2016 (7) TMI 927 - HC - Income Tax

Condonation of delay - Held that - When an assessee is suffering huge losses for over a period of time it has to be assumed that they have genuine hardship and that genuine hardship can be redressed or avoided only on payment of the amount which is legally due to them. Of course the delay is also a matter which is required to be considered by the Commissioner while directing refund of the amount. Section 119 (2) (b) clearly indicates that if it considers desirable or expedient so to do authorize the Commissioner (Appeals) to admit an application or claim for any exemption deduction refund or any other relief in accordance with law. Therefore when the Commissioner is given the power to adjudicate all such issues and find out that on account of non-payment genuine hardship will be caused to a person the Commissioner will have to condone the delay. In the case on hand in Ext.P4 the reference is made to the returns filed for the Assessment years 2006-07 onwards and 2008-09. It is stated that in the subsequent years returns were filed belated. That by itself cannot be a reason to arrive at a finding as to whether there is any hardship caused to the assessee or not. In the case on hand it is demonstrated by the material placed that the assessee company was suffering huge losses. In the said circumstances if the amount claimed is not refunded definitely their losses will be much more than what is computed presently. In the said circumstances it would have been appropriate for the Commissioner to have condoned the delay.

Summary

Issues:
Challenge to dismissal of petition seeking refund of advanced tax for assessment years 2004-2005 and 2005-2006 due to delay.

Analysis:
1. The petitioner contested the dismissal of the refund petition (Ext.P4) by the Commissioner of Income Tax, citing genuine hardship due to suffering huge losses, which caused delays in filing returns and seeking refund. The petitioner argued that the delay should have been condoned based on the hardship faced and the inability to approach the authority within the prescribed period.

2. The respondents supported the decision, highlighting the petitioner's delay in filing returns for subsequent years as a factor to consider in determining genuine hardship warranting condonation of delay.

3. Reference was made to Section 119(2)(b) empowering the Board to authorize the admission of applications for exemption, deduction, refund, or relief after the specified period to avoid genuine hardship. The petitioner relied on legal precedents like Sitaldas K. Motwani v. Director General of Income Tax and Pala Marketing Co-operative Society Ltd v. Union of India to argue for a liberal interpretation of "genuine hardship" and the need for substantive justice in refund claims.

4. The court emphasized that refusing to condone delay could lead to meritorious claims being dismissed, and the focus should be on substantial justice rather than technicalities. The judgment underscored that delay condonation should be granted if the refund is legitimately due, even if the claimant benefits from lodging the claim late.

5. The court found that the petitioner had shown sufficient cause for the delay in filing the refund application, considering the substantial losses suffered by the company. It was held that the Commissioner should have condoned the delay in this case to prevent further financial hardship to the petitioner.

6. Consequently, the court set aside Ext.P4 and directed the second respondent to process the return and issue appropriate orders within two months from the date of the judgment, recognizing the genuine hardship faced by the petitioner due to financial losses and the need for timely refund to mitigate further losses.