2024 (6) TMI 601 - HC - Income Tax

Rejection of application for condonation of delay u/s 119 (2) (b) in filing returns u/s 139 (1) or 139 (4) of the said Act - petitioner s case that the petitioner could not file its return of income u/s 139 (1) for the AY 2022-23 for the reasons beyond its control - It is also the petitioner s case that the petitioner s senior accountant had been diagnosed with heart ailments for which he had to be hospitalized and as such the books of accounts could not be finalized which resulted in delayed finalization of accounts. HELD THAT - Admittedly in this case initially the accountant fell ill and subsequently on account of such illness had to resign. Although the Board had observed that the petitioner had adopted a casual approach in finding replacement of its accountant and there was willful negligence on the part of the management the materials on record do not substantiate the same. To the aforesaid extent the finding reached by the Board appears to be based on no evidence and is perverse. Considering the enormity of the problem suffered by the petitioner and the subsequent resignation of the petitioner s accountant due to his health condition the same would certainly make out a case of genuine hardship. The delay also does not appear to be on account of any negligence or mala fide of the petitioner as the illness and the subsequent resignation of the accountant was an entirely unforeseen event. The authorities ought to have taken a justice oriented approach. The order cannot be sustained and the same is accordingly set aside. Since no fruitful purpose will be served by remanding the matter back to the Board for reconsideration of the aforesaid issue I am of the view that considering the unavoidable circumstances and the genuine hardship suffered by the petitioner the delay in filing the return should be condoned especially when the petitioner had already in its application for condonation of delay filed on 31st March 2023 had enclosed therewith a copy of the audited balance-sheet for the Assessment Year 2022-23. Accordingly the delay in filing of return is condoned in terms of Section 119 (2) (b) of the said Act with liberty to the petitioner to file its return of income within a period of 15 days from date.

Summary

Issues involved:
Challenge to rejection of application for condonation of delay u/s 119 (2) (b) of Income Tax Act, 1961 for filing returns u/s 139 (1) or 139 (4) for Assessment Year 2022-23.

Judgment Summary:

Issue 1: Rejection of Condonation of Delay Application
The petitioner, an income tax payee, sought condonation of delay for not filing income tax return for Assessment Year 2022-23 due to accountant's illness and subsequent resignation. The Board rejected the application citing willful negligence by management. Petitioner argued lack of evidence and genuine hardship. Court noted lack of substantiation for Board's observations and deemed the delay as unforeseen genuine hardship, setting aside the rejection order.

Issue 2: Interpretation of Section 119 (2) (b) of the Act
The Court examined Section 119 (2) (b) which allows for condonation of delay to avoid genuine hardship. It referenced guidelines and a recommendation for condonation by the Principal Chief Commissioner of Income Tax, West Bengal and Sikkim. The Court criticized the Board's reliance on time limits and emphasized a liberal interpretation of genuine hardship, citing relevant judicial pronouncements.

Final Decision:
The Court set aside the rejection order, condoning the delay in filing the return under Section 119 (2) (b) of the Act. The petitioner was granted 15 days to file the return, subject to assessment officer's review. The judgment emphasized a justice-oriented approach in cases of genuine hardship and unforeseen events, without delving into the return's merits. No costs were awarded, and parties could obtain a certified copy of the order upon request.