Equity and Justice in Tax Matters: Condonation of Bona Fide Delays

Deciphering Legal Judgments: A Comprehensive Analysis of  High Court's Judgment on Condonation of Delay in Filing Income Tax Return

Reported as:

2024 (10) TMI 1158 - BOMBAY HIGH COURT

1. INTRODUCTION

This case revolves around the issue of condonation of delay in filing income tax returns u/s 119(2)(b) of the Income Tax Act, 1961. The petitioner filed their return on November 8, 2022, with a delay of one day due to a technical glitch on the portal. The petitioner immediately filed an application seeking condonation of the one-day delay, which was rejected by the Principal Commissioner of Income Tax (Respondent No. 1).

The core legal question presented is whether the reasoning provided by the Respondent No. 1 for rejecting the petitioner's application for condonation of delay is valid and sustainable in law.

2. ARGUMENTS PRESENTED

Petitioner's Contention: The petitioner argued that the reasoning provided by Respondent No. 1 for rejecting the application for condonation of delay was flawed and displayed a complete non-application of mind. The petitioner relied on the decision of the Bombay High Court in Jyotsna M. Mehta v/s. Principal Commissioner of Income Tax, where the court had held that a bona fide delay on the part of a Chartered Accountant in filing returns could not be a ground to reject the application for condonation of delay.

Respondent's Contention: The respondent's contention is not explicitly stated in the text provided.

3. COURT DISCUSSIONS AND FINDINGS

The High Court analyzed the reasoning provided by Respondent No. 1 for rejecting the petitioner's application for condonation of delay. The court found that the reason cited, i.e., that the return had been processed u/s 143(1) of the Act with a demand due, was completely misconceived and could not be a ground to reject the delay in filing the return, which was only for one day.

The court relied on the principles laid down in Jyotsna M. Mehta case [2024 (9) TMI 585 - BOMBAY HIGH COURT], which emphasized that technicalities and rigidity of rules should not overlook genuine human problems that may prevent an assessee from achieving compliance. The court observed that the principles discussed in Jyotsna M. Mehta were paramount and jurisprudentially accepted, and they mandated their application in the present case for the delay to be condoned.

The court also referred to another decision, M/s. Neumec Builders Pvt. Ltd.  [2024 (10) TMI 764 - BOMBAY HIGH COURT], where a delay of two days in filing the Return of Income was ordered to be condoned.

4. ANALYSIS AND DECISION

The High Court concluded that the delay of one day in filing the return was bona fide and should have been condoned. The court quashed and set aside the impugned order rejecting the petitioner's application for condonation of delay.

The legal principle established is that a bona fide delay, especially a short delay, in filing income tax returns due to genuine human problems or technical glitches should be condoned by the authorities, keeping in mind the principles of equity and justice.

The implications of the ruling are that tax authorities should adopt a more empathetic and humane approach when dealing with applications for condonation of delay, especially in cases of short delays caused by genuine reasons beyond the assessee's control. Technicalities and rigid application of rules should not override the principles of equity and justice.

5. DOCTRINAL ANALYSIS

The legal principles discussed in this case revolve around the doctrine of condonation of delay and the principles of equity and justice in tax matters.

The court relied on the evolution of doctrine as discussed in Jyotsna M. Mehta case, which emphasized that technicalities and rigidity of rules should not overlook genuine human problems that may prevent an assessee from achieving compliance. The court applied these principles in the current case, recognizing that a bona fide delay of one day due to a technical glitch should be condoned.

The application of this doctrine in the current case reinforces the principle that tax authorities should adopt a more empathetic and humane approach when dealing with applications for condonation of delay, especially in cases of short delays caused by genuine reasons beyond the assessee's control. Technicalities and rigid application of rules should not override the principles of equity and justice.

Full Text:

2024 (10) TMI 1158 - BOMBAY HIGH COURT