Advance tax default attracts interest even for complete non-compliance, while penalty depends on absence of reasonable cause.

Section 18A of the Indian Income-tax Act, 1922 was treated as a complete advance-tax scheme on a pay-as-you-earn basis. For a new assessee, section 18A(3) required both an estimate of advance tax and payment of that tax, and the language of section 18A(8) was read broadly enough to cover complete non-compliance, not merely partial payment. The provision for interest was distinguished from section 18A(9), which depended on absence of reasonable cause for penalty. Interest was therefore chargeable where the assessee neither furnished the estimate nor paid advance tax.

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Issues: Whether interest under section 18A(8) of the Indian Income-tax Act, 1922 was chargeable where a new assessee neither furnished an estimate of advance tax nor paid advance tax under section 18A(3).

Analysis: Section 18A was treated as a complete scheme for advance tax on a pay-as-you-earn basis. Sub-section (3) imposed on a new assessee both the obligation to estimate advance tax and to pay it. The language of sub-section (8) was held wide enough to cover failure to comply with that obligation, and there was no basis to confine it only to cases of partial payment. The Court also noted that sub-section (8) and sub-section (9) operated in different fields: interest could be levied even where the failure was accidental or otherwise excusable, while penalty under sub-section (9) required absence of reasonable cause.

Conclusion: Interest under section 18A(8) was chargeable on failure to furnish the estimate and pay advance tax under section 18A(3), and the question was answered in the affirmative.

Ratio Decidendi: Where the statutory scheme makes a new assessee liable to estimate and pay advance tax, complete non-compliance attracts interest under the provision governing failure to pay advance tax, even if penalty requires an additional finding of absence of reasonable cause.

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