2024 (9) TMI 585 - HC - Income Tax

Condonation of delay in filing the return of income rejected - as argued income-tax returns were handled by a Chartered Accountant, who could not take timely steps on account of ill health of his spouse and returns of the petitioners could not be filed within the stipulated time - HELD THAT - It needs no elaboration that in matters of maintaining accounts and filing of returns, the assessees are most likely to depend on the professional services of their Chartered Accountants. Once a Chartered Accountant is engaged and there is a genuine dependence on his services, such as in the present case, whose personal difficulties had caused a delay in filing of the petitioners returns, was certainly a cause beyond the control of the petitioners / assessees. In these circumstances, the assessee, being at no fault, should have been the primary consideration of the PCIT The reasons can be manifold like illness either of himself or his family members, as a result of which he was unable to timely discharge his professional obligation. There could also be a likelihood that for such reasons, of impossibility of any services being provided/performed for his clients when tested on acceptable materials. Such human factors necessarily require a due consideration when it comes to compliances of the time limits even under the Income Tax Act. The situation in hand is akin to what a Court would consider in legal proceedings before it, in condoning delay in filing of proceedings. In dealing with such situations, the Courts would not discard an empathetic /humane view of the matter in condoning the delay in filing legal proceedings, when law confers powers to condone the delay in the litigant pursuing Court proceedings. This of course on testing the bona fides of such plea as may be urged. In our opinion, such principles which are quite paramount and jurisprudentially accepted are certainly applicable, when the assessee seeks condonation of delay in filing income tax returns, so as to remove the prejudice being caused to him, so as to regularise his returns. In fact, in this situation, to not permit an assessee to file his returns, is quite counter productive to the very object and purpose, the tax laws intend to achieve. In this view of the matter, we have no manner of doubt that the delay which is sufficiently explained in the present case would be required to be condoned. Resultantly, the impugned order is quashed and set aside. The respondents are directed to permit the petitioners to file returns with penalty, fees and interest, if any, within a period of two weeks from today.

Summary

Issues:
Delay in filing income tax returns, rejection of application for condonation of delay under section 119 (2) (b) of the Income-tax Act, 1961 by Principal Commissioner of Income-tax, Mumbai.

Analysis:

The judgment delivered by the High Court of Bombay pertains to a case where the petitioners, members of one family, sought relief against the rejection of their application for condonation of delay in filing income tax returns by the Principal Commissioner of Income-tax, Mumbai. The delay was attributed to the ill health of the petitioners' Chartered Accountant's spouse, which hindered timely filing of returns. The petitioners argued that they were heavily reliant on the Chartered Accountant for all tax-related matters, and the delay was genuine due to unforeseen circumstances beyond their control. They submitted medical papers to support their claim. However, the PCIT rejected their application without providing concrete reasons for disbelief in the petitioners' case. The High Court noted the mechanical approach of the PCIT and emphasized the need for sensitivity towards genuine human problems that may impede compliance with tax regulations. The Court highlighted the legislative provision allowing for condonation of delay to address such situations and criticized the PCIT for not considering the valid reasons presented by the petitioners. The Court emphasized the importance of recognizing human factors, such as illness or personal difficulties, that could affect compliance with tax deadlines. It drew parallels with legal proceedings where delays are condoned based on the merits of the case. The Court concluded that the delay in this instance should be condoned, quashed the impugned order, and directed the respondents to allow the petitioners to file their returns within a specified period, keeping all contentions on the merits open. The judgment was disposed of with no costs incurred by either party.