Court grants partial relief in Writ appeal, emphasizing timely reconsideration for Income Tax benefit

The Court allowed the Writ appeal in part, setting aside the order denying the benefit of Section 54EC of the Income Tax Act to the appellant due to a delay in investing in specified bonds. The Court emphasized an expedited reconsideration by the first respondent, highlighting that the appellant should not suffer due to technical grounds and leaving all rights and contentions open for the parties involved.

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Issues:
Challenge to order denying benefit of Section 54EC of the Income Tax Act - Delay in investing in specified bonds - Application under Section 119[2][b] rejected on grounds of limitation - Applicability of Circular dated 09.06.2015 - Appeal against rejection of application - Retrospective operation of Circular - Delay in adjudicating application - Setting aside of orders and remand for re-consideration.

Analysis:

1. The appellant, an income tax assessee, challenged the order denying the benefit of Section 54EC of the Income Tax Act due to a delay in investing in specified bonds. The appellant sold a property in 2002 and invested in Rural Electrification Corporation Ltd. bonds in 2003. The Assessing Authority disallowed the exemption, resulting in a tax demand, which was paid by the appellant. A Revision Petition and subsequent applications were made to condone the delay, which were rejected by authorities, leading to the filing of a Writ Petition.

2. The appellant contended that the rejection of the application under Section 119[2][b] of the Act was solely based on limitation, citing a CBDT Circular from 2015. The appellant argued that the Circular was applied retrospectively, which was unjustifiable. The appellant emphasized that at the time of application in 2011, no time limit was prescribed, and the Circular's imposition of a six-year limit was post-facto. Reference was made to a Supreme Court judgment supporting the appellant's position.

3. The Revenue defended the rejection, asserting that the Circular from 2015 applied to pending applications like the appellant's. The Revenue highlighted the delay in filing the application and the lack of satisfactory reasons for the delay. The Revenue contended that the belated application could not be condoned, given the timelines of assessment orders.

4. The Court considered the arguments and noted that the Circular from 2015 introduced a six-year limitation period, not present in the Act or Rules before. Citing a Supreme Court judgment on Circulars' retrospective operation, the Court found that the delay in adjudicating the 2011 application before the Circular's issuance was crucial. The Court opined that the appellant should not suffer due to technical grounds, setting aside the orders and remanding the matter for reconsideration in light of the circumstances and legal principles.

5. Consequently, the Court allowed the Writ appeal in part, setting aside the Single Judge's order and remanding the case for re-consideration by the first respondent, emphasizing an expedited decision-making process while leaving all rights and contentions open for the parties involved.

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