2018 (3) TMI 1704 - HC - Income Tax

Delay in filing return of income by 37 days - bonafide reasons of delay - due date for filing of the Return Of Income, in case of assessee having specified international/domestic transactions - Auditors were delaying the process of audit completion without proper reasons inspite of the petitioner providing expert valuation report from other professional firm to satisfy their concerns - appointment of new auditors wich took time due to no NOC recived from previous auditors - Held that - It is pertinent to note that the petitioner cannot appoint an alternative Auditor without getting the written letter/NOC from the existing Auditor. Thereafter, after getting NOC from the erstwhile Auditor, the petitioner uploaded the Return Of Income along with the Tax Audit Report on 07.01.2015, hence, there was a delay of 37 days in filing the Return Of Income. By delaying the submission of the Return Of Income, the petitioner did not stand to benefit in any manner whatsoever. The petitioner had satisfactorily explained the reasons for the delay in filing the Return Of Income, the approach of the 1st respondent should be justice oriented so as to advance the cause of justice. The delay of 37 days in filing the Return Of Income should not defeat the claim of the petitioner. In the case of the petitioner failing to explain the reasons for the delay in a proper manner, in such circumstances, the delay should not be condoned. But, when the petitioner has satisfactorily explained the reasons for the delay of 37 days in filing the Return Of Income, the delay should be condoned. Since the petitioner has satisfactorily explained the reasons for the delay in a proper manner, it is of the considered view that the 1st respondent should have condoned the delay of 37 days in filing the Return Of Income along with the Audit Report.

Summary

Issues Involved:
1. Delay in filing the Return of Income (ROI).
2. Refusal to condone the delay by the 1st respondent.
3. Legal precedents supporting or opposing the condonation of delay.

Detailed Analysis:

1. Delay in filing the Return of Income (ROI):
The petitioner, a Private Limited Company engaged in manufacturing Wind Energy Generators, filed its ROI for the assessment year 2014-15 on 07.01.2015, which was 37 days late from the due date of 30.11.2014. The delay was attributed to the Tax Auditors, M/s.S.R.Batliboi & Associates, who had reservations about the valuation of a business transfer and delayed the audit completion. The petitioner sought a new auditor, M/s.CNGSN Associates, after obtaining a No Objection Certificate (NOC) from the existing auditors, which further delayed the process. The new auditors completed the audit, and the ROI was filed on 07.01.2015.

2. Refusal to condone the delay by the 1st respondent:
The 1st respondent refused to condone the delay of 37 days, stating that the petitioner had not established that the delay was solely due to the auditors' fault. The petitioner had not taken any legal action against the auditors for professional misconduct. The 1st respondent concluded that the reasons provided were not valid to invoke the powers under Section 119 of the Act.

3. Legal precedents supporting or opposing the condonation of delay:
The petitioner relied on several judgments to support their case:
- Goetze (India) Ltd. Vs. Commissioner of Income Tax: The Supreme Court held that the power of the Tribunal under Section 254 of the Income Tax Act, 1961, does not relate to the power of the Assessing Officer to entertain a claim of deduction otherwise than by filing a revised return.
- Un-reported judgment in W.A.No.1314 of 2016: The Division Bench held that an authority with discretion to condone delay should not reject an application for minor delays if the reasons are justified.
- Un-reported order in W.P.No.5137 of 2015: The court held that if the petitioner satisfactorily explains the delay, the approach should be justice-oriented to advance the cause of justice.
- Bombay Mercantile Co-op. Bank Ltd. Vs. Central Board of Direct Taxes: The Bombay High Court emphasized a justice-oriented approach in matters of condonation of delay.

The respondents countered with judgments that emphasized the discretion of the Board to condone or not condone delays, and that compelling and good reasons must be shown for such condonation.

Judgment:
The court held that the petitioner satisfactorily explained the reasons for the delay, which were beyond their control. The misunderstanding with the erstwhile auditor and the subsequent delay in obtaining the NOC were valid reasons. The court emphasized that the approach should be justice-oriented, and the delay of 37 days should not defeat the petitioner's claim. The court set aside the impugned order dated 01.06.2016 by the 1st respondent and allowed the writ petition, directing the 1st respondent to accept the ROI filed by the petitioner.

Conclusion:
The court allowed the writ petition, setting aside the 1st respondent's order and directing the acceptance of the ROI filed by the petitioner, emphasizing a justice-oriented approach in condonation of delay cases.