2021 (12) TMI 1218 - HC - Income Tax

Exemption u/s 10(10C) - seeking for condonation of delay to file a revised return by an application u/s 119(2)(b) - Period of limitaiton of 6 years - Earlier the request for rectification of mistake was rejected - HELD THAT - Taking note of the peculiar facts of the case, the fact remains that the entitlement of exemption under Section 10(10C) of the Act was noticed by the Assessing Officer. In fact the petitioner had also sought relief of rectification by way of letter dated 18.03.2008. As no order appears to have been passed on the letter of 18.03.2008, the petitioner decided to seek for condonation of delay to file a revised return by an application u/s 119(2)(b) of the Act. If an order had been passed as regards the rectification application, the assessee may have got relief at that end itself. As no order was passed, the assessee then decided to explore the possibility of filing a revised return. Unfortunately, the assessee s application u/s 119(2)(b) has been rejected on the ground that the same was filed beyond the period of 6 years, while observing that the Circular 9/2015 dated 09.06.2015 does not permit condoning the delay beyond 6 years. Letter that could be construed to be a rectification application is not decided, noticing the merits of the claim for exemption, a fit case is made out for consideration of the revised return on its merits. Accordingly, it would be appropriate to set aside the order of 119(2)(b) and condone the delay. It is also to be noticed that the reasons assigned while seeking condonation of delay are also satisfactory. Accordingly, the impugned order at Annexure-G dated 17.02.2017 is set aside, the delay is condoned and the application under Section 119(2)(b) of the Act is allowed. It is however clarified that as regards to the grant of refund, eventually in light of the delay, there would be exclusion of interest on the amount of refund. It is also clarified that the order is passed taking note of the peculiar facts and circumstances of the case and accordingly, may not be considered to have laid down the law as regards the aspect of condonation of delay under Section 119(2)(b) of the Act or on other issues dealt with herein.

Summary

Issues:
1. Claim for exemption under Section 10(10C) of the Income Tax Act, 1961.
2. Rejection of application for condonation of delay under Section 119(2)(b) of the Act.
3. Validity of the order passed by the respondent Authority.

Analysis:

1. Claim for exemption under Section 10(10C) of the Income Tax Act, 1961:
The petitioner, a retired ICICI Bank employee, availed of the Reserve Bank's Optional Early Retirement Scheme and received a superannuation benefit. The petitioner did not claim exemption under Section 10(10C) in the return filed for the assessment year 2004-2005. The Assessing Officer issued an intimation under Section 143(1) accepting the return but did not grant the exemption. The petitioner later made a representation seeking rectification, citing relevant case laws supporting rectification of apparent errors. The High Court considered the facts and legal precedents, noting that the Assessing Officer was aware of the non-claiming of exemption. The Court found that the petitioner's letter could be construed as a rectification application, justifying consideration for granting the exemption.

2. Rejection of application for condonation of delay under Section 119(2)(b) of the Act:
The respondent Authority rejected the petitioner's application for condonation of delay under Section 119(2)(b) as time-barred, preventing the processing of a revised return. The Court observed that the rejection was based on the limitation period of 6 years from the end of the assessment year. However, considering the peculiar facts of the case and the petitioner's efforts to rectify the error, the Court found that the delay condonation was justified. The Court referred to Circulars emphasizing fair assessment without exploiting the assessee's ignorance, leading to the decision to set aside the rejection and allow the application for condonation of delay.

3. Validity of the order passed by the respondent Authority:
The petitioner challenged the validity of the order passed by the respondent Authority, contending that the letter submitted was akin to a rectification application. The Court analyzed the facts, including the Assessing Officer's awareness of the exemption issue, and found that the petitioner's request for rectification was not addressed. Considering the legal principles and the peculiar circumstances, the Court set aside the order rejecting the condonation of delay and allowed the application under Section 119(2)(b). The Court clarified that its decision was based on the specific case and should not be considered as a precedent on the aspect of condonation of delay or other issues discussed in the judgment.

In conclusion, the High Court granted relief to the petitioner by setting aside the rejection of the condonation of delay application, allowing consideration of the revised return, and emphasizing fair assessment practices in tax matters. The judgment highlighted the importance of rectifying errors to prevent injustice to the assessee and ensure proper application of tax laws.