2024 (1) TMI 950 - HC - Income Tax

Condonation of delay for filing revised return u/s 119(2)(b) - scope of 'genuine hardship - as alleged no tax or stamp duty was payable on any award or agreement that was made under the provisions of the Right to Fair Compensation Act - only reason for rejecting the application as we see is, the assessee has not submitted any genuine hardship is caused due to delay in the application. Therefore, the application of the assessee for condonation of delay would not be entertained. - HELD THAT - There cannot be a straight jacket formula to determine what is genuine hardship. In our view, certainly the fact that an assessee feels he has paid more tax than what he was liable to pay will certainly cause hardship and that will be certainly a genuine hardship . As relying on Optra Health Pvt. Ltd. case 2023 (12) TMI 1094 - BOMBAY HIGH COURT the phrase genuine hardship used in Section 119(2)(b) of the Act should be considered liberally. Respondent should keep in mind, while considering an application of this nature, that the power to condone the delay has been conferred to enable the authorities to do substantial justice to the parties by disposing the matters on merits. While considering these aspects, the authorities are expected to bear in mind that no applicant stand to benefit by lodging delayed returns. Refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when the delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. Thus Delay in filing revised returns is condoned.Respondent shall open the portal within two weeks from today to enable Petitioner to file revised returns.The concerned Authority may pass such order as it deems fit in accordance with law. All rights and contentions of parties are kept open. Authority shall decide the issue whether the petitioner s case that the award/compensation that it received under the Right to Fair Compensation Act is taxable or otherwise.

Summary

Issues Involved:
1. Impugning the order dated 22nd September 2023 under Section 119(2)(b) of the Income Tax Act, 1961.
2. Consideration of "genuine hardship" under Section 119(2)(b) of the Act.
3. Condonation of delay in filing revised returns.

Summary:

Issue 1: Impugning the Order Dated 22nd September 2023
The petitioner challenged the order dated 22nd September 2023, passed under Section 119(2)(b) of the Income Tax Act, 1961. The petitioner, engaged in acquiring and developing plots of land, received a compensation of Rs. 39,07,595/- for compulsory acquisition of land under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. This compensation was inadvertently included in the total profit declared in the return of income for Assessment Year 2022-23. The petitioner sought to file a revised return after realizing no tax was payable on the compensation but was rejected due to the delay.

Issue 2: Consideration of "Genuine Hardship"
The court emphasized that "genuine hardship" under Section 119(2)(b) should be construed liberally. It referred to precedents such as Optra Health Pvt. Ltd. v. Additional Commissioner of Income Tax and Sitaldas K. Motwani v. Director General of Income-tax, highlighting that genuine hardship involves more than just the inability to file corrections on time. The authorities should consider other factors and aim for substantial justice. The court noted that refusing to condone the delay could result in a meritorious matter being dismissed prematurely, defeating the cause of justice.

Issue 3: Condonation of Delay in Filing Revised Returns
The court concluded that the phrase "genuine hardship" should be interpreted liberally to enable substantial justice. It was noted that the petitioner did not benefit from the delay and that the authorities should have condoned the delay and considered the matter on its merits. Consequently, the court disposed of the petition with the following orders:
(a) The delay in filing revised returns is condoned.
(b) The respondent shall open the portal within two weeks to enable the petitioner to file revised returns.
(c) The concerned authority may pass an order in accordance with the law.

The court clarified that it did not decide on the taxability of the compensation received under the Right to Fair Compensation Act, leaving this determination to the concerned authority.