Appellate tribunal decision on interest levy & adhoc disallowance of expenditure.

The appellate tribunal dismissed grounds 1 and 2 related to the adhoc disallowance of general expenditure. Regarding the levy of interest under sections 234A and 234B, the tribunal held that interest should only be imposed on the income declared in the return, following legal precedents. The assessing officer was directed to levy interest solely on the income returned by the assessee. As a result, the appeal was partially allowed, with the order pronounced on 28th February 2018.

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Issues:
1. Adhoc disallowance of general expenditure
2. Levy of interest under section 234A and 234B

Analysis:
1. The first issue pertains to the adhoc disallowance of 10% of general expenditure amounting to Rs. 83,520. The appellate tribunal found no merit in the appellant's submissions and refused to interfere with the factual findings of the revenue authorities. Consequently, ground no 1 and 2 were dismissed.

2. The second issue concerns the levy of interest under section 234A and 234B. The key question was whether the interest should be imposed on the total income disclosed in the return or the total income determined by the assessing officer. Citing a judgment by the Hon'ble Jharkhand High Court in the case of Ajay Prakash Verma vs. ITO, the tribunal held that interest under sections 234A and 234B should only be levied on the income declared in the return of income. The tribunal further referenced another judgment where the civil review application filed by the department on the same issue was dismissed. Therefore, following the legal precedents set by the jurisdictional High Court, the assessing officer was directed to levy interest under sections 234A and 234B solely on the income returned by the assessee, not on the income assessed by the assessing officer.

In conclusion, the appeal of the assessee was allowed in part, and the order was pronounced in the open court on 28th February 2018.

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