2024 (10) TMI 709 - HC - Income Tax

Validity of the order passed u/s 119 (2) (b) - delay in filing return and denial of refund entitlement - revenue rejected the application filed by the petitioner on the ground that the petitioner has not provided any proof to prove the genuineness of the hardship she had faced in not filing the return of income as per Para-5 of the Circular No. 9/2015 - as submitted petitioner is staying at Mumbai and return of income could not be filed by the advocate of the petitioner, HELD THAT - It is not in dispute that the petitioner has not filed the return within the time limit prescribed u/s 139 (1) and u/s 139 (4) of the Act. It is also not in dispute that the petitioner is entitled to refund on account of excess tax deducted at source. On perusal of computation of income placed on record at Annexure B , it is revealed that the petitioner otherwise was not liable to pay the tax and as such the entire tax deducted at source of interest and dividend is liable to be refunded to the petitioner. As in the case of Bombay Mercantile Co-op. Bank Ltd. 2010 (9) TMI 23 - BOMBAY HIGH COURT as held that in matters of condonation of delay, a highly pedantic approach should be eschewed and a justice oriented approach should be adopted and a party should not be made to suffer on account of technicalities. The respondent ought to have considered the application filed by the petitioner u/s 119 (2) (b) in accordance with law, without adopting any pedantic technical approach. It is not in dispute from the facts on the record that the petitioner is entitled to the refund - The petitioner is permitted to file the return of income belatedly by exercising the powers u/s 119 (2) (b) of the Act. The present petition is allowed. Matter is remanded back to the respondent to pass an appropriate order, in accordance with law while exercising the jurisdiction under Section 119 (2).

Summary

Issues:
Challenge to validity of order under Income Tax Act for Assessment Year 2022-23 based on delay in filing return and refund entitlement.

Analysis:
The petitioner challenged the validity of an order dated 24.01.2024 under section 119 (2) (b) of the Income Tax Act, 1961 for Assessment Year 2022-23. The petitioner, an individual and citizen of India, had been regularly assessed for tax on income sources like salary, dividends, and interest for over 30 years. The petitioner, not engaged in economic activities except for a brief stint as a Clerk, filed income tax returns regularly. However, due to inadvertent delay, the return for Assessment Year 2022-23 was not filed on time. The petitioner sought condonation of delay under Circular No. 9/2015 issued by the Central Board of Direct Taxes. The respondent rejected the application citing lack of proof of genuine hardship faced by the petitioner for the delay.

The petitioner contended that despite the delay in filing the return, she was entitled to a refund of Rs. 52,592/- due to excess tax deducted at source. The petitioner's advocate argued that the delay should be condoned considering the circumstances, including the inadvertent delay, and the petitioner's entitlement to the refund. The advocate relied on legal precedents emphasizing a liberal approach in condoning delays to ensure substantive justice.

The High Court, considering the legal principles and facts, held that the petitioner, who was not liable to pay tax as per income computation, should be refunded the excess tax deducted at source. Referring to legal precedents, the Court emphasized a justice-oriented approach over technicalities in matters of condonation of delay. The Court directed the respondent to reconsider the petitioner's application under section 119 (2) (b) of the Act and pass an appropriate order within 12 weeks. Consequently, the petition was allowed, the impugned order was quashed, and the matter was remanded back to the respondent for further action in accordance with the law.

In conclusion, the judgment highlighted the importance of considering genuine hardship and substantive justice in tax matters, especially regarding condonation of delays and refund entitlements. The Court's decision emphasized a balanced approach to ensure fairness and proper application of legal provisions in tax assessment cases.