traveling expenses under r. 6D. 5. Addition of Rs. 2,403 as PF and ESI paid during the year but allowed as deduction in earlier year. 6. Addition of Rs. 22,185 as bonus for asst. yr. 1988-89 already allowed as deduction in the same year. 7. Addition of cash credits of Rs. 10,000 each under s. 68. 8. Charging of interest under ss. 234A and 234B without a specific order. Issue-wise Detailed Analysis: 1. Ex parte decision against principles of natural justice: The learned counsel did not press for consideration on this ground. Therefore, the issue was rejected. 2. Disallowance of Rs. 5,109 as entertainment expenses under s. 37(2A): The learned counsel did not press for consideration on this ground. Therefore, the issue was rejected. 3. Treatment of additional sales-tax liability of Rs. 10,580 as penalty: The CIT(A) confirmed the disallowance made by the AO, treating the payment as a penalty. The assessee contended it was additional sales-tax, not a penalty. Both parties agreed to restore the matter to the AO for a de novo decision after giving the assessee a reasonable opportunity. 4. Disallowance of Rs. 6,292 out of traveling expenses under r. 6D: The learned counsel did not press for consideration on this ground. Therefore, the issue was rejected. 5. Addition of Rs. 2,403 as PF and ESI paid during the year but allowed as deduction in earlier year: The AO added Rs. 2,403 on the ground that it was paid during the previous year but allowed as a deduction in earlier years. The CIT(A) upheld this view. The learned counsel requested verification of the assessee's claim by the AO. The matter was restored to the AO for re-examination. 6. Addition of Rs. 22,185 as bonus for asst. yr. 1988-89 already allowed as deduction in the same year: This issue was similar to the one in ground No. 5. The orders of the tax authorities were set aside, and the matter was restored to the AO for a de novo decision on merits. 7. Addition of cash credits of Rs. 10,000 each under s. 68: The AO observed that no confirmations were filed, and the assessee offered no explanation about the nature and source of the amounts. The CIT(A) confirmed the AO's view. The assessee's counsel argued that no query was raised during the hearing. The matter was restored to the AO to verify if queries were raised. If the AO had raised queries, the addition would be repeated. If not, the AO would re-examine the matter de novo on merits, allowing the assessee to adduce evidence to discharge the onus under s. 68. 8. Charging of interest under ss. 234A and 234B without a specific order: An additional ground was admitted, questioning the charging of interest under ss. 234A and 234B without a specific order. The learned counsel cited several judgments, arguing that no order had been passed for charging interest, and the assessment order lacked any observation or direction for such interest. The learned Departmental Representative relied on the judgment of the Hon'ble Punjab & Haryana High Court in Vinod Khurana vs. CIT & Anr., which suggested that a demand notice or calculation sheet constituted sufficient compliance. The Tribunal found that in the present case, there was no mention of interest in the assessment order or demand notice. The Hon'ble Delhi High Court, the jurisdictional High Court, had upheld the quashing of interest levies in similar cases. The Tribunal quashed the levy of interest under ss. 234A and 234B, following the judgments of the Hon'ble Supreme Court in Ranchi Club Ltd. and the Hon'ble Delhi High Court in Gold Tex Furnishing Industries. Conclusion: The appeal was partly allowed, with specific matters restored to the AO for re-examination and the levy of interest under ss. 234A and 234B quashed.
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