2024 (10) TMI 752 - HC - Income Tax

Delay filling return of income - petitioner had not placed evidence of the date of receipt of the audit report - HELD THAT - On examining the impugned order, it is clear that the Chief Commissioner of Income Tax was conscious of the fact that the audit was completed only on 30.09.2019. The said date was the original deadline for filing the return of income. Although the petitioner asserted in the application that the return was received only on 31.12.2019, the said aspect was not taken cognizance of in the impugned order. As asserted both in the application u/s 119(2)(b) of the Income Tax Act and in the affidavit before this Court that such audit report was only received in December 2019. Even after extension, the time limit for filing the return of income for the relevant assessment year expired on 31.10.2019. Therefore, the petitioner was clearly not in a position to file the return of income within time. Although the explanation of the petitioner that the report was received only in December 2019 is not corroborated by evidence, by taking into account the nature of the petitioner's society and the scale of operation, there would be genuine hardship to the members if the delay in filing the return of income is not condoned. In this connection, it should be noticed that Section 119(2)(b) was construed by this Court and the Bombay High Court liberally. Thus, this is an appropriate case to condone delay in filing the return of income.

Summary

Issues:
Challenge to rejection of application under Section 119(2)(b) of the Income Tax Act
Challenge to consequential intimation under Section 143(1) of the Income Tax Act

Analysis:
In the present judgment, the High Court of Madras dealt with two issues. Firstly, the challenge was made against the rejection of an application under Section 119(2)(b) of the Income Tax Act, 1961. The petitioner, an Agricultural Co-operative Credit Society, underwent a statutory audit for the financial year 2018-2019, completed in September 2019, but the audit report was received in December 2019. Due to amendments in Section 80AC of the Income Tax Act and lack of awareness, the petitioner filed the income tax return belatedly in June 2020. The application under Section 119(2)(b) was rejected on 29.12.2023. The petitioner argued genuine hardship due to the delay in filing the return. The respondent contended that non-compliance with statutory requirements should not be condoned to prevent encouraging others to flout the law.

Secondly, the challenge was against the consequential intimation under Section 143(1) of the Income Tax Act. The Chief Commissioner of Income Tax, while rejecting the application, noted the completion of the audit on 30.09.2019, the original deadline for filing the return. The impugned order emphasized the petitioner's failure to provide evidence of hardship faced or diligence in pursuing the matter. However, the Court considered the nature of the petitioner's society and the scale of operation, acknowledging genuine hardship to members if the delay was not condoned. Referring to precedents, the Court adopted a liberal interpretation of Section 119(2)(b) and decided to condone the delay in filing the return of income.

Consequently, the Court allowed W.P.No.7329 of 2024 by quashing the order dated 29.12.2023 and condoning the delay in filing the return of income. Subsequently, the impugned intimation in W.P.No.7333 of 2024 was quashed, and the matter was remanded for assessment based on the petitioner's filed return of income. The judgment was delivered without costs, and connected miscellaneous petitions were closed.