Court rules interest due for late tax return filing under Income-tax Act

The High Court of Calcutta ruled that an assessee who filed a return under section 139(4) of the Income-tax Act, 1961, after the prescribed time under section 139(1), was still liable to pay interest for delayed submission under sub-clause (iii) of the proviso to section 139(1). The court held that the failure to file within the specified period or apply for an extension necessitated the payment of interest. The judgment favored the Revenue, obligating the assessee to pay interest for the delayed income tax return submission, with each party bearing its costs.

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Issues:
Interpretation of provisions under section 139(1) and section 139(4)(a) of the Income-tax Act, 1961 regarding the applicability of interest for delayed submission of income tax return.

Detailed Analysis:

The judgment by the High Court of Calcutta involved a question of law referred by the Tribunal regarding the charging of interest under clause (iii) of the proviso to section 139(1) of the Income-tax Act, 1961. The case pertained to the assessment year 1970-71, where the relevant provisions required the filing of income tax return within a specified period. The proviso to section 139(1) allowed for an extension of time for filing the return under certain conditions, failing which interest at nine per cent per annum would be payable for delayed submission. Section 139(4)(a) provided a right to file a return within a specified period after the assessment year, subject to the provisions of the proviso to section 139(1.

The main issue was whether an assessee who had not filed the return within the time allowed under section 139(1) but availed the right under section 139(4) was liable to pay interest under sub-clause (iii) of the proviso to section 139(1). The assessee contended that interest was only payable if an application for extension was made, which was not done in this case. However, the court rejected this contention, emphasizing that the assessee failed to file the return within the specified period and did not apply for an extension.

The court analyzed the provisions of section 139 comprehensively, highlighting that the assessee, by availing the right under section 139(4), was still liable to pay interest as per sub-clause (iii) of the proviso to section 139(1. The court emphasized the clear scheme of the section, where the assessee must file the return within the prescribed time or apply for an extension. Filing under section 139(4) did not absolve the assessee from paying interest for delayed submission, as mandated by the law.

The court referenced decisions from various High Courts supporting the view that interest under sub-clause (iii) of the proviso to section 139(1) is applicable even if no application for extension is made. It distinguished a contrary view taken by the Delhi High Court, emphasizing that section 139(4) only makes the provisions of sub-clause (iii) of the proviso applicable, not the entire proviso. Thus, the court concluded that the assessee was liable to pay interest despite filing the return under section 139(4).

In conclusion, the court answered the question in the negative and in favor of the Revenue, holding that the assessee was obligated to pay interest for delayed submission of the income tax return. Each party was directed to bear its own costs in the case.

Judge Umesh Chandra Banerjee concurred with the judgment delivered by Judge Suhas Chandra Sen.

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