Law: Income Tax Act, 1922

Section: 18A(1),18A(8),29,59

Law: Income Tax Rules, 1922

Section: 20

Income-tax Act, 1922 -- Sections 18A(8), 29, 30, 31 -- Income-tax Rules -- Rule 20 -- Penal interest -- Notice of demand -- Demand notice served on assessee along with I.T. No. 30 form -- Amount of penal interest payable specified in I.T. No. 30 form -- No separate order passed levying penal interest -- Penal interest, whether valid in law -- Held no -- Penal interest -- Appeal -- Appeal preferred against assessment proper -- Levy of penal interest, whether can be agitated in that appeal -- Held yes -- Appeal relating to assessment as a whole including penal interest -- Appeal against levy of penal interest, held, in such situation, maintainable -- Advance tax -- Notice of demand -- "Assessment form" (I. T. 30) not same thing as "assessment order" -- Demand for penal interest must be made in pursuance of assessment order -- Demand of interest not based on order, levying such interest, as contemplated by section 29 -- Held, illegal -- Corresponding Sections: Income-tax Ordinance, 1979 -- Sections 85, 87(2) -- ORDER The order was passed by NUR ILAHI, President.-There are three appeals, two by the Department and one at the instance of the assessee, relating to the charge years 1958-59 and 1961-62. The two 1961-62 appeals are cross appeals by the parties. All arise from the first appellate orders. 2. We take up the cross appeals first. The assessee appears to be a dealer in coal. Scrutiny of its accounts showed a closing stock 1251 tons of coal, but valued at nil on the ground that it was not saleable. However, no evidence was placed on record that this stock was as worthless as claimed. The assessing officer accordingly valued the said stock at Rs. 58,000 and made an addition on account thereof. When the matter reached the first appellate authority this addition was confirmed but that authority came to observe that the said stock should be taken as the opening stock of the next year and its set off given in that next year. It is this observation of the Appellate Assistant Commissioner which is objected to by the Department. The assessee's grievance for this years' assessment is against the disallowance of a loss of Rs. 21,122 and the application of a net rate of…

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