2025 (3) TMI 235 - HC - Income Tax

Refusal to condone the delay in filing income tax returns - no reply to notice of defective return promptly - as submitted financial position of the Petitioner company is not quite strong and the business activities suffered considerably due to the Covid pandemic and submitted that the Petitioner had candidly disclosed that a part-time accountant received the intimation of the notice of defective return but the same was not brought to the notice of the directors for a considerable time HELD THAT - The records show that this is a case where the Petitioner had filed the returns within the prescribed period. However the returns were found to be defective and the Petitioner was informed of the defective return. However for reasons the Petitioner attributes to the part-time account such intimation was not addressed resulting in the delay. The explanation offered does not smack of any mala fides. Mr Jose Pulikkoden pointed out that earlier there used to be delays in granting refunds. Therefore the Petitioner bona fide believed that the refund issue was pending with the department. Only at the later stage when enquiries were made it was realised that the matter was pending due to non-clearance of the defects in the returns as may have been pointed out to the Petitioner. Considering the explanation and the statement that no interest would be claimed if a refund is allowed the delay deserves to be condoned. Mr Jose Pulikoden pointed out that according to the Petitioner the refunds would be in the range of Rs. 5, 65, 000/-. He submitted that this refund means much to the Petitioner company which is presently in reduced financial circumstances. Accordingly we are inclined to allow condonation. As submited that the Petitioners do not have a copy of the defect notice. Accordingly we direct the Respondents to furnish a copy of the defect notice to the Petitioner within two weeks of uploading this order. The return so filed after clearing the defects pointed out should be scrutinised by issuing notice u/s 143 (2) and making an assessment u/s 143 of the Income Tax.

Summary

The Petitioner challenged an order under Section 119 (2) (b) of the Income Tax Act, 1961, which refused to condone the delay in filing income tax returns for the assessment years 2017-18 and 2018-19. The Petitioner faced genuine hardships due to financial constraints exacerbated by the Covid-19 pandemic. The delay in filing the returns was attributed to a part-time accountant who failed to address the notice of defective return promptly. The Petitioner believed the delay was due to pending refunds, but upon investigation, it was discovered that the returns had unintentional defects.The Court considered the Petitioner's explanation and the absence of mala fides in the delay. The Petitioner committed to not claiming interest on any refunds due if the delay was condoned. The Court acknowledged the financial significance of the refunds amounting to Rs. 5,65,000 for the Petitioner. Consequently, the Court inclined to allow condonation of the delay.The Court directed the Respondents to provide a copy of the defect notice to the Petitioner for rectification within a specified timeline. The Petitioner was instructed to clear the defects and file the returns promptly. Upon filing the corrected returns, the Assessing Officer would scrutinize and make assessments accordingly. Any amounts payable by the Petitioner would need to be settled, while refunds, if due, would be granted without interest based on the Petitioner's undertaking.In case of difficulties in filing returns electronically, the Petitioner was permitted to file in physical format as a special exception. The Court emphasized that this allowance was specific to the present circumstances and should not set a precedent. The impugned order was set aside, and the delay was condoned subject to the outlined directions and observations.Ultimately, the rule was made absolute without any cost order, and all parties were instructed to comply with the Court's decision as per an authenticated copy of the order.