No Interest u/s 234A and 234B of Income Tax Act Beyond Date of Self-Assessed Tax: ITAT

The Rajkot Bench of Income Tax Appellate Tribunal (ITAT) has no interest under Section 234A and234B of the Income Tax Act 1961 shall be imposed beyond the date of self-assessed tax.

Theassessee Dhirendra Narbheram Sheth is an individual who derives income under the head salary and interest income. The assessee did not file his return of income for the AY 2011-12 under section 139 of the Act.

 The assessee had filed the return of income as on 13/04/2018 in response to the notice issued under section 148 of the Act declaring an income which was accepted by the AO in the assessment framed under section 147 of the Act. Besides, the AO had levied interest under section 234A, 234B and 234C of the Act till the date of completion of assessment on 29/11/2018.

The assessee against the levy of interest under section 234A and 234B of the Act, among other grievances, has moved an application dated 2 January 2019 under section 154 of the Act to rectify the same. As per the assessee, he had paid the self-assessment tax along with interest dated 19 March 2015 and therefore should not have been charged any interest under section 234A and 234B of the Act.

Section 234A of Income tax act deals with levy of interest on taxpayers if they delay in filing their Income Tax Return (ITR). While section 234B of the Income Tax Act deals with levy upon those taxpayers who default in payment of Advance Tax.

Fenil Mehta, on behalf of the assessee submitted that, Once, the assessee had paid the taxes including the interest under section 234A and 234B up the date of self-assessment tax on the income declared in the income tax return which had been accepted by the revenue, there could not be any element of interest to be charged beyond the date of tax paid by the assessee as self-assessment tax on19 March 2015

B. D. Gupta, on behalf of the revenue, supported the impugned order.

The Division Bench of Waseem Ahmed, (Accountant Member) and Madhumita Roy, (Judicial Member) allowed the appeal referring to the decision in CIT v. Prannoy Roy and observed that,

 “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.”

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