TMI Blog2001 (7) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year 1994-95 subject to the condition that no penal action or prosecution was initiated against him. On April 20, 1998, the petitioner filed a revised statement of taxable income and paid the additional amount of tax. He appended the following note to the revised statement of taxable income: "No interest under sections 234A, 234B and 234C is payable since the assessee has surrendered the amount to win peace with the Income-tax Department and to avoid unnecessary litigation much after the close of the assessment year." A copy of this document is at annexure P-2 with the writ petition. On August 6, 1998, a notice under section 148 was issued to the petitioner. He filed a reply. On January 12, 2000, the Assessing Officer passed the order by which the taxable income was assessed at Rs.5,98,520. It was further ordered that- "Charge interest as per law. Penalty proceedings under section 271(1)(c) have been initiated. Issue demand notice and challan." On the same day, viz., January 12, 2000, a notice of demand under section 156 of the Income-tax Act, 1961, was issued. The amount held payable by way of interest under section 234B was Rs.2,06,940. After adjusting the amount a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which he was held liable to pay additional tax and interest. The respondents maintain, that the order of assessment and the demand notice were "issued simultaneously on January 12, 2000". It is claimed that the two documents have to be treated as a "part of the assessment order". The demand is in conformity with law. As such, the respondents pray that the writ petition be dismissed. The petitioner has filed a replication to the written statement controverting the claim made on behalf of the respondents. Counsel for the parties have been heard. Mr. A. K. Mittal, counsel for the petitioner, contended that the levy of interest under section 234B is Wholly illegal. He placed a strong reliance on the decision of their Lordships of the Patna High Court in Uday Mistanna Bhandar and Complex v. CIT [1996] 222 ITR 44. He further pointed out that the decision had been affirmed by their Lordships of the Supreme Court in CIT v. Ranchi Club Ltd, [2001] 247 ITR 209, when the civil appeal was dismissed. Mr. R. P. Sawhney submitted that the petitioner has an effective alternative remedy of revision under section 264. He further submitted that the liability to pay interest is laid down b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Act. Interest is payable under various provisions like for default or delay in furnishing the return of income [sections 139(8) and 139(9)] and also under the various sections for default in payment of advance tax (sections 215, 216, 217, 234B and 234C). A notice of demand is somewhat like a decree in a civil suit which must follow the order. When a judgment does not specify any amount to be charged under any particular section, the decree cannot contain any such amount. Similarly, when the assessment order is silent if any interest is leviable, the notice of demand under section 156 of the Act cannot go beyond the assessment order and the assessee cannot be served with any such notice demanding interest. We, therefore, do not feel any difficulty in coming to the conclusion that the notices of demand in C. W. J. C. Nos. 3609 of 1995(R), 3287 of 1995(R), 3562 of 1995(R), 3494(R) of 1995 and 3527 of 1995(R), have to be quashed so far these relate to charging of interest under section 234A, 234B or 234C of the Act. We get support for the view which we have taken from the decisions of the Calcutta High Court in Monohar Gidwany v. CIT [1983] 139 ITR 498 and CIT v. Wiliard In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest as per rule" and the provision under which interest is to be charged as also the amount are determined by some other officer. Such an order shall, as observed by their Lordships of the Patna High Court, be vague. The application of mind by the competent authority shall not be apparent. However, in a case like the present where the provision and the amount are decided and determined by the Assessing Officer himself on the same day, the position would be totally different. It deserves notice that even calculations, etc., are a part of the process of assessment. The "assessment" is complete only when the "taxable income" and the "due amount" are duly determined. In the case of Kalyankumar Ray v. CIT [1991] 191 ITR 634, their Lordships of the Supreme Court were pleased to observe as under: '"Assessment' is one integrated process involving not only the assessment of the total income but also the determination of the tax. The latter is as crucial as the former. The Income-tax Officer has to determine, by an order in writing, not only the total income but also the net sum which will be payable by the assessee for the assessment year in question and the demand notice has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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