2023 (2) TMI 513 - AT - Income Tax

Levying the interest u/s 234A and 234B up to the date of the assessment order u/s 147 - as per the assessee interest shall be chargeable up-to the payment of self-assessment tax paid 19-3-2015 - HELD THAT:-The issue, however, is no longer res-integra. The Hon’ble Supreme Court and Various Hon’ble High Court thorough judgements have well settled that when the statute says interest, which would be compensatory in nature, would be levied upon happening of a particular event or action.

It has been held in the case of CIT v. Prannoy Roy [2001 (12) TMI 68 - DELHI HIGH COURT] that the interest under section 234A of the Act on default in furnishing return of income shall be payable only on the amount of tax that has not been deposited before the due date of filing of the income-tax return for the relevant assessment year. The impugned provisions are only compensatory in nature and no part thereof is penal in character. Also see ANAND PRAKASH [2009 (2) TMI 30 - DELHI HIGH COURT] as held argument raised on behalf of the revenue that such payment of tax did not strictly comply with the meaning of advance tax and would therefore, have to be disregarded for the purposes of charging interest u/s 234A, was rejected. The Court also held that interest u/s 234A was compensatory in nature and unless any loss was caused to the revenue, the same could not be charged from the assessee.

Thus we are of the opinion that the interest under section 234A and 234B of the Act can be levied in the given facts and circumstances up-to the date of self-assessment tax paid by the assessee along with the interest and not to the period beyond that date. Hence, we set aside the order of the learned CIT-A with the direction to the AO to delete the interest charged by him. Thus, the ground of appeal of the assessee is allowed.