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TMI Blog2019 (4) TMI 1169X X X X Extracts X X X X X X X X Extracts X X X X ..... originally filed return of income for assessment year 2009-10 on 30.9.2009 declaring total income at Rs. NIL. It is the case of the petitioner that its income tax matters were handled by M/s. U.A. Maheshwari & Co., Chartered Accountants. However, the income tax matters for the assessment year 2012-13 were handed over to M/s. R. K. Doshi & Co., Chartered Accountants. During the course of assessment proceedings for assessment year 2012-13, the then Assessing Officer called for the details of brought forward losses. Therefore, M/s. R.K. Doshi & Co., authorised representative of the petitioner, called for old records from the petitioner so as to ascertain and also substantiate the amount of brought forward losses available for set off. While undertaking this exercise, it was realised that though there was a book loss of Rs. 8,56,85,868/- for assessment year 2009-10, the return of income for the said assessment year was filed declaring income at Rs. NIL in ITR-7 without claiming carry forward losses of Rs. 7,91,66,338/-. Since the return of income was processed under section 143(1) of the Act, the above error went unnoticed. Upon being properly advised, the petitioner filed correct ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven when the petitioner has complied with all the conditions mentioned in Circular dated October 12, 1993. The legislature has conferred the power to condone delay to enable the authorities to do substantive justice to the parties by disposing of the matters on the merits. 3.3 Mr. Hemani submitted that unless the petitioner is permitted to carry forward the losses incurred by it in the assessment year under consideration, it would lose such amount for all times to come and that such loss cannot be denied on account of technicalities. Therefore, this is a case where the petitioner would suffer from genuine hardship and therefore, the CBDT was not correct in not exercising discretion under section 119(2)(b) reasonably and judiciously and rejecting the application made by the petitioner. 4. Vehemently opposing the petition, Mr. M. R. Bhatt, Senior Advocate, learned counsel for the respondents submitted that the core ingredient of section 119(2)(b) of the Act is genuine hardship. It was submitted that formation of opinion on stated facts would differ from person to person and that the opinion of the CBDT is not so arbitrary or capricious so as to warrant exercise of extraordinary p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only when the authority has acted wrongly in the decision-making process or the order is such which cannot be supported by reasons and similar other grounds. The learned counsel submitted that in the facts of the present case also, there is no infirmity in the decision-making process nor can the order be said to be such which is not supported by reasons and similar other grounds. 4.2 Reliance was also placed upon the decision of the Delhi High Court in the case of B.U. Bhandari Nandgude Patil Associates v. Central Board of Direct Taxes, (2018) 91 taxmann.com 241 (Delhi), wherein the court found that the findings recorded by the CBDT were primarily factual and also lucid and cogent. The impugned order was not so arbitrary or whimsical, to justify interference in exercise of power of judicial review. The court further held that statutory time limits fixed have to be adhered to as it ensures timely completion of assessments. Discipline on time limits regarding filing of returns have to be complied and respected, unless compelling and good reasons are shown and established for grant of extension of time. Extension of time cannot be claimed as a vested right on mere asking and on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort under section 44AB of the Act which was placed during the course of the annual general meeting duly reflects the loss in the year 2009, and, therefore, the genuineness of the claim is beyond doubt. 5.1 Referring to the affidavit-in-rejoinder filed by the petitioner, it was submitted that there was a clerical error on the part of the Chartered Accountant while filing the return of income, and hence, it was beyond the petitioner's control. It was submitted that there is other contemporaneous evidence to show a different picture, namely, that the petitioner had in fact incurred a loss during the assessment year under consideration. Therefore, apparently a clerical error is a mistake of an expert which is beyond the control of the petitioner. It was submitted that the factum of loss not being denied, the conclusion that there is no genuine hardship is not judicious. It was, accordingly, urged that the petition deserves to be allowed by granting the relief as prayed for. 5.2 Dealing with the contention of the learned counsel for the respondent that the matter has become academic, the learned advocate for the petitioner submitted that to claim the benefit of carry forward, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board: Provided that no such orders, instructions or directions shall be issued - (a) so as to require any Income Tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the Principal Commissioner or Commissioner (Appeals) in the exercise of his appellate functions. (2) Without prejudice to the generality of the foregoing power,- (a) the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of sections 115-P, 115-S,, 115-WD, 115-WE, 115-WF, 115-WG, 115- WH, 115WJ, 115-WK, 139, 143, 144, 147, 148, 154, 155, 158-BFA, subsection (1-A) of section 201, sections 210, 211, 234-A, 234-B, 234C, 234-E 270-A, 271, 271-C, 271- CA and 273 or otherwise), general or special orders in respect of any class of incomes or fringe benefits or class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to the guidelines, principles or procedures to be followed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, for the purpose of admitting any application or claim after the expiry of the period specified, such hardship has to be genuine. 9. This High Court in Jay Vijay Express Carriers v. Commissioner of Income Tax [2013] 34 taxmann.com 61 (Gujarat), on which reliance has been placed on behalf of the petitioner, has held that the paramount consideration in exercise of power under section 119(2)(b) of the Act is the desirability or expedience for avoiding genuine hardship. The twin considerations before the Commissioner, therefore, would be whether to avoid genuine hardship to exercise the power would be necessary, and further even if there was a case of genuine hardship, whether it would be desirable or expedient to do so. In the facts of the said case, the court opined that the petitioner was neither lethargic nor lacking in bona fides in making the claim beyond the period of limitation, which should have a relevance to the desirability and expedience for exercising such power. The court further sounded a note of caution that such powers are not to be exercised in a routine manner to extend limitation provided by the Act for various stages. Such routine exercise of powers wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer said that the application for condonation of delay may not be accepted as the same had been made by way of an afterthought when the assessee started earning profits during assessment year 2012-13. The petitioner's case was that denial of carry forward losses would cause genuine hardship to it as it would be burdened by a huge tax liability. 13. By the impugned order, the CBDT has rejected the application made by the petitioner on the following grounds: - The petitioner was not prevented from any circumstances beyond its control from filing the revised return of income within the time prescribed by the Act. There was no factor attributable to the income tax department or other external factor preventing it from filing its revised return of income in time. - There were no external factors preventing the petitioner from filing its revised return of income within the permitted time. - The fact that losses were not carried forward did not come to the notice of the petitioner even while filing returns of income of assessment years 2010-11 and 2011-12, which shows that it has failed to discharge its statutory obligations diligently. The petitioner has not been able to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the correctness of the claim and submit a report in this regard to the concerned officer and not merely his views on the merits of the application made by the assessee. It is in the backdrop of the above Circular that the report of the Assessing Officer as well as the affidavit-inreply filed on behalf of the respondents is required to be examined. 18. On reading the report submitted by the Assessing Officer in its entirety, it emerges that the Assessing Officer has only offered his comments on the merits of the application, whereas there is not even a whisper as regards the genuineness of the claim as to whether the loss claimed is genuine or not. As noticed hereinabove, in terms of the circular, the Assessing Officer is required to make necessary inquiries or scrutinise the case in accordance with the provisions of the Act to ascertain the correctness of the claim. However, no such exercise appears to have been carried out by the Assessing Officer who has only commented on the merits of the application under section 119(2)(b) of the Act. In the opinion of this court, in terms of the above Circular, the Assessing Officer is required to verify the genuineness and correctness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the loss claimed by it in the year under consideration. Not being able to carry forward such loss, therefore, per se would cause hardship to the petitioner. The mere fact that the petitioner is now making a profit and may be in a position to bear the loss does not mean that the petitioner would not suffer hardship. Evidently therefore, if the time limit for filing revised return of income is not extended the petitioner would have to suffer from hardship as otherwise the entire loss of Rs. 7,91,66,338/- would not be permitted to be carried forward for being set off against the profits of the subsequent assessment years. 24. Insofar as the question as to whether the claim could not be made within the specified time for circumstances beyond the control of the petitioner is concerned, the petitioner is a bank which is run by various employees who are engaged in the banking business. The officers of the bank may not have any knowledge about the intricacies of the Income Tax Act or the manner in which a return of income has to be filed. It is for this reason that the petitioner avails of the services of an expert, viz. a Chartered Accountant, for filing its returns of income and han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyees who maintain the daily accounts and prepare or assist in preparation of Profit and Loss account as well as balance sheet; such books of account are subject to audit by regular auditors as well as tax auditors. It is in cases like the present one, wherein despite the aforesaid position, in case of genuine hardship, if on account of reasons beyond the control of the assessee, an application or claim is not made by the assessee within the period specified in the Act, that powers under section 119(2)(b) of the Act are required to be exercised. 27. In PDS Logistics International (P.) Ltd. v. Chief Commissioner of Income Tax, [2018] 256 Taxman 167 (Karnataka), the Karnataka High Court has held thus:- "7. It is trite law that rendering substantial justice shall be paramount consideration of the Courts as well as the Authorities rather than deciding on hyper-technicalities. It is obvious that there is some lapse on the part of the petitioner, that itself would not be a factor to turn out the plea for filing of the return, when the explanation offered was acceptable and genuine hardship is established. It was with a fond hope of getting justice at the hands of the Chief Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income and this was the only explanation put forth. The CBDT took note of the fact that the assessee had not been able to show that it had pursued the matter diligently as the responsibility of filing the return in time is of the assessee and he is expected to be more diligent if a large claim of deduction is involved. It was further found that there was nothing to show that the assessee pursued the matter with the auditor to get audit done. The fact that all other audits were done timely by the auditor except for the said audit also did not help the assessee's case as any medical exigency of the magnitude being claimed would have delayed at least a few more audits. The court found the findings recorded by the CBDT were primarily factual and also lucid and cogent and that the application under section 119(2)(b) was made only at the stage when the assessment order reached the stage of the Tribunal. The above decision would also, therefore, not be applicable to the facts of the present case. 31. In light of the above discussion, this court is of the considered view that the CBDT ought to have exercised such powers under clause (b) of sub-section (1) of section 119 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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