2024 (3) TMI 152 - HC - Income Tax

Order u/s 119(2)(b) of the Act rejecting the application for waiver of time limit for filing of the return - claim in the refund on account of the tax deducted at source from the income of late father - entitlement of legal heir to file return of income only for Assessment Year of the previous year in which the assessee has expired - HELD THAT - In view of the provisions of Section 119(2)(b) of the Act, which indicates that once the petitioner has filed the return for AY 2016-17, then he ought to have filed return for AY 2017-18 and without any genuine hardship or showing any reason for not filing the return for AY 2017-18 that the circumstances were beyond the control of the assessee, the respondent No. 1 has accordingly rejected the application. However, the approach of the respondent No. 1 is contrary to the settled legal position as held by this Court from time to time as well as by the Apex Court. This Court in case of Gujarat Electricity Company Limited 2001 (1) TMI 10 - GUJARAT HIGH COURT has held that the Board was not justified in rejecting the claim for refund on the ground that a case of genuine hardship was not made out by the petitioner and delay in claiming the refund was not satisfactorily explained, more particularly when the returns could not be filed in time due to the ill health of the Officer who was looking after the taxation matters of the petitioner. As it is not in dispute that the petitioner is entitled to the refund of the amount which represents the tax deducted at source from the income of his late father and in absence of any outstanding dues of the late father of the petitioner, the said amount is liable to be refunded by the respondent-Authority as per the provisions of the Income Tax Act. Denial on the part of the respondent No. 1 to condone the delay in filing the return of income by the petitioner either in name of his father or in his individual name ought to have been permitted and the respondent-Authority ought to have examined such claim on merits and if it is found to be genuine, the petitioner is entitled to the refund with statutory interest, if any, to be paid on such amount. The petition succeeds and is accordingly allowed. The impugned order passed by the respondent No. 1 u/s 119(2)(b) of the Act is hereby quashed and set aside and the petitioner is permitted to file the return of income claiming the refund which shall be considered by the proper AO in accordance with law. Rule is made absolute to the aforesaid extent.

Summary

Issues involved:
The issues involved in this legal judgment include the petitioner's request to quash an order passed by the Principal Commissioner of Income Tax under section 119(2)(b) of the Income Tax Act for A.Y. 2017-18 and the request to allow the application for condonation of delay in filing the income tax return for the same assessment year.

Issue 1 - Quashing of Impugned Order:
The petitioner, a legal heir, sought to quash an order passed by the Principal Commissioner of Income Tax under section 119(2)(b) of the Income Tax Act for A.Y. 2017-18. The petitioner argued that the impugned order was unjust as it rejected the application for waiver of the time limit for filing the return. The petitioner highlighted that the amount of refund on account of TDS was not in dispute, and genuine hardships were faced due to taking over the business of the deceased father. The petitioner cited legal precedents to support the claim for condonation of delay.

Issue 2 - Application for Condonation of Delay:
The petitioner requested the respondents to allow the application to condone the delay in filing the income tax return for A.Y. 2017-18. The petitioner, a legal heir, explained the circumstances leading to the delay, including the transition of taking over the deceased father's business and the claim for refund due to TDS. The respondent No. 1, the Principal Commissioner of Income Tax, rejected the application citing reasons such as the petitioner filing the return for the previous assessment year and not attaching the death certificate of the father. The respondent argued that the petitioner should have filed the return in his individual capacity as a legal heir.

Judgment Summary:
The High Court considered the arguments presented by both sides and analyzed the provisions of Section 119(2)(b) of the Income Tax Act. The Court noted that the respondent No. 1's rejection of the application was not in line with the legal principles established by previous court decisions. The Court referred to various legal cases to emphasize the need for a liberal interpretation of "genuine hardship" and the importance of advancing the cause of justice. Ultimately, the Court found that the petitioner was entitled to the refund amount and allowed the petition. The impugned order was quashed, and the petitioner was permitted to file the return of income to claim the refund, which would be considered by the proper Assessing Officer in accordance with the law.