Court emphasizes genuine hardship in refund claim delay condonation under Section 119(2)(b) of Income Tax Act

The Court overturned the rejection of a refund claim due to delayed filing of returns for assessment years 1996-97 and 1997-98. It emphasized the need to consider genuine hardship in condoning delays under Section 119(2)(b) of the Income Tax Act. The Commissioner's failure to properly assess hardship rendered the rejection unsustainable. The Court directed a reevaluation of the delay condonation applications, quashing previous orders and instructing compliance with Section 119(2)(b) within two months. The judgment focused on ensuring proper application of the law in refund claim cases.

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Issues:
1. Delay in filing returns for assessment years 1996-97 and 1997-98 leading to rejection of refund claim.
2. Application for condonation of delay under Section 119(2)(b) of the Income Tax Act.
3. Proper exercise of power under Section 119(2)(b) by the Commissioner.
4. Consideration of genuine hardship in condoning delay for refund claims.
5. Applicability of Bombay High Court judgment on claiming refund when returns are filed in response to Section 148 notices.
6. Judicial review of orders passed on refund claims.

Analysis:
The writ appeal in this case was filed challenging the rejection of a refund claim due to the belated filing of returns for assessment years 1996-97 and 1997-98. The judgment under appeal condoned the delay in applying for a refund based on the authority granted under Section 119(2)(b) of the Income Tax Act, emphasizing the need to avoid genuine hardship to the assessee. The Commissioner's order rejecting the delay condonation did not properly assess the genuine hardship aspect as required by the law, leading to the unsustainability of the order.

The Bombay High Court's judgment stating that an assessee cannot claim a refund when returns are filed in response to Section 148 notices was considered. However, it was highlighted that if the delay in filing is condoned under Section 119(2)(b), the reason for filing the return becomes less significant. The Court found the Commissioner's order to be improper and unsustainable, emphasizing the need for a proper exercise of power under Section 119(2)(b) to consider genuine hardship.

While agreeing with the Single Judge's decision on the unsustainability of the previous orders, the Court directed a reconsideration of the applications for delay condonation (Exts.P14 and P15) instead of directly condoning the delay. The judgment quashed the previous orders and instructed the competent authority to reevaluate the applications and pass fresh orders within two months, ensuring compliance with Section 119(2)(b) of the Income Tax Act. The writ appeal was disposed of accordingly, focusing on the proper application of the law in refund claim cases.

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