2017 (2) TMI 118 - HC - Income Tax

Court overturns tax authority's rejection of filing extension, emphasizes need for discretion under Income Tax Act

The Central Board of Direct Taxes rep. by its Deputy Secretary (OT) Department of Revenue-Ministry of Finance Government of India, New Delhi., The Commissioner of Income Tax, Chennai-V, Aaykar Bhavan, Chennai and The Income Tax Officer, Company Ward-V (4), Chennai Versus M/s. Regen Infrastructure & Services Pvt. Ltd., (formerly Renewable Energy Generation Pvt. Ltd. rep. by its Joint Managing Director, Mr. R. Sundaresh

The Court set aside the Central Board of Direct Taxes' rejection of condonation of delay in filing income tax returns for Assessment Year 2010-11, ... Condonation of delay - delay in filing the Return of Income - Held that:- In the instant case, there is no dispute or denial of the fact that the Return of Income filed by the Respondent/Assessee for the Assessment Year 2010-11, has been uploaded sometime past 00.00 hours on 15.10.2010. One can take judicial notice of the fact that uploading of Return requires not only an effort but also consumes sometime. If the Assessee has encountered certain hardship or difficulty in uploading his return, as alleged by him due to a technical snags in the website of the Income Tax Department due to the last hour rush of filing of Returns, the delay deserves to be condoned. When once an authority has been conferred discretion to condone the delay, application seeking condonation of delay of one day cannot be rejected for such reasons as are assigned by the Board in its order dated 05.05.2014. Hence, we are of the opinion that the Board has not exercised its discretion properly in the matter and in keeping with the legal principles relevant for such consideration. Hence, we have no hesitation to come to the conclusion that the learned Single Judge has rightly allowed the writ petition and set aside the order dated 05.05.2014 passed by the Board. The net result is, the delay in filing the Return of Income by the Respondent/Assessee for the assessment year 2010-2011, beyond 15.10.2010 stands condoned Issues:Condonation of delay in filing income tax return for Assessment Year 2010-11.Analysis:The case involved a Letters Patent Appeal against a Single Judge's order regarding the filing of income tax returns for the Assessment Year 2010-11. The Respondent, an Assessee, filed the return past midnight on 15.10.2010, which was considered belated. The Assessee sought condonation of delay due to floods affecting general life, which was rejected by the Central Board of Direct Taxes. The main reason for rejection was the absence of floods in Tamil Nadu, where the Assessee was located, implying the return could have been filed within the extended deadline. The Single Judge set aside the Board's order, directing the Assessing Officer to consider the return on its merits.Under Section 119(2)(b) of the Income Tax Act, the Board has the discretion to admit applications for relief beyond specified periods and must exercise this discretion judiciously. In this case, the Assessee uploaded the return just after midnight, indicating effort and technical challenges. The Court noted that reasons for delay must be evaluated based on the record available at the time of the decision, without post-hoc justifications. The Court held that the Board did not properly exercise its discretion, leading to the Single Judge's decision to set aside the Board's order.The Court concluded by condoning the delay in filing the return and instructing the Assessing Officer to process the return in accordance with the law. The Writ Appeal was dismissed, and no costs were awarded. The judgment emphasized the importance of the Board's proper exercise of discretion in condonation cases, ensuring fairness and adherence to legal principles.