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2004 (11) TMI 20 - HC - Income TaxPower given to the Board under section 119(2) to entertain a belated claim of refund - The petitioner in this writ petition had filed a refund claim for the assessment year 1995-96 u/s 237. Since the claim was made after the period of limitation prescribed in section 239, he moved an application for condonation of delay under section 119(2)(b) which has been rejected by the CBDT without assigning any reasons vide order dated May 25, 2003 - in our view, the power given to the Board under section 119(2) of the Act to entertain a belated claim is nothing but incorporation of the provisions of section 5 of the Limitation Act, 1963 - we are satisfied that by virtue of power conferred on the Board under section 119(2) of the Act, it is fully competent to admit an application for refund even after the expiry of the period prescribed under section 239 of the Act for avoiding genuine hardship in any case or class of cases.
Issues Involved:
1. Whether the conditions prescribed in section 239 of the Income-tax Act, 1961, are amenable to relaxation by the Central Board of Direct Taxes (CBDT) through instructions under section 119 of the Act. Detailed Analysis: Issue 1: Relaxation of Conditions Prescribed in Section 239 by CBDT under Section 119 Background: - The petitioner filed a refund claim for the assessment year 1995-96 under section 237 of the Income-tax Act, 1961. - The claim was made after the limitation period prescribed in section 239, leading the petitioner to seek condonation of delay under section 119(2)(b). - The CBDT rejected the application without providing reasons, prompting the petitioner to challenge this decision. Contentions by Assessee's Counsel: - Article 245 of the Constitution: Permits the Legislature to delegate powers to administrative agencies. - Doctrine of Unjust Enrichment: Articles 265 and 300A of the Constitution mandate that tax collected without entitlement must be refunded. - Section 237 and 239: Section 237 mandates a refund of excess tax, while section 239 prescribes the procedure and time limit for claiming such refunds. - Section 119(2)(b): Provides the Board with the power to admit a belated claim for refund, similar to section 5 of the Limitation Act. Contentions by Revenue's Counsel: - Section 119(2)(b): Specifically allows the Board to admit a refund application after the expiry of the specified period to avoid genuine hardship. - Judicial Precedents: Cited multiple cases where the Board's power to condone delay under section 119(2)(b) was upheld. Legal Provisions and Judicial Interpretations: - Section 237: Entitles a person to a refund of excess tax paid. - Section 239: Prescribes the form, manner, and time limit for making a refund claim. - Section 119: Empowers the Board to issue orders, instructions, and directions for proper administration of the Act, including relaxation of provisions to avoid genuine hardship. Supreme Court Observations: - Azadi Bachao Andolan (2003) 263 ITR 706: Section 119 is an enabling power for the CBDT to ensure fair enforcement of the Act, even if it means relaxing certain provisions. - UCO Bank v. CIT (1999) 237 ITR 889: The Board's power under section 119 includes the ability to tone down the rigour of the law to avoid undue hardship. High Court's Analysis: - Interpretation of Section 119(2)(b): The power to admit a belated claim for refund is in line with the principles of avoiding genuine hardship and does not interfere with the assessment process or the discretion of appellate authorities. - Comparison with Limitation Act: Section 5 of the Limitation Act allows for condoning delays, and section 239 does not expressly exclude this provision. Thus, section 119(2) effectively incorporates section 5 of the Limitation Act. Conclusion: - The High Court concluded that the CBDT has the power under section 119(2) to admit a refund application even after the expiry of the period prescribed under section 239 to avoid genuine hardship. - The decision in Niranjan Dass [2004] 266 ITR 489 (P&H), which held otherwise, was overruled. Final Judgment: - The reference was answered in the affirmative, confirming the Board's power to relax the conditions prescribed in section 239 through instructions under section 119. - The case was directed to be placed before the Division Bench for further proceedings.
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