2023 (2) TMI 973 - HC - Income Tax

Condonation of delay in filing the return of income - due date for filing return on income u/s 139(1) was 31.10.2019 and same was filed on 30.11.2020 u/s 139(4) - disallowing the brought forward losses as the same was not filed within the time stipulated u/s 139(1) - corporate insolvency resolution process was initiated against the company - grievance of the petitioner is that due to inaction on the part of the erstwhile management or resolution professional, the genuine business loss is not allowed to be carried forward for all times to come and if the delay is not condoned, the petitioner company would suffer - HELD THAT - The petitioner has written on 02.01.2023, however the Board has not responded to this application for condonation of delay in filing the return of income for AY 2018-19 and 2019-20 u/s 119(2)(b) of the Act. There was a proposal on the part of the learned senior advocate Mr.Bhatt for the petitioners, seeking the directions against the respondent Board, for it to consider on expeditious basis the request for condonation of delay in filing the return of income for AY 2018-19 and 2019-20. Responding to the same, learned senior standing counsel Mr.Raval has taken instructions and has no objection to the matter being sent to the Board for its consideration and to be adjudicated at the earliest within a period of six (06) weeks. This Court has not entered into the merits at all and at the time of admission of this matter, with a specific request seeking the direction for the Board to decide the application dated 02.01.2023 at the earliest and since the parties are at ad idem on this issue, it has decided to relegate them and the matter is accordingly being finalized. Let the respondent No.2 take up the matter and decide within six (06) weeks from the date of receipt of the copy of this order.

Summary

Issues:
1. Delay in filing income tax returns for Assessment Years 2018-19 and 2019-20.
2. Condonation of delay in filing returns due to moratorium under the Insolvency and Bankruptcy Code (IBC).
3. Request for condonation under Section 119(2)(b) of the Income Tax Act, 1961.
4. Impact of delay on carrying forward business losses.
5. Seeking directions from the Central Board of Direct Taxes (CBDT) for consideration of the condonation request.

Issue 1: Delay in filing income tax returns for Assessment Years 2018-19 and 2019-20:
The petitioner, a company engaged in manufacturing plastic films, filed manual returns beyond the due dates specified under Section 139(1) of the Income Tax Act for AY 2018-19 and AY 2019-20. The delay in filing led to subsequent complications in processing returns and carrying forward business losses.

Issue 2: Condonation of delay in filing returns due to moratorium under the IBC:
During the Corporate Insolvency Resolution Process (CIRP) initiated against the petitioner, a moratorium was imposed under Section 14 of the Insolvency and Bankruptcy Code. The delay in filing returns was attributed to the actions of the resolution professional and the erstwhile management, causing hardship to the petitioner in carrying forward business losses.

Issue 3: Request for condonation under Section 119(2)(b) of the Income Tax Act, 1961:
The petitioner sought condonation of the delay in filing returns for AY 2018-19 and AY 2019-20 under Section 119(2)(b) of the Act. The petitioner emphasized the need for urgent consideration of the application to address the genuine hardship faced due to the delay caused during the CIRP process.

Issue 4: Impact of delay on carrying forward business losses:
The delay in filing returns resulted in the disallowance of carrying forward business losses for subsequent Assessment Year 2021-22. The petitioner highlighted the adverse implications of this disallowance on the company's financial position and the need to rectify the situation to prevent further losses.

Issue 5: Seeking directions from the Central Board of Direct Taxes (CBDT) for consideration of the condonation request:
The petitioner approached the High Court seeking writs, orders, or directions to the CBDT to decide on the applications for condonation of delay in filing returns for AY 2018-19 and AY 2019-20. The Court issued notice and directed the matter to be finalized within a specified timeframe, emphasizing the urgency of addressing the petitioner's grievances.

In summary, the judgment addressed the petitioner's challenges related to the delay in filing income tax returns, the impact on carrying forward business losses, and the request for condonation under Section 119(2)(b) of the Income Tax Act. The Court directed the Central Board of Direct Taxes to consider the condonation request promptly to alleviate the hardship faced by the petitioner due to the delay caused during the CIRP process under the IBC.