Section 234A — Interest for Defaults in Furnishing Return of Income

Section 234A of the Income-tax Act, 1961, imposes interest on taxpayers who fail to file their income tax returns by the due date. This section applies when an individual or entity does not submit their return on time, and it mandates an interest charge of 1% per month or part of a month on the amount of tax remaining unpaid from the due date to the actual date of filing. The significance of this section lies in its role as a deterrent against late filing, encouraging timely compliance with tax obligations. The statutory test for applicability involves determining whether the return was filed after the due date and if there is any outstanding tax liability. The burden of proof lies with the taxpayer to demonstrate timely filing or payment of taxes. In practice, this section ensures that the government receives timely tax revenue and that taxpayers adhere to deadlines.

Common Litigation Flashpoints

1. Calculation of interest period
2. Dispute over due date applicability
3. Outstanding tax amount determination
4. Waiver or reduction of interest under specific circumstances

Judgments on Section 234A — Interest for Defaults in Furnishing Return of Income

• Kishinchand Chellaram vs The Commr. of Income-Tax Bombay City II, Bombay — SC,
  The burden of proof lies on the Revenue to show that the remittance was made by the assessee and constituted its undisclosed income.
• AT & T Global Network Services India Private Limited vs Assistant Commissioner of Income Tax — ITAT,
  Inadvertent errors in reporting should not preclude the allowance of legitimate deductions if the factual basis is verified.
• Union of India & Anr. vs M/s. Ganpati Dealcom Pvt. Ltd. — SC,
  The 2016 Amendment Act cannot be applied retrospectively as it creates new offences and substantive changes, which cannot be applied to past transactions.
• Interglobe Technology Quotient Private Limited vs ACIT — ITAT, 2024
  CSR contributions can be eligible for deduction under section 80G if they meet the necessary conditions.