2020 (1) TMI 921 - HC - Income Tax

Condonation of delay in filing return - reasonable cause of delay - genuine hardship - disagreement of the promoters and investors creating deadlock in the adoption of audited accounts of the petitioner - HELD THAT - Order passed by Central Board of Direct Taxes, it is evident that the Prl. Chief Commissioner of Income Tax, Additional Chief Commissioner of Income Tax as well as Assessing Officer, had recommended that the delay in filing the return be condoned. Order rejecting condonation of delay is cryptic and while deciding the application filed by the petitioner under Section 119(2)(b) of the Act, the claim of the petitioner has been dealt with on merits. It is also pertinent to mention that the circular dated 09.06.2015 does not apply in cases of Central Board of Direct Taxes. However, by placing reliance on the aforesaid decision, the claim of the petitioner for condonation of delay has been held to be not admissible and has been rejected. In the considered opinion of this Court and in the fact situation of the case as well as bearing in mind the well settled legal proposition that the expression genuine hardship should receive liberal consideration, the instant case was a fit case for condonation of delay. In view of the preceding analysis, the impugned order dated 16.01.2018 passed by the Central Government is hereby quashed and delay in filing the return of income for the assessment year 2014-15 is condoned.

Summary

Issues:
1. Writ of certiorari for quashment of order dated 16.01.2018 passed by the Central Board of Direct Taxes
2. Condonation of delay in filing the return of income for the assessment year 2014-15 under Section 119(2)(b) of the Income Tax Act, 1961

Analysis:

Issue 1: Writ of Certiorari
The petitioner sought a writ of certiorari to challenge the order passed by the Central Board of Direct Taxes under Section 119(2)(b) of the Income Tax Act, 1961. The petitioner argued that the delay in filing the return of income for the assessment year 2014-15 was due to extraordinary factors beyond their control. The Central Board of Direct Taxes examined the return on merits and concluded that the delay was not admissible based on the reluctance of the tax auditor to verify the claim, creating doubts on its correctness. The petitioner contended that the expression 'genuine hardship' in Section 119(2)(b) should be construed liberally and that the Board should not have delved into the merits of the claim. The Court noted that the authority must ensure the genuineness of the claim without prejudging the case. Ultimately, the Court quashed the impugned order and condoned the delay in filing the return.

Issue 2: Condonation of Delay
The Court considered the legal position that 'genuine hardship' should be liberally construed to advance justice. It was observed that the Central Board of Direct Taxes had rejected the condonation of delay by examining the merits of the claim, which was not the correct approach. The Court highlighted that the circular relied upon did not apply to the Central Board of Direct Taxes. Emphasizing the importance of liberal consideration for genuine hardship, the Court held that the delay in filing the return for the assessment year 2014-15 should be condoned. Consequently, the Court allowed the petition and quashed the order of the Central Government, thereby condoning the delay in filing the return.

In conclusion, the Court's decision focused on the proper interpretation of 'genuine hardship' under Section 119(2)(b) of the Income Tax Act, emphasizing the need for a liberal approach in such cases. The judgment highlighted the importance of not prejudging claims and ensuring that authorities do not delve into the merits of the claim while considering condonation of delay requests.