2018 (2) TMI 309 - HC - Income Tax

Instructions to subordinate authorities - petitioner u/s 119(2)(b) in respect of the refund of income tax - Held that - Whenever there is special provision in special enactment fixing the period of limitation even the Court cannot extend that period and the provision of section 5 of the Limitation Act cannot be applied in those cases. There cannot be dispute over that proposition. In the present matter, due to the provision like section 119(2)(b) made in the Income Tax Act, it can be said that discretionary power is given to the Board to issue such instructions and only after that the assessing authority can use such power. As in the past, at the time when the claim of the petitioner was considered, there was no such instruction or order from the Board, in the present matter such benefit cannot be given to the petitioner. Thus, no case is made out for interference in the order made by the Commissioner of Income Tax. In the result, both the petitions stand dismissed.

Summary

Issues:
Challenge to Commissioner's order under section 119(2)(b) of the Income Tax Act for refund of income tax for assessment years 2004-2005 and 2005-2006.

Analysis:
1. The petitioner, a Private Limited Company, filed petitions challenging the Commissioner's order denying refund of excess income tax for the assessment years 2004-2005 and 2005-2006. The Commissioner held that the conditions for condonation of delay under section 119(2)(b) of the Income Tax Act were not fulfilled. The petitioner claimed business losses and sought refund due to financial difficulties faced by the company.

2. The Commissioner observed that the petitioner had paid Minimum Alternate Tax (MAT) through self-assessment and did not claim a refund in the original returns filed. The delay in filing the claims was attributed to the petitioner's financial distress as a sick industry. The Commissioner highlighted that the claims did not meet the conditions specified in Circulars and instructions issued by the Board.

3. The petitioner argued that the waiver of a principal amount by a bank, which was inadvertently excluded from MAT computation, would have resulted in business losses for the relevant assessment years. The delay in filing the claims was due to the petitioner's inability to rectify the mistake in time, as it was a sick industry. The petitioner sought refunds of income tax paid during the assessment years.

4. The Commissioner emphasized that the petitioner's claims did not qualify for refund under the Board's Circulars and instructions, as the returns were not the first-time filings and no refund was initially claimed. The Commissioner also noted the significant delay in filing the claims, which exceeded the prescribed limitation period under the Income Tax Act.

5. The petitioner contended that the Commissioner should have exercised discretion under section 119(2)(b) of the Income Tax Act to authorize the admission of the claims for relief, despite the delay. However, the Commissioner found no merit in the petitioner's arguments and held that the delay was not justifiable based on the existing instructions and orders from the Board.

6. The Board's order dated 26-20-1993, which authorized the admission of claims for relief in specific cases, did not cover self-assessment tax initially. Subsequently, an order including self-assessment tax was issued in 2015. As the petitioner's application was filed before the inclusion of self-assessment tax, the Commissioner had no authority to condone the delay.

7. The Court considered precedents cited by both parties, emphasizing that the discretionary power to admit claims for relief lies with the Board, and the assessing authority can act upon such instructions. In this case, since no relevant order was in place when the petitioner's claims were assessed, the Court upheld the Commissioner's decision to deny the refunds. The petitions challenging the Commissioner's order were dismissed.