2024 (10) TMI 1478 - HC - Income Tax

Rejection of Condonation of delay in filing income tax returns - as per petitioner reasons such as the impact of Covid-19 on operations, loss leading to non-payment of electricity charges, and corruption of computer data lead to delay - HELD THAT - On perusal of records, it is seen that due to outbreak of Covid-19 and lock down throughout the Country since March 2020, the petitioner- Company's operations were stopped abruptly, therefore, the petitioner- Company faced with a huge loss, resulting in non-payment of the electricity charges, due to which, power connections were also cut in the Factory, apart from the same, due to non-usage of the Computer, the server of the Computer, where, the petitioner used to maintain accounts got corrupt and hence, all the Computer data backups were lost, hence, the petitioner was not in a position to file Income Tax Returns in time, however, as and when, the petitioner was able to reconstruct the lost records, they filed returns for the AY 2021-22 and that since there happened to be delay of nine months in filing the returns, (as the due date for filing the returns was on or before 15.03.2022), the petitioner has rightly taken out an Application for condonation of the delay, clearly setting out the reasons for the delay. Thus, the delay on the part of the petitioner in filing the returns is neither willful nor wanton, but, purely owing to unforeseen circumstances, therefore, the respondent before rejecting the application ought to have taken into consideration of all the aforesaid aspects. Respondent also failed to consider the vital factor that the petitioner is not a habitual offender, to file returns with a delay and that excluding the subject AY (i.e. 2020-21) the petitioner has been prompt in filing the returns in respect of the past Assessment Years and subsequent Assessment Years. Hence, this Court is of the considered view that the reasons assigned by the petitioner for the delay is genuine and reasonable, and is inclined to condone the delay, however, subject to payment of costs, as agreed by the petitioner.

Summary

Issues:
Challenge to rejection of application for condonation of delay in filing income tax returns for the assessment year 2021-22.

Analysis:
The petitioner's application for condonation of delay in filing Income Tax Returns for the Assessment Year 2021-22 was rejected by the respondent, leading to the filing of a Writ Petition. The petitioner cited reasons such as the impact of Covid-19 on operations, loss leading to non-payment of electricity charges, and corruption of computer data as factors contributing to the delay. The petitioner argued that the delay was due to unforeseen circumstances and expressed willingness to pay any costs imposed by the court. The respondent objected to the petition, emphasizing the importance of timely filing and potential negative precedent if the order was set aside.

Upon review, the court noted the significant challenges faced by the petitioner, including the Covid-19 outbreak, operational disruptions, and data loss. The court acknowledged that the delay in filing the returns was not deliberate but a result of unforeseen circumstances. It considered the petitioner's past compliance with filing requirements for other assessment years, indicating a lack of habitual delay. Consequently, the court found the reasons for delay genuine and reasonable, leading to the decision to condone the delay, subject to the payment of costs as agreed by the petitioner.

The court issued orders to condone the delay in filing the Income Tax Returns, set aside the impugned order, and directed the petitioner to make a charitable donation within a specified timeframe. The court emphasized that the benefit of the order would only apply upon proof of payment to the designated institute. The court allowed the Writ Petition on the specified terms, with no additional costs incurred. Subsequently, related petitions were disposed of accordingly.