Condoning Delay in Filing Income Tax Return: A Case for Equitable Consideration

Deciphering Legal Judgments: A Comprehensive Analysis of Judgment of High Court on "Condoning Tax Return Filing Delays"

Reported as:

2024 (10) TMI 764 - BOMBAY HIGH COURT

INTRODUCTION

This case concerns the issue of condoning a two-day delay in filing the Return of Income and Form 10-IC for the Assessment Year 2021-22. The Petitioner sought relief from the High Court, citing technical difficulties faced by the Chartered Accountant in filing the returns within the prescribed time limit.

The core legal question presented is whether the delay should be condoned given the bona fide reasons and circumstances that led to the delay.

ARGUMENTS PRESENTED

The Petitioner's primary contention was that the Chartered Accountant made diligent efforts to file the Return of Income and Form 10-IC within the extended due date of March 15, 2022. However, due to technical issues on the Income Tax Portal, the filing could not be completed on time. A screenshot of the technical difficulties faced was submitted as evidence.

Additionally, the Petitioner highlighted that on March 10, 2022, an incident of fire at the Chartered Accountant's office premises led to a power outage, disrupting the computer systems and server operations. This further contributed to the delay in filing the returns.

The Petitioner relied on the principles established in the case of Jyotsna M. Mehta, Niti Ravi Mehta, and Ravi Madhusudan Mehta Versus Principal Commissioner of Income-tax-19 & Ors. - 2024 (9) TMI 585 - BOMBAY HIGH COURT, wherein the High Court emphasized the need for a humane and empathetic approach in condoning delays caused by genuine circumstances beyond the assessee's control.

COURT DISCUSSIONS AND FINDINGS

The Court analyzed the legal principles governing the condonation of delays in filing tax returns. It referred to the decision in Jyotsna Mehta v. Principal Commissioner of Income Tax, where the Court had stressed the importance of considering genuine human problems that may prevent timely compliance.

The Court acknowledged that assessees often rely on the professional services of Chartered Accountants, and unforeseen circumstances beyond their control, such as illness or technical difficulties, should not be grounds for rejecting condonation applications.

The Court evaluated the evidence presented, including the screenshot of technical issues, the fire incident at the Chartered Accountant's office, and the affidavit from the Chartered Accountant. It found the reasons for the delay to be bona fide and beyond the Petitioner's control.

ANALYSIS AND DECISION

The High Court concluded that the principles of equity and fairness, as established in the Jyotsna Mehta case, mandated the condonation of the two-day delay in filing the Return of Income and Form 10-IC.

The Court reasoned that a rigid adherence to technicalities would be counter-productive to the objectives of tax laws, which aim to facilitate compliance. Therefore, it directed the Respondents to condone the delay and accept the Petitioner's returns without penalty, fees, or interest.

The Court's ruling highlights the importance of adopting a humane and empathetic approach when assessing delays caused by genuine circumstances beyond the assessee's control. It establishes that bona fide efforts and reasonable explanations should be given due consideration in the interest of justice and fairness.

DOCTRINAL ANALYSIS

This case reinforces the legal principle that condonation of delays should not be approached mechanically but should consider the specific circumstances and bona fide reasons presented by the assessee.

The Court's decision aligns with the evolving doctrine of equity and fairness in tax administration, recognizing that strict adherence to technicalities may sometimes lead to unjust outcomes. The ruling emphasizes the need for tax authorities to exercise their discretionary powers in a judicious and humane manner, taking into account genuine human problems that may hinder compliance.

By relying on the principles established in the Jyotsna Mehta case, the Court has further solidified the application of these equitable considerations in the context of condoning delays in filing tax returns. This decision reinforces the jurisprudence that seeks to balance the interests of tax administration with the rights and genuine difficulties faced by assessees.

Full Text:

2024 (10) TMI 764 - BOMBAY HIGH COURT