Tribunal sets aside interest charges post-tax payment, citing compensatory nature of interest under Sections 234A and 234B.

The Tribunal allowed the appeal, setting aside the CIT(A)'s order and directing the AO to delete the interest charged beyond the self-assessment tax payment date. It clarified that interest under sections 234A and 234B is compensatory and should only be levied until the tax payment date to prevent revenue loss. The Tribunal emphasized that charging interest post-tax payment does not serve the purpose of compensating revenue loss, in line with Supreme Court and High Court precedents.

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Issues:
1. Condonation of delay in filing the appeal due to Covid-19.
2. Levying interest under section 234A and 234B beyond the date of self-assessment tax payment.
3. Nature of interest under section 234A and 234B - compensatory or penal.

Condonation of Delay:
The appeal was filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, regarding the assessment order passed under Section 143(3) r.w.s. 147 of the Income Tax Act, 1961 for the Assessment Year 2011-12. The assessee requested condonation of a 105-day delay in filing the appeal due to Covid-19, which was granted based on Supreme Court judgment. The delay was not objected to by the Revenue, and the appeal was considered on merit.

Levying Interest under Section 234A and 234B:
The main issue raised by the assessee was the levy of interest under section 234A and 234B beyond the date of self-assessment tax payment. The assessee argued that interest under these sections is compensatory, paid to avoid revenue loss due to late tax payment. The AO had charged interest till the date of assessment order, despite the assessee's self-assessment tax payment in 2015. The CIT(A) upheld the AO's decision, considering the provisions of the Act as mandatory and penal. However, the Tribunal found that interest should only be charged up to the date of self-assessment tax payment. Various case laws supported the compensatory nature of such interest, emphasizing that no interest should be charged post-tax payment. The Tribunal allowed the appeal, directing the AO to delete the interest charged beyond the self-assessment tax payment date.

Nature of Interest under Section 234A and 234B:
The Tribunal analyzed whether interest under section 234A and 234B is compensatory or penal in nature. It was established that the purpose of such interest is compensatory to ensure timely tax payment and avoid revenue loss. The Tribunal referred to Supreme Court and High Court judgments emphasizing the compensatory nature of this interest. The Tribunal concluded that interest should only be levied until the date of self-assessment tax payment, as charging interest beyond that point would not serve the purpose of compensating revenue loss. Therefore, the Tribunal allowed the appeal, directing the deletion of interest charged post-self-assessment tax payment.

In conclusion, the Tribunal allowed the appeal, setting aside the order of the CIT(A) and directing the AO to delete the interest charged beyond the date of self-assessment tax payment. The judgment clarified the compensatory nature of interest under section 234A and 234B, emphasizing that such interest should only be levied until the date of tax payment to avoid revenue loss.

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