2016 (7) TMI 215 - HC - Income Tax

Claim of refund - Condonation of delay in filing the return - genuine hardship - application u/s 119(2)(b) - Held that - It is clear that a search operation was carried out at the residence of members of the management of the company and the office of the company and its sister concerns. The authorities had seized thousands of loose papers, books of accounts of the company, hard disc and other relevant documents. The petitioner received seized material finally on 21.10.2013. The papers were thousands in numbers and entries were running on lacks. Documents, prior to the aforesaid date, were not in possession of the petitioner. Hence, the petitioner was not able to finalize the accounts and determine the tax liability. The search and seizure proceedings were conducted on 23 group concerns of the assessee. Within one month, it was not possible for the petitioner to file return because the petitioner in the return disclosed total income of ₹ 2,65,57,04,226/-. Petitioner claimed refund of ₹ 2,08,73,620/-. The business of the petitioner is quite huge. The seizure operations were carried out at headquarter of the petitioner company, residence of office bearers and near about 28 sister concerns. In these circumstances, looking to the magnitude of accounts, it is unreasonable to hold that the petitioner could have had completed the process within a period of one month after receiving the final set of documents on 21.10.2013. In our opinion, in the facts and circumstances of the case, there was genuine hardship to the petitioner in not filing the return within time. Hence, it would be just and proper to condone the delay.

Summary

Issues:
Delay in filing income tax return leading to rejection of claim under Section 80IA and refund application under Section 119(2)(b) of Income Tax Act, 1961.

Analysis:
The petitioner, a public limited company engaged in infrastructure development, filed a petition challenging the rejection of its application under Section 119(2)(b) of the Income Tax Act, 1961. The rejection was due to the delay in filing the income tax return for the assessment year 2013-14, resulting in the non-allowance of the claim under Section 80IA. The petitioner received seized documents post a search operation on 20.06.2012 and 21.06.2012, leading to the belated filing of the return on 31.03.2014, missing the due date of 30.11.2013. The petitioner sought refund of ?2,08,73,620, which was not granted due to the delay. The petitioner contended that the delay was due to the time taken to reconcile the numerous documents seized during the search operation.

The petitioner argued that the delay was genuine and sought condonation under Section 119(2)(b) to avoid hardship. The petitioner cited various judgments emphasizing the liberal interpretation of "genuine hardship" to enable authorities to dispense substantive justice. The petitioner highlighted that the delay was not deliberate and that refusing to condone it could lead to meritorious claims being dismissed without consideration. The petitioner's substantial income and the extensive search operations conducted on multiple entities within a short period supported the claim of genuine hardship.

The revenue contended that the petitioner had ample time to file the return within the due date and failed to provide a satisfactory reason for the delay. The revenue asserted that the authority had appropriately considered the case and passed a reasoned order rejecting the application. The revenue suggested remanding the matter for fresh consideration based on certain judgments, but the court found the existing order to be well-reasoned and declined the suggestion. The court, after evaluating the circumstances, concluded that there was genuine hardship in the petitioner's case and decided to condone the delay of four months in filing the return for the assessment year 2013-14.

In the final judgment, the court allowed the petition, quashed the impugned order, and directed the competent authority to examine the petitioner's refund claim on merits within three months. The court emphasized the importance of considering genuine hardship in such cases and ensuring that substantial justice prevails. No costs were awarded in the matter.