Court remands application to Board under Section 119(2)(c) for reconsideration. Rule partly absolute, no costs.

The court set aside the order and remanded the application to the Board for reconsideration under clause (c) of sub-section (2) of Section 119, directing the Board to pass an appropriate order within three months. The rule was made partly absolute with no order as to costs.

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Issues Involved:
1. Condonation of Delay in Filing Return of Income
2. Application of Section 119(2)(b) and 119(2)(c) of the Income Tax Act, 1961
3. Interpretation and Application of Section 80AC of the Income Tax Act, 1961

Detailed Analysis:

1. Condonation of Delay in Filing Return of Income:

The petitioner filed a return of income electronically on 26th February 2008 for the assessment year 2007-08, which was beyond the time prescribed under sub-section (1) of Section 139 of the Income Tax Act, 1961. The delay was attributed to a tragic accident involving the petitioner’s elder brother, which led to a prolonged search and rescue operation. The petitioner claimed that due to this unfortunate event, he was unable to complete and hand over the books of accounts for tax audit on time, resulting in the delayed filing of the return.

2. Application of Section 119(2)(b) and 119(2)(c) of the Income Tax Act, 1961:

The petitioner invoked powers under clauses (b) and (c) of sub-section (2) of section 119, seeking condonation of delay. The application was rejected on the grounds that:
- No satisfactory explanation was provided by the petitioner during the show-cause notice and personal hearing.
- Clause (c) of sub-section (2) of Section 119 could not be applied as it does not permit relaxation of any requirement of Section 80AC.
- The petitioner’s business activities continued to grow during the relevant period, indicating that the tragic event did not adversely affect the business.

The court observed that the Board has the power to relax any requirement under Chapter IV or Chapter VI-A to avoid genuine hardship, provided the default was due to circumstances beyond the control of the assessee, and the requirement was complied with before the completion of assessment. The petitioner met these conditions as the return was filed before the assessment order dated 31st December 2009.

3. Interpretation and Application of Section 80AC of the Income Tax Act, 1961:

Section 80AC stipulates that for claiming deductions under Section 80IB, the return must be filed on or before the due date specified under sub-section (1) of Section 139. The court noted that the power under clause (b) of sub-section (2) of Section 119 does not extend to relaxing the time limit specified under Section 139(1). However, clause (c) allows the Board to relax such requirements to avoid genuine hardship, subject to specific conditions.

The court found that the petitioner’s circumstances—engrossed in the search for his brother and dealing with the tragic event—constituted circumstances beyond his control, fulfilling the conditions under clause (c). The Board’s observations that the petitioner’s presence was not required for the audit and that the business income grew during the period were deemed irrelevant to the petitioner’s genuine hardship.

Conclusion:

The court set aside the impugned order dated 18th April 2012 and remanded the application to the Board for reconsideration under clause (c) of sub-section (2) of Section 119, directing the Board to pass an appropriate order within three months. The rule was made partly absolute with no order as to costs.

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