2018 (2) TMI 1537 - HC - Income Tax

Application u/s 119(2) - condoning the delay in filing the return for the assessment year 2009-2010 - claim of refund - Held that - In case of Karta of HUF in his individual capacity under identical circumstances, application for condonation of delay based on identical grounds came to be accepted by the Revenue. In same set of facts and same situation, there cannot be a differential treatment. Merely because one application was decided by the Commissioner and another by the Chief Commissioner cannot be a point of distinction. Only on this ground, we are inclined to allow the petition. This would however be with two riders. Firstly, in case of individual while condoning delay, the Commissioner has provided that he will not be entitled to interest to the extent of period of delay. Same direction will apply in the present case. It is clarified that the petitioner shall not be entitled to any interest on refund even if ultimately allowed by the department till 8.6.2011. Second is that if the delay is condoned and effect of condonation is that the return filed by the petitioner after delay is treated as valid return filed on the date of its submission to the department, the period envisaged in the proviso to subsection (2) of section 143 would have lapsed by now. This would mean that even if the department wanted to scrutinise the return, there would be no such facility. To obviate this difficulty, while condoning the delay, it is provided that the petitioner s return shall be treated to have been validly filed from the date of this order i.e. today for the purpose of scrutiny and completion of assessment, if taken in scrutiny. All consequential provisions for scrutiny, final assessment and limitation would consequentially apply.

Summary

Issues:
Challenge to order rejecting application for condoning delay in filing income tax return for assessment year 2009-2010.

Analysis:
The petitioner, a Hindu Undivided Family (HUF), challenged the Chief Commissioner of Income Tax's order rejecting their application under section 119(2) of the Income Tax Act, 1961, for condoning the delay in filing the return for the assessment year 2009-2010. The petitioner, engaged in the business of providing buses under contract to Ahmedabad Municipal Transport System (AMTS) and Ahmedabad Municipal Corporation (AMC), faced delays and discrepancies in Tax Deducted at Source (TDS) details for the first time due to the introduction of online filing. This led to a delay in filing the return, which was submitted on 8.6.2011 against the deadline of 31.3.2011. The petitioner explained the delay citing issues with TDS certificates from AMTS, AMC, and Nationalized Banks, requesting condonation of the delay. The Karta of the petitioner HUF, engaged in the same business individually, also faced similar issues and filed a similar application for condonation of delay on the same grounds.

In a similar case involving an individual, the Commissioner of Income Tax allowed the application for condonation of delay due to genuine hardship caused by TDS mismatches, enabling the individual to claim a refund. However, in the case of the petitioner HUF, the Chief Commissioner rejected the application, stating that the petitioner could have filed the return within the deadline despite TDS discrepancies and implying that the delay was intentional to avoid scrutiny assessment. The Chief Commissioner also highlighted the petitioner's low declared net profit ratio as a concern.

The High Court found the Chief Commissioner's reasons insufficient to reject the petitioner's case. It noted that the Chief Commissioner's assumption of intentional delay to avoid scrutiny was speculative, as there was ample time for scrutiny even if the return was filed within the deadline. Moreover, the Court pointed out that the application of the Karta of the HUF, filed under identical circumstances and grounds, was accepted by the Revenue. This inconsistency in treatment led the Court to allow the petition, with conditions. The Court directed that no interest would be admissible on any belated claim of refund, and the petitioner's return would be treated as valid from the date of the Court's order for scrutiny and assessment purposes. The Court set aside the impugned order and disposed of the petition accordingly.