Interest under Section 234A accrues only until tax payment date, not return filing date, rules ITAT

ITAT Delhi held that interest under section 234A is compensatory, not penal, and accrues only until tax payment date, not return filing date. The assessee deposited interest for one month from due date (31st October 2021) to tax payment (29th November 2021), but revenue computed interest till return filing date (7th March 2022). Following Supreme Court precedent in Prannoy Roy case, ITAT ruled that interest under section 234A ceases on tax payment date regardless of return filing date. Decision favored assessee.

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Issues:
1. Validity of order passed under section 250 of the Act.
2. Opportunity of being heard before levying interest under section 234A.
3. Imposition of interest under section 234A beyond the date of self-assessment tax payment.
4. Calculation of interest under section 234A till the date of filing income tax return.
5. Interpretation of circulars and judicial rulings regarding interest under section 234A.
6. Compliance with the judgment of the Honorable Supreme Court in the case of CIT vs. Pranoy Roy.

Analysis:

1. The appellant challenged the order of the Ld. Addl/JCIT(A), Madurai, regarding the assessment year 2021-22 on various grounds, including the validity of the order passed under section 250 of the Act.

2. The appellant contended that the Assessing Officer erred in not providing an opportunity of being heard before levying interest under section 234A of the Act.

3. The dispute arose regarding the imposition of interest under section 234A beyond the date on which self-assessment tax, including interest, was already paid. The appellant argued that interest should only be calculated till the date of tax deposition, as per CBDT circular relief.

4. The appellant raised objections to the calculation of interest under section 234A until the date of filing the income tax return, emphasizing that interest should cease accruing upon full tax payment, as per judicial precedents.

5. The appellant contested the interpretation of circulars and judicial rulings concerning the imposition of interest under section 234A, highlighting discrepancies in the application of these guidelines by the authorities.

6. The appellant argued that the authorities failed to follow the judgment of the Honorable Supreme Court in the case of CIT vs. Pranoy Roy, which clarified the compensatory nature of interest under section 234A and its non-leviability if tax is paid before the due date of filing the income tax return.

7. The ITAT, after considering the submissions and precedents cited, ruled in favor of the appellant, setting aside the orders of the lower authorities and allowing the grounds raised by the assessee. The appeal was thus allowed in favor of the appellant.

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