2022 (11) TMI 1065 - HC - Income Tax

Application for condonation of delay u/s 119(2)(b) - condonation of delay in filing returns and claiming refund - case of the petitioner that the delay in filing the return for the Assessment Year 2010-11 was on account of the fact that the petitioner was suffering from certain ailments and was hospitalized in connection with treatment for a period about four months - HELD THAT - 1st respondent completely misdirected himself in law while holding that Ext.P5 application of the petitioner for condonation of delay ought to be rejected as it was filed beyond the period specified in the Circular of the Board - It cannot be disputed and it is clear from a reading of the provisions of Section 119(2)(b) that the delay to be condoned is the delay in making 'the application' for refund. 'The application for refund', in this case is the return which was not processed as it was filed beyond the time specified in Section 139 - Therefore, the delay to be condoned was not to be considered with reference to the date on which the application u/s 119(2)(b) was filed, but with reference to the date on which the 'application for refund' (here in this case the return of income) was filed. Section 119(2)(b) does not impose any limitation for the purposes of filing an application for condonation of delay. Therefore, it was completely wrong on the part of the 1st respondent to treat the date of filing of application for condonation of delay as the relevant date for the purpose of considering whether it was filed within 6 years or not. The application for refund, by filing return of income, was admittedly made on 13.7.2012. Delay in filing ought to be with reference to the last date for filing of return of income for the year 2010-11, till 13.7.2012. In this view of the matter, it is not necessary to consider the decisions cited at the bar by the learned counsel for the petitioner. This writ petition is allowed and Ext.P6 is quashed. Ext.P5 application will stand restored to the file of the 1st respondent who will consider the matter afresh, and decide whether the delay from 31.3.2012 (the last date on which return could have been filed for Assessment Year 2010-11) till 13.7.2012 (date of filing of return by the petitioner) can be condoned in exercise of the power conferred u/s 119 (2)(b) of the Act. This shall be done within a period of one month from the date of receipt of a certified copy of this judgment.

Summary

Issues:
1. Condonation of delay in filing returns and claiming refund for Assessment Year 2010-11 under Section 119(2)(b) of the Income Tax Act, 1961.

Analysis:
The petitioner approached the Kerala High Court seeking relief after the Principal Commissioner of Income Tax rejected their application for condonation of delay in filing returns and claiming a refund for the Assessment Year 2010-11. The petitioner requested a mandamus to process the income tax return and grant the claimed refund. The petitioner's delay in filing the return was due to health issues, leading to the application for condonation of delay. The court noted that the delay was beyond the period specified by the Circular issued by the Central Board of Direct Taxes. The petitioner argued for condonation of the delay based on various judgments, while the respondent Department defended the rejection of the application.

The court examined Section 119(2)(b) of the Income Tax Act, which allows for condonation of delay in filing applications for exemptions, deductions, refunds, or other reliefs. The court clarified that the delay to be condoned is the delay in making the application for refund, not the filing of the condonation application itself. The court found that the respondent misdirected in law by rejecting the petitioner's application solely based on the Circular's time limit. The court emphasized that the relevant date for considering the delay should be the date of filing the return of income, not the date of filing the condonation application.

As a result, the court allowed the writ petition, quashed the rejection order, and directed the respondent to reconsider the condonation of delay from the last date for filing the return until the actual filing date. The court specified a timeline for the respondent to review the matter and process the return if the delay is condoned. Notably, the court mentioned that if the refund is delayed, the Department should pay interest as per the Income Tax Act. The court highlighted the petitioner's lack of pursuit in the refund process for several years, impacting the interest payment scenario.

In conclusion, the court's decision favored the petitioner, emphasizing the correct interpretation of the law regarding condonation of delay in filing income tax returns and claiming refunds. The judgment provided clarity on the application of Section 119(2)(b) and directed the proper consideration of the delay period in such cases.