Satish Chandra, C.J. - (1.) THIS reference relates to the assessment years 1964-65 and 1967-68. The two questions referred for our opinion are in respect of these years. In substance, the question is whether interest is payable for late filing of the return in spite of service of notice under Section 139(2) of the Act and without application for extension of time and without any order by the ITO extending the time for filing the return. For the assessment year 1964-65, the return was to be filed till September 30, 1964. A notice under Section 139(2) of the Act was served on the assessee on June 1, 1964, calling for a return on or before July 1, 1964. The assessee, however, filed the return on May 21, 1965.
(2.) FOR the assessment year 1967-68, a notice under Section 139(2) calling for a return to be filed on or before October 3, 1967, was issued on September 4, 1967. The assessee, however, filed the return on February 15, 1969. In both these years, the assessee did not apply to the ITO for extension of time either under Section 139(1) or (2) of the Act. The ITO charged interest for late filing of the return. This view was confirmed on appeal. The assessee took the matter to the Tribunal. The Tribunal accepted the reasoning adopted by the Andhra Pradesh High Court in Kishanlal Haricharan v. ITO [1971] 82 ITR 660. It disagreed with the view taken by the Mysore High Court in Indian Telephone Industries Co-operative Society Ltd. v. ITO [1972] 86 ITR 566. It held that, in view of the provisions as they stood in the years in question, interest was not chargeable for late filing of the return because the assessee had not applied for any extension of time. At the instance of the Commissioner, the Tribunal has referred the questions mentioned above for our opinion. The matter has been considered by two Full Benches. The Audhra Pradesh High Court in ITO v. Secunderabad Tin Industries [1978] 113 ITR 1 [FB] overruled its earlier decision in Kishanlal Haricharan v. ITO [1971] 82 ITR 660 and approved its subsequent decision in Progressive Engineering Co. v. ITO [1976] 105 ITR 226 (AP). The Full Bench held that where the return is filed beyond the time prescribed by Section 139(1) or in pursuance of a notice under Section 139(2), though beyond the time prescribed by it interest is chargeable irrespective of the question whether time for filing the return was extended on an application of the assessee. The making of an application for extension of time is irrelevant to the liability to pay interest. The Full Bench differed from the decisions of tie Delhi High Court in Garg and Co. v. CIT [1974] 97 ITR 639 as well as the High Court of Patna in CIT v. Bahri Bros. (P.) Ltd. [1976] 102 ITR 443 and the Jammu and Kashmir High Court in Mulakh Raj Bimal Kumar v. ITO [1977] 107 ITR 382,
(3.) THE Gauhati High Court has in Shankarlall Goenka v. ITO (since reported in [1979] 119 ITR 229) also taken the same view, though by majority. We have heard learned counsel for the parties. We find ourselves in agreement with the Full Bench decision of the Andhra Pradesh High Court and the majority opinion of the Gauhati High Court. Learned counsel for the assessee stressed the various aspects mentioned in the decisions, taking the other view but for the reasons given in these decisions, we are not prepared to accept them. In our opinion, interest is payable under the provisions as they stood prior to their amendment by the Taxation Laws (Amendment) Act, 1970, for late filing of the returns even though the assessee had made no application for extension of time. The principal submission by Mr. Gulati appearing for the assessee was that when Section 139(4)refers to Clause (iii) of the proviso to Sub-section (1), then the clause must apply along with the opening part of the proviso. In that event, Clause (iii) would be applicable only when the ITO has extended the time for furnishing the return on an application made by the assessee. We are, however, unable to accept this submission. Sub-section (4) makes the provisions of Clause (iii) applicable "in every such case", the case being, one where the return had not been filed within the time prescribed either under Sub-section (1) or (2) but was filed before the assessment is made. If we introduce the opening part of the proviso to Sub-section (1), then it will effect cutting down of the express provisions of Sub-section (4), namely, that Clause (iii) has to apply in every such case. By reading the opening part of the proviso, Clause (iii) would become applicable only to such cases covered by Sub-section (4) in which, on an application, time has been extended. That will be contrary to the express language of the statute which says " in every such case".;