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TMI Blog2024 (4) TMI 549X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of its statutory duty to decide applications for rectification of mistakes apparent from the record under Section 154 of the Act. Respondent no. 1 has failed to pass orders on the application for rectification filed by petitioner despite numerous reminders being issued by petitioner. 3. For AY 2016-17, petitioner got his books of accounts audited and an audit report dated 19th August 2016 was issued by the auditors M/s Shankarlal Jain & Associates, Chartered Accountants. Petitioner filed his return of income on 7th September 2016 well before the due date of 30th September 2016 prescribed under Section 139(1) of the Act. 4. In his return of income, petitioner claimed a deduction under Section 80-IC of the Act in respect of an industrial unit/ undertaking that petitioner was operating in the name and style of M/s Creative Industries in an export processing zone (EPZ) at Haridwar (Uttaranchal). In terms of Section 80IC of the Act, no deduction under Section 80-IC of the Act could be allowed to an assessee unless the return of income was filed on or before the due date specified under Section 139(1) of the Act. Since petitioner had duly filed his return of income within the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to petitioner, till date no decision has been taken by respondent no. 1 on the rectification application filed by petitioner under Section 154 of the Act, though almost 6 years have passed since the same was filed. 7. Therefore, left with no option, petitioner approached respondent no. 2 for condoning the delay, if any, and to direct respondent no. 1 to allow the rectification application. Petitioner explained to respondent no. 2 in the application under Section 119(2)(b) of the Act that the reason for not filing Form 10 CCB on time was on account of the inadvertence/over sight by the Chartered Accountants and relying on a judgment of the Apex Court in CIT Vs. G. M. Knitting Industries Private Limited (2015) 376 ITR 456 (SC), submitted that filing Form 10 CCB was directory and not mandatory. Reliance was also placed on the Circular No. 689 dated 24th August 1994 and Circular No. 669 dated 25th October 1993 issued by CBDT as per which, respondent no. 1 was bound to consider Form 10 CCB and decide the application for rectification. Petitioner's application was rejected by respondent no. 2 on the ground that the reasons stated by petitioner, i.e, inadvertence on the part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which is not regarded as a developed state in the country, providing employment to around 100 persons and making a huge investment for such setting up has a legitimate expectation of grant of statutory benefits under section 80-IC of the Act. The business decisions including pricing of the products manufactured at the said undertaking are taken keeping in mind the entitlements to such statutory benefits. Therefore, the refusal to exercise its powers under Section 119 of the Act in a manner that would further legislative intention on the grounds that there was no case of severe financial crisis, should be rejected by the court. Mr. Sarda also submitted that the phrase 'genuine hardship' used under Section 119(2)(b) of the Act ought to be liberally construed. Mr. Sarda further submitted that there is nothing to indicate that the application filed by petitioner before respondent no. 2 has been considered by a Member of the Board. Mr. Sarda submits that the order only says that it has been issued with the approval of the Member (IT&R), CBDT. But no order passed by the said Member has been made available to petitioner or filed alongwith the affidavit in reply. Mr. Sarda submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ardship and that will be certainly a 'genuine hardship'. This Court in Optra Health Pvt. Ltd. v. Additional Commissioner of Income Tax (HQ), Pune & Ors. (Writ Petition No. 15544 of 2023 dtd. 19th December 2023) in paragraphs No. 9 and 10 held as under: 9. While considering the genuine hardship, the PCCIT was not expected to consider a solitary ground as to whether the assessee was prevented by any substantial cause from filing the corrections within a due time. Other factors also ought to have been taken into account. The phrase "genuine hardship" used in Section 119(2)(b) of the Act should have been construed liberally. The Legislature has conferred the power to condone the delay to enable the authorities to do substantial justice to the parties by disposing the matters on merits. The expression 'genuine' has received a liberal meaning in view of the law laid down by the Apex Court and while considering this aspect, the authorities are expected to bear in mind that ordinarily the applicant, applying for condonation of delay, does not stand to benefit by lodging erroneous returns. Refusing to condone the delay can result in a meritorious matter being thrown out at the very thres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming the relief was not satisfactorily explained, more particularly when the returns could not be filed in time due to the ill health of the officer who was looking after the taxation matters of the petitioner...." (p. 737). The Madras High Court in the case of R. Seshammal (P.) Ltd. (supra), was pleased to observe as under: "This is hardly the manner in which the State is expected to deal with the citizens, who in their anxiety to comply with all the requirements of the Act pay monies as advance tax to the State, even though the monies were not actually required to be paid by them and thereafter, seek refund of the monies so paid by mistake after the proceedings under the Act are dropped by the authorities concerned. The State is not entitled to plead the hyper-technical plea of limitation in such a situation to avoid return of the amounts. Section 119 of the Act vests ample power in the Board to render justice in such a situation. The Board has acted arbitrarily in rejecting the petitioner's request for refund." (p. 187) 15. The phrase "genuine hardship" used in section 119(2) (b) should have been construed liberally even when the petitioner has complied with all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on that evidence. 17. Having said so, turning to the facts of the matter giving rise to the present petition, we are satisfied that respondent No. 1 did not consider the prayer for condonation of delay in its proper perspective. As such, it needs consideration afresh." 10. This was followed by this Court in Artist Tree (P.) Ltd. v. Central Board of Direct Taxes, (2014) 52 taxmann.com 152 (Bombay) relied upon by Mr. Walve, where paragraph nos. 19, 21 and 23 read as under : "19. The circumstance that the accounts were duly audited way back on 14 September 1997, is not a circumstance that can be held against the petitioner. This circumstance, on the contrary adds force to the explanation furnished by the petitioner that the delay in filing of returns was only on account of misplacement or the TDS Certificates, which the petitioner was advised, has to be necessarily filed alongwith the Return of Income in view of the provisions contained in Section 139 of the said Act read alongwith Income Tax Rules, 1962 and in particular the report in the prescribed Forms of Return of Income then in vogue which required an assessee to attach the TDS Certificates for the refund being claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with the provisions of Section 119(2)(b) of the said Act, the concerned I.T.O. or the Assessing Officer would have to consider the Return of Income and deal with the same on merits and in accordance with law." The Court has held that the phrase 'genuine hardship' used in Section 119(2)(b) of the Act should be considered liberally. CBDT should keep in mind, while considering an application of this nature, that the power to condone the delay has been conferred is to enable the authorities to do substantial justice to the parties by disposing the matters on merits and while considering these aspects, the authorities are expected to bear in mind that no applicant would stand to benefit by lodging delayed returns. The court also held that refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when the delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. Similar issue came to be considered in R. K. Madhani Prakash Engineers (Supra), where paragraph 8 reads as under : "8 Further it is recorded in the impugned order th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er well known principle, namely a person cannot take advantage of his own wrong, may also have to be borne in mind. The Gujarat High Court in the case of Gujarat Electric Co. Ltd. V. CIT MANU/G1/0407/2001: 255 ITR 396, was pleased to hold as under: The Board was not justified in rejecting the claim for refund on the ground that a case of genuine hardship was not made out by the petitioner and delay in claiming the relief was not satisfactorily explained, more particularly when the returns could not be filed in time due to the ill health of the officer was looking after the taxation matters of the petitioner. The Madras High Court in the case of Seshammal (R) v. ITO MANU/TN/0879/1998: (1999) 237 ITR 185 (Madras), was pleased to observe as under: This is hardly the manner in which the State is expected to deal with the citizens, who in their anxiety to comply with all the requirements of the Act pay monies as advance tax to the State, even though the monies were not actually required to be paid by them and thereafter seek refund of the monies so paid by mistake after the proceedings under the Act are dropped by the plea of limitation in such a situation to avoid return of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e apparent defect. At this stage, the authority is not expected to go deep into the niceties of law. While determining whether refund claim is correct and genuine, the relevant consideration is whether on the evidence led, it was possible to arrive at the conclusion in question and not whether that was the only conclusion which could be arrived at on that evidence." (emphasis supplied) This court in R.K. Madhani Prakash Engineers (Supra) had quashed and set aside the impugned order on the ground that the impugned order is not passed by the CBDT but only with the approval of the Member (IT & R), CBDT. So also in the case of TATA Autocomp (supra) wherein paragraphs 11, 12 and 13 read as under: "11. Moreover, the order says, "This issues with the approval of Member (IT&R), Central Board of Direct Taxes" and is signed by one Virender Singh, Additional Commissioner of Income Tax (ITA Cell), CBDT, New Delhi. If a personal hearing has been granted by the Member (IT&R), the order should have been passed by him. Mr. Sharma states there could be file notings. If that is so, that has not been made available to Petitioner. 12. In the circumstances, on these two grounds alone, we quas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plinary action against respondent no. 1 for dereliction of duty. 16. We shall also note that, despite this court had observed in R. K. Madhani Prakash Engineers (Supra) on 18th July 2023, as under: "6 Before we proceed further, we should note that pursuant to Circular F No. 312/22/2015-OT dated 9th June 2015 issued by CBDT, application / claim for amount exceeding Rs. 50 lakhs shall be considered by the Board. We say this because the last sentence in the impugned order dated 24th December 2020 reads; "This order is passed with the approval of the Member (TPS & Systems), CBDT." There is nothing to indicate that Board has considered petitioner's application. We also find that copy of the impugned order dated 24th December 2020 is sent to, (a) the Principal Chief Commissioner of Income Tax, Mumbai, (b) Principal Commissioner of Income Tax-21, Mumbai, (c) Director of Income Tax, Centralized Processing Cell, Bengaluru, (d) the applicant and (e) the Guard File but it is not sent to the Member on whose approval the said order is supposed to have been passed. In our view, this means the Member has not passed the order but has been passed by the Director. On this ground alon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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