Genuine hardship governs condonation of delay in refund claims, allowing belated claims to be examined on merits.

A delayed refund claim under the Income-tax Act can be examined on merits only after condonation of delay under section 119(2)(b). The decisive test is genuine hardship, not a strict repetition of the Limitation Act standard. On the stated facts, the delay in completing the statutory audit was not attributable to the assessee and the record showed financial hardship, so refusal to condone delay was unsustainable. Once delay is condoned, the refund claim may be processed and scrutinised on merits by the Assessing Officer.

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Issues: Whether delay in filing a refund claim could be condoned under section 119(2)(b) of the Income-tax Act, 1961 on the ground of genuine hardship, and whether the rejection of the request for condonation was sustainable.

Analysis: A claim for refund is governed by Chapter XIX of the Income-tax Act, 1961 and must be made within the limitation prescribed for such claims. A belated refund claim can be processed on merits only if the delay is first condoned under section 119(2)(b). The power under that provision is not a mere repetition of section 5 of the Limitation Act; the decisive consideration is whether refusal to condone delay would cause genuine hardship to the assessee. The delay in completion of statutory audit was not attributable to the assessee, and the materials also showed financial hardship. The Board's view that the return could not be scrutinised because the limitation period had expired was not accepted, since the Assessing Officer could examine the refund claim once delay was condoned.

Conclusion: The rejection of condonation was unsustainable. Delay was required to be condoned, and the refund claim had to be processed on merits; the decision was in favour of the assessee.

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