2013 (10) TMI 201 - HC - Income Tax

Waiver of delay in filing belated revised return u/s 119 - Belated Revised return filed to claim deduction of freight expenses after depositing TDS u/s 40(a)(ia) - Held that - there would be genuine hardship, if the time limit is not extended as otherwise, the entire claim of Rs. 17,84,323/- would be destroyed. The petitioner would neither get deduction in the assessment year 2005-06 nor in the year 2008-09 as per then prevailing Section 40(a)(ia) of the Act. In our opinion, the petitioner was neither lethargic nor lacking in bona fides in making the claim beyond the period of limitation, which should have a relevance to the desirability and expedience for exercising such power. Before proceeding further we may caution that undoubtedly such powers are not to be exercised in a routine manner to extend limitation provided by the Act for various stages. Commissioner ought to have exercised such powers u/s 119. It is true that the Appellate Commissioner recorded that the petitioner did not remain present in the appellate proceedings. However that by itself would not take away the petitioner s case for genuine hardship nor contrary to what is vehemently contended before us by the counsel for the Revenue, convince us to hold that filing of revised return beyond limitation lacked bona fides - Decided in favour of assessee.

Summary

Issues:
Challenge to order passed by Commissioner of Income-tax under section 119(2)(b) of the Income-tax Act, 1961 regarding disallowance of freight charges for assessment year 2005-06, dismissal of appeal by Appellate Commissioner, dismissal of revision petition by Commissioner, filing of revised return for assessment year 2008-09, request for extension of time to file revised return under Section 119(2)(b) of the Act.

Analysis:
1. The petitioner contested the disallowance of freight expenditure for the assessment year 2005-06, where the Assessing Officer disallowed Rs. 17,84,323 under section 40(a)(ia) of the Act due to non-deduction of tax at source. The appeal before the Appellate Commissioner and revision petition were both dismissed on merits, leading to the petitioner's deposit of the tax amount on 29.3.2008. The proviso to Section 40(a)(ia) allowed deduction in the year the tax was paid, which was introduced by the Finance Act, 2008 with retrospective effect from 1.4.2005.

2. Despite the earlier claim being declined, the petitioner made a claim for deduction in the assessment year 2008-09 through a revised return, which was filed beyond the permissible time limit. The petitioner sought an extension under Section 119(2)(b) of the Act to condone the delay in filing the revised return. The Commissioner rejected the application, citing lack of reasonable cause for the delay and non-maintainability under Section 119(2)(b) of the Act.

3. The Court observed that the petitioner was still pursuing the deduction claim for the assessment year 2005-06 when filing the return for 2008-09. Despite missing the deadline, the Court found grounds for accepting the petition under Section 119(2)(b) to avoid genuine hardship. The Court emphasized the need to consider genuine hardship and the desirability of extending the time limit, cautioning against routine exercise of such powers.

4. The Court concluded that there was genuine hardship in this case, as the petitioner faced losing the deduction entirely if the time limit was not extended. The petitioner's claim was not considered lethargic or lacking in bona fides, warranting the exercise of powers under Section 119(2)(b) to admit the revised return for processing. The impugned order was quashed, allowing the petitioner's revised return to be processed according to law, while directing the Assessing Officer to examine the genuineness of the expenditure disallowed solely on the ground of non-deduction and deposit of tax at source.

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