Court allows challenge to denial of delay condonation under Income Tax Act, cites Circular No.273

The court allowed the writ petition challenging Ext.P5 issued by the Commissioner of Income Tax, which denied condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961. The court found that the Commissioner could condone delays even for belated deposits, as Circular No.273 allowed for condonation related to investment of money in prescribed securities. The court set aside Ext.P5 and directed the 3rd respondent to reconsider the matter within two months from the date of the judgment.

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Issues:
Challenge to Ext.P5 issued by Commissioner of Income Tax denying condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961.

Analysis:
The petitioner challenged Ext.P5 issued by the Commissioner of Income Tax, which denied condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961. The petitioner had accumulated funds for future application under Section 11(2) for the assessment year 2010-11. The return was submitted before the extended deadline, but a reassessment was ordered later, resulting in a tax demand. The petitioner sought condonation of delay for extending the due date of filing the return and depositing the accumulated amount, citing Circular No.273. The rejection of the condonation by Ext.P5 was based on the absence of a provision in the circular to condone the delay for depositing accumulation under Section 11(2).

The petitioner relied on clauses (b) and (d) of Circular No.273, which empowered Commissioners to entertain applications to condone delays related to investment of money in prescribed securities under Section 11(2) in cases of oversight. The standing counsel supported the Commissioner's decision. However, the court noted that the Commissioner could condone delays even in the case of belated deposits, as the circular allowed for condonation related to investment of money in prescribed securities. The court found justification for the petitioner's challenge to Ext.P5 and allowed the writ petition, setting aside Ext.P5 and directing the 3rd respondent to reconsider the matter in light of the observations made within two months from the date of the judgment.

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