2019 (1) TMI 1140 - HC - Income Tax

Condonation of delay of 37 days in filing the return - reasons assigned by the respondent for belatedly filing the return - difference of opinion between the auditor and the auditee - genuine hardship - assessee s case is that the auditors appointed by them initially were delaying the process of audit completion without proper reasons inspite of providing expert valuation report from other professional firm to satisfy their concerns Held that - The respondent cannot appoint a new auditor without getting a No Objection Certificate from the existing auditor and therefore, the respondent after getting No Objection Certificate from the erstwhile auditor had uploaded the Return of Income along with the Tax Audit Report on 07.01.2015 and by then, there was a delay of 37 days. Further, the learned Writ Court rightly pointed out that by the delayed submission of Return of Income, the respondent does not stand to benefit in any manner whatsoever. Thus, the learned Writ Court was satisfied that the explanation given by the respondent was sufficient for condonation of delay of 37 days in filing the Return of Income and such a delay should not defeat the claim of the respondent. We have also seen the reasons assigned by the respondent for belatedly filing the return. As rightly pointed out by the learned Writ Court, no assessee would stand to benefit by filing the return belatedly. Writ Court on facts, rightly held that the delay of 37 days in filing the Return of Income along with the Audit Report is condonable. The observations made by the first appellant in the order dated 01.06.2016 largely pertained to the respondent s eligibility to carry forward the loss claimed by them in the return of income. Further, the first appellant in the order dated 01.06.2016 has made an observation that if the reasons given by the assessee is accepted as a valid ground it may encourage other tax payers to follow suit. The appellants need not have any apprehension in that regard because exercise of discretion for the purpose of condonation of delay can be only based on the facts and circumstances of each case and therefore, there can be no set precedent on such issues. Delay condoned - Decided against revenue

Summary

Issues:
Challenge to order refusing to condone delay in filing Return of Income for Assessment Year 2014-15 under the Income Tax Act, 1961.

Analysis:
The appeal before the Madras High Court involved a challenge against an order refusing to condone a delay of 37 days in filing the Return of Income for the Assessment Year 2014-15 under the Income Tax Act, 1961. The respondent had filed a writ petition seeking to set aside the order passed by the first appellant, which was allowed by the learned single Bench. The Revenue appealed, questioning the correctness of the impugned order.

During the hearing, arguments were presented by the learned Senior Standing Counsel for the Revenue and the counsel for the respondent. The first appellant had rejected the request for condonation of delay, citing reasons related to the acceptance of the Tax Audit Report and the appointment of a new auditor. The issue revolved around Section 119 of the Act, which deals with instructions to subordinate authorities. The Board's power under Section 119(2)(b) to avoid genuine hardship in cases was crucial in this appeal.

The respondent's case highlighted delays caused by the initial auditors, leading to the appointment of a new auditor after obtaining a No Objection Certificate. The Writ Court found that the delay in filing the Return of Income did not benefit the respondent and accepted the explanation provided for the delay. The Court emphasized that unless there were malicious reasons for the delay, it should be condoned, considering the genuine hardship faced by the assessee.

The High Court concurred with the Writ Court's decision, stating that the delay of 37 days in filing the Return of Income was condonable. It emphasized that the Board's discretion under Section 119(2)(b) should be exercised based on the genuine hardship faced by the assessee. The Court dismissed the Revenue's appeal, directing the processing of the return in accordance with the law. The judgment concluded by closing the connected miscellaneous petition without costs.