2025 (3) TMI 814 - HC - Income Tax

Condonation of delay in filing return of income for A.Y. 2020-21 u/s 119 (2) (b) - genuine hardship to justify the condonation of delay in filing the income tax return - HELD THAT - As it is not in dispute that the petitioner is residing at USA and the transaction was entered by his late father on the basis of Power of Attorney executed by the petitioner. The petitioner therefore could not file the return of income due to the Covid-19 Pandemic Situation at the relevant point of time. As per the Circular No. 9/2015 dated 09.06.2015 the respondent was required to exercise the power vested upon him u/s 119 (2) (b) of the Act and there is nothing on record to show that the petitioner is not entitled to the refund on the basis of the computation of income for the year under consideration. Petitioner was prevented by sufficient cause for not filing return in time and the delay caused in filing return ought to have been condoned by the respondent while exercising the powers u/s 119(2) (b) of the Act. Petition is allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the petitioner demonstrated "genuine hardship" as required under section 119(2)(b) of the Income Tax Act, 1961, to justify the condonation of delay in filing the income tax return for the Assessment Year 2020-21.
• Whether the respondent appropriately exercised discretion under section 119(2)(b) of the Act in rejecting the petitioner's application for condonation of delay.
• Whether the petitioner is entitled to a refund based on the computation of income for the relevant assessment year, despite the delay in filing the return.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

Section 119(2)(b) of the Income Tax Act, 1961, empowers the tax authorities to condone delays in filing tax returns if the taxpayer can demonstrate "genuine hardship." The Circular No. 9/2015 dated 09.06.2015 provides guidance on the application of this section.

Court's Interpretation and Reasoning

The Court considered whether the petitioner had demonstrated sufficient cause for the delay in filing the tax return, which was primarily attributed to the Covid-19 pandemic and the petitioner's residence in the USA. The Court found that these circumstances constituted a sufficient cause, preventing the petitioner from timely filing the return.

Key Evidence and Findings

The petitioner argued that the delay was due to the Covid-19 pandemic and his inability to travel to India. Additionally, the petitioner's father, who executed the property sale, had passed away, complicating the situation further. The Court noted that the petitioner's claim for a refund was based on a legitimate computation of income, and there was no evidence to suggest otherwise.

Application of Law to Facts

The Court applied section 119(2)(b) and determined that the petitioner was indeed prevented by sufficient cause from filing the return on time. The pandemic and the petitioner's non-resident status were deemed valid reasons for the delay, aligning with the principles of the Circular No. 9/2015.

Treatment of Competing Arguments

The respondent argued that the petitioner failed to demonstrate genuine hardship beyond the mere assertion of pandemic-related travel restrictions. However, the Court found this argument insufficient, noting the broader context of the pandemic's impact and the petitioner's circumstances, including his father's death.

Conclusions

The Court concluded that the petitioner had shown genuine hardship and sufficient cause for the delay. Therefore, the respondent should have exercised discretion to condone the delay under section 119(2)(b).

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning

The Court stated, "We are of the opinion that the petitioner was prevented by sufficient cause for not filing return in time and the delay caused in filing return ought to have been condoned by the respondent while exercising the powers under section 119(2)(b) of the Act."

Core Principles Established

• The Court reinforced the principle that genuine hardship under section 119(2)(b) must be evaluated in light of the specific circumstances, including external factors like a global pandemic.
• The decision emphasized that tax authorities should exercise discretion reasonably and consider all relevant factors when assessing applications for condonation of delay.

Final Determinations on Each Issue

• The Court quashed the impugned order dated 25.01.2024, which dismissed the petitioner's application for condonation of delay.
• The Court ordered the delay in filing the return to be condoned under section 119(2)(b) of the Act, recognizing the petitioner's entitlement to a refund based on the legitimate computation of income.