2015 (1) TMI 483 - HC - Income Tax

Delay in filing returns - power to condone - Non explanation of delay - Claim of refund of the tax paid in excess - Held that - Taking a lenient view in the matter, and considering the fact that the petitioner is not a habitual offender when it comes to complying with the procedure prescribed for filing returns under the IT Act, we quash Ext.P10 order and direct the 2nd respondent to complete the income tax assessment of the petitioner for the assessment year 1999-2000, by treating the delay in filing the return as condoned, and by taking into account Ext.P2 series of certificates produced by him and after verifying the accounts produced by the petitioner to substantiate his declaration of total income. The 2nd respondent shall pass consequential orders as directed in this judgment within a period of three months from the date of receipt of a copy of this judgment after hearing the petitioner. Also if the assessment proceedings completed by the 2nd respondent, as directed in this judgment, results in the grant of any amount by way of refund to the petitioner, the petitioner will not be entitled to claim any interest on the amount paid to him by way of refund.

Summary

Issues:
Delay in filing income tax return for assessment year 1999-2000, Condonation of delay in filing return, Application for condonation of delay rejected by 1st respondent, Justification of Ext.P10 order by respondents, Dispute over reasons for delay in filing return, Exercise of discretion under Section 119 (2b) of IT Act.

Analysis:
The petitioner, a contractor collecting cashew from Forest Department plantations, faced a delay in filing his income tax return for the assessment year 1999-2000, despite receiving tax collection certificates in 1998. The petitioner sought condonation of the delay, claiming insufficient income to justify the tax collected at source. The 1st respondent rejected the condonation application, citing lack of sufficient cause shown by the petitioner and disregarding a judgment from the High Court of Karnataka supporting the petitioner's stance.

The respondents justified the rejection of the condonation application, emphasizing the need for proper explanation of the delay and the discretionary nature of condoning delays based on individual circumstances. The petitioner's counsel and the Standing Counsel for the Income Tax Department presented their arguments before the court.

Upon review of the case, the court noted the petitioner's consistent filing of returns in previous years and the specific circumstances leading to the delay in filing for the assessment year in question. Despite the delay, the petitioner's track record and the isolated nature of the delay indicated that he should not be treated as a habitual offender. The court found that the 1st respondent should have exercised discretion in favor of the petitioner under Section 119 (2b) of the IT Act, considering the petitioner's non-liability for tax payment and the expected refund once the assessment was completed.

Consequently, the court quashed the Ext.P10 order, directing the 2nd respondent to complete the income tax assessment for the petitioner for the relevant year, condoning the delay in filing the return. The 2nd respondent was instructed to verify the certificates and accounts provided by the petitioner and issue necessary orders within three months. The court clarified that the petitioner would not be entitled to interest on any refund granted as a result of the assessment.