Interest U/s. 234A to 234C Not Payable If Assessment Order Silent

Even if any provision of law is mandatory and provides for charging of tax or interest, the view taken in CIT vs. Ranchi Club Ltd  (2000 (8) TMI 79 (SC) ) is that such charge by the assessing officer should be specific and clear and assessee must be made to know that the assessing officer has applied its mind and has ordered charging of interest. The mandatory nature of charging of interest and the actual charging of interest by application of mind and the mention of the proviso of law under which such interest is charged are two different things.

In the present case although it is stated  that in the demand notice there was charging of interest, there is no such pleading or ground taken, nor do we find that any such point was raised in the Tribunal.

Charging of interest not effective without a specific, reasoned finding in the assessment order or pleadings. Where an assessing officer seeks to levy interest, the charging must be specific and clear and the assessment record must show that the officer applied mind and expressly imposed interest; a silent or non specific assessment order cannot validly create an interest liability, and an asserted charge in a demand notice is ineffective if no specific pleading, ground or Tribunal issue on interest appears.