High Court rules interest chargeable for late tax return filing even without extension

The Full Bench of the Andhra Pradesh High Court ruled that interest is chargeable for late filing of returns, regardless of whether the time was extended upon the assessee's application. The court emphasized the statutory language and rejected the argument that interest should only apply when the time is extended at the assessee's request. The judgment favored the tax department, holding that interest is payable for late filing beyond the prescribed time, as per notice under s. 139(2). The decision supported the department's imposition of interest for late filing without extension application.

---

---

Issues:
1. Whether interest is payable for late filing of the return without application for extension of time and without any order by the ITO extending the time.
2. Interpretation of provisions under s. 139(1) and s. 139(2) of the Act regarding the liability to pay interest for late filing of returns.

Analysis:

1. The judgment pertains to assessment years 1964-65 and 1967-68, focusing on the issue of interest payment for late filing of returns without applying for extension of time or any order by the ITO extending the time. The assessee in both years did not apply for extension under s. 139(1) or (2) of the Act. The ITO imposed interest for late filing, which was upheld on appeal, leading the matter to the Tribunal. The Tribunal referred the case based on conflicting decisions by different High Courts.

2. The Full Bench of the Andhra Pradesh High Court overruled its earlier decision and held that interest is chargeable for late filing of returns, irrespective of whether the time was extended on the assessee's application. This decision was supported by the Gauhati High Court majority opinion. The court rejected the argument that cl. (iii) of the proviso to sub-s. (1) should apply only when the ITO extends the time on the assessee's application. The court emphasized the language of the statute and the illogicality of reading the opening part of the proviso to sub-s. (1) in conjunction with other provisions.

3. The court concluded that interest is payable for late filing of returns even without the assessee applying for an extension of time. The judgment favored the department, holding that interest is chargeable when the return is filed beyond the time prescribed by the notice under s. 139(2). The questions referred were answered in the negative, in favor of the department, and costs were awarded to the Commissioner.

---