2023 (3) TMI 1356 - HC - Income Tax

Delay in filling ROI - application u/s 119(2)(b) - requesting condonation of delay and permission to file the return of income for the assessment year 2020-21 (financial year 2019-20) has been rejected - said application has been rejected by the impugned order mainly on the ground that the petitioner failed to substantiate before the Principal Chief Commissioner, Income Tax, that it was facing genuine hardship because of which the return could not be filed on time. HELD THAT - In the present case, Principal Chief Commissioner of Income Tax Department was vested with the power of acceptance/rejection of an application for condonation of delay and accordingly the impugned order has been passed by the Principal Chief Commissioner, Income Tax. We find force in submission made on behalf of the petitioner that the Principal Chief Commissioner ought to have taken a lenient view considering the difficulties, which the persons were facing during the period of Covid-19 pandemic and general lock-down imposed during the said period. As Submitted that this Court, exercising power of judicial review under Article 226 of the Constitution of India, cannot substitute its own opinion in place of the opinion of the Principal Chief Commissioner, to the extent the same relates to rejection of the petitioner's prayer for condonation of delay in exercise of power under Section 119(2)(b) of the Act. We remand the matter back to the Principal Chief Commissioner of Income Tax (Bihar and Jharkhand), after setting aside the impugned order dated 31.05.2022, with a direction to him to reconsider the petitioner's case for condonation of delay under Section 119(2)(a) of the Act. It is expected that the Principal Chief Commissioner of Income Tax shall keep in mind the ratio laid down by the Supreme Court in the case of B.M. Malani 2008 (10) TMI 2 - SUPREME COURT and the concern shown by the Division Bench of Uttarakhand High Court in the case of Dehradun Chartered Accountants Society vs. Union of India 2021 (1) TMI 689 - UTTARAKHAND HIGH COURT

Summary

Issues involved: Challenge to rejection of application for condonation of delay and permission to file income tax return for assessment year 2020-21 under Section 119(2)(b) of the Income Tax Act, 1961 due to Covid-19 related hardships.

Details of the Judgment:

Issue 1: Challenge to rejection of application for condonation of delay

The petitioner, a Government Company, challenged the order rejecting its application for condonation of delay in filing the income tax return for the assessment year 2020-21. The delay was attributed to the Covid-19 pandemic situation affecting the availability of Accountants, Auditors, and the Company Secretary, leading to a shortage of manpower. The application for condonation of delay and refund was rejected on grounds of failure to substantiate genuine hardship for the delay.

Issue 2: Interpretation of Section 119(2)(b) of the Income Tax Act

The petitioner's counsel argued that Section 119(2)(b) of the Act, along with a Government Circular, allows for condonation of delay in submission of returns based on genuine hardship. Reference was made to the Supreme Court's interpretation of "Genuine Hardship" as genuine difficulty. The counsel emphasized that the Principal Chief Commissioner should have considered the impact of the Covid-19 pandemic as a valid reason for the delay.

Issue 3: Judicial Review and Remand

After hearing both parties, the Court acknowledged the challenges faced during the pandemic and directed the Principal Chief Commissioner to reconsider the petitioner's case for condonation of delay. The Court highlighted that while exercising judicial review, it cannot substitute its opinion for that of the Commissioner. The matter was remanded back for a fresh decision, emphasizing the need to consider the Supreme Court's precedent and the stance taken by the Uttarakhand High Court in similar cases.

Conclusion:

The Court allowed the application, granting the petitioner the opportunity to file a fresh representation within 15 days for reconsideration. The Principal Chief Commissioner was directed to pass an order within four weeks, taking into account the difficulties faced during the pandemic and the legal principles highlighted in the judgment.

This summary provides a detailed breakdown of the issues involved in the legal judgment, focusing on the challenge to the rejection of the application for condonation of delay, interpretation of relevant legal provisions, and the Court's decision regarding judicial review and remand of the case.