Section 234A interest is compensatory and cannot run beyond self-assessment tax payment when paid before filing the return.

Interest under section 234A is compensatory, not penal, and its levy cannot continue beyond the date on which self-assessment tax is paid if that tax is paid before the return is filed. On those facts, a rectification petition under section 154 was maintainable because the recomputation of interest exceeded what the law permitted and disclosed a mistake apparent from the record. The first appellate order was set aside and the Assessing Officer was directed to rectify the interest computation accordingly.

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Issues: Whether the assessee's petition under section 154 was maintainable for rectification of interest levied under section 234A, and whether such interest was to be computed up to the date of filing of the return or only up to the date of payment of self-assessment tax.

Analysis: Interest under section 234A was treated as compensatory and not penal, intended to recompense the Revenue for the period during which tax remained unpaid. On the facts, the self-assessment tax had been paid before the return was filed, and the levy could not continue merely because the return was filed later. The recomputation made in rectification therefore exceeded what the law permitted, and the assessee's claim disclosed a mistake apparent from the record.

Conclusion: The rectification should have been allowed, and interest under section 234A was not chargeable beyond the date of payment of self-assessment tax. The assessee succeeded.

Final Conclusion: The order of the first appellate authority was set aside and the Assessing Officer was directed to rectify the interest computation in accordance with law.

Ratio Decidendi: Interest under section 234A is compensatory and, where self-assessment tax is paid before filing of the return, it cannot be levied beyond the date of such payment.

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