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 without penalty, fees and interest, if any, within a period of two weeks from today.

Summary

Issues:
Challenge to rejection of application for condonation of delay in filing income tax returns under section 119 (2) (b) of the Income-tax Act, 1961.

Analysis:
The petitioners, members of the same family, sought condonation of delay in filing their income tax returns due to their Chartered Accountant's inability to act promptly because of his spouse's ill health. They contended that their reliance on the accountant was genuine and that the delay was beyond their control. The petitioners submitted medical papers to support their claim, but the Principal Commissioner of Income-tax (PCIT) rejected their application without providing reasons for disbelief or any contrary evidence on record.

The High Court criticized the PCIT's mechanical approach, emphasizing the need for sensitivity to genuine human issues that may hinder compliance. The court highlighted the legislative provision allowing for the condonation of delays to address such situations. It noted the inconsistency in the PCIT's reasoning and stressed the importance of considering factors beyond the assessee's control, such as reliance on professionals and personal difficulties affecting timely compliance.

The court likened the situation to legal proceedings where delays can be condoned based on genuine reasons. It emphasized the need for a humane view in tax compliance matters and the counterproductivity of denying an assessee the opportunity to regularize returns. Ultimately, the court quashed the impugned order, directing the respondents to allow the petitioners to file returns without penalties within two weeks, keeping all contentions on the merits open.

In conclusion, the judgment underscores the significance of considering genuine reasons for delays in tax compliance, especially when beyond the assessee's control, and highlights the need for a compassionate approach in addressing such issues to uphold the objectives of tax laws.