1. The assessee is an individual and derived 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.
 

2. The assessee filed the return of income on 13/04/2018 in response to the notice issued under section 148 of the Act declaring an income of Rs. 6,20,156/- which was accepted by the Assessing Officer (“AO”) in the assessment order under section 147 of the Act.
 

3. The AO had levied interest under section 234A, 234B and 234C of the Act till the date of completion of assessment i.e., 29/11/2018.
 

4. The assessee against the levy of interest under section 234A and 234B of the Act had moved an application dated 02/01/2019 to rectify the same. As per the assessee’ s contention, he had paid the self-assessment tax along with interest amounting to Rs. 71,070/- up to the date of making payment i.e.,19 March 2015 and therefore there should not have been any additional interest under section 234A and 234B of the Act after the payment of the self-assessment tax.
 

5. However, the AO disagreed with contention of the assessee and stated that the self-assessment tax paid is required to be first adjusted towards the interest payable by him and the balance shall be adjusted towards the tax payable. Accordingly, the interest payable under section 234B of the Act is worked out giving credit to tax paid of Rs. 71,070/- after adjustment of interest payable by him u/s. 234A and 234C of the Act up to the date of passing the reassessment order. Thus, the interest of Rs. 19,220/- was payable u/s. 234B, rectifying the mistake of the assessee in determining the amount of interest chargeable.
 

6. On further appeal before the Commissioner of Income Tax (Appeals) (“CIT(A)”) it was stated that interest under section 234A of the Act is charged from the original due date of filing the return to the date of actual filing of the return. Similarly, interest u/s 234B is charged from start of the AY to the date of determination of income under section 143(1) or regular assessment including under section 147 thereby considering the interest as penal in nature.
 

7. Aggrieved by the order of CIT(A), the assessee appealed before the Income Tax Appellate Tribunal (ITAT). The main issue before them was to decide whether the interest under section 234A and 234B are compensatory or penal in nature. The purpose of the Act is to realize direct taxes and is not correct to refer the levy of such interest as a penal in nature.
 

8. It was stated that when the amount of tax has been paid by the assessee with interest up to the date of payment, there is no point to charge the interest till the date of filing of return of income as the revenue is not incurring any loss on account of non-filing of the return.
 

9. It was therefore held 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, the appeal of the assessee was allowed and against the department.