2014 (10) TMI 622

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....ive portion of the order of the Assessing Officer is extracted hereunder:- "Assessed on total income of Rs. 6,10,850/-. Penalty proceedings u/s 271(1)(1)(a), 271(1)(b), 271(1)(c), 271A, 273(2)(b) are initiated. Issue notice of demand and challan and penalty notices." 4. From the aforesaid, it is clear that the Assessing Officer had not issued any direction for charging interest under Section 139(8) and Section 215 of the Act. Pursuant to the said assessment order, a notice of demand was issued under Section 156 of the Act demanding interest under the aforesaid sections. The assessee, accordingly, moved an application under Section 154 of the Act for rectification on the ground that no interest under Section 139(8) and 215 of the Act could....

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....rging of interest was mandatory. 6. Before proceeding further, it would be necessary to consider the provision of Section 156 of the Act, which is extracted hereunder:- Notice of demand "156. When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the Assessing Officer shall serve upon the assessee a notice of demand in the prescribe form specifying the sum so payable: Provided that where any sum is determined to be payable by the assessee or by the deductor under sub-section (1) of section 143 or sub-section (1) of section 200A, the intimation under those sub-sections shall be deemed to be a notice of demand for the purposes of this section." 7. A perusal of the aforesaid pr....

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.... assessment order does not specify charging of any interest. Similarly in Commissioner of Income Tax Vs. Kishan Lal (HUF) 258 I.T.R. 359, the Delhi High Court held that since no direction was issued in the assessment order for charging of interest, the notice of demand could not be issued levying 5 interest under Section 234A, 234B and 234C of the Act. Similar view was reiterated by the Delhi High Court in Commissioner of Income Tax Vs. INSILCO Ltd. 261 I.T.R. 220. 10. In Uday Mistanna Bhandar & Complex 222 I.T.R. 44 (Patna), while analyzing the provisions of Sections 234A, 234B and 234C vis-à-vis Section 156 of the Act, the Patna High Court held that notice of demand claiming interest can be issued only when there is a direction in....

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....cify any amount to be recovered, the decree could not contain such amount. Similarly, when the assessment order does not indicate that interest would be leviable, the notice of demand under Section 156 of the Act levying interest would be wholly illegal since interest is payable in consequence of an assessment order as is clear from Section 156 of the Act itself. Consequently, we are of the opinion that the notice of demand cannot go beyond the assessment order and the assessee cannot be served with any such notice demanding interest, Further, the assessee must know that he has been charged interest under a particular section of the Act, which must be specify in the assessment order and only thereafter a notice of demand under Section 156 ....