2022 (5) TMI 1180 - HC - Income Tax

Court quashes rejection of condonation application, emphasizes genuine hardship in tax filing

SHREE MAHARAJA AGRASEN SEVA SANSTHAN Versus COMMISSIONER OF INCOME TAX (EXEM) OR HIS SUCCESSOR

The court quashed the respondent's rejection of the condonation application for delay in filing Form No.10B for A.Y. 2014-15, citing genuine hardship to ... Order u/s 119(2)(b) - condonation of delay in filing of Form No.10B - scope of expression 'genuine hardship' - HELD THAT:- As decided in G.V. INFOSUTIONS PVT. LTD. VERSUS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 10 (2) , & ANR. [2019 (2) TMI 177 - DELHI HIGH COURT] the statute or period of limitation prescribed in provisions of law meant to attach finality, and in that sense are statutes of repose; however, wherever the legislature intends relief against hardship in cases where such statutes lead to hardships, the concerned authorities - including Revenue Authorities have to construe them in a reasonable manner. That was the effect and purport of this court's decision in Indglonal Investment & Finance Ltd. [2011 (6) TMI 229 - DELHI HIGH COURT]. This court is of the opinion that a similar approach is to be adopted in the circumstances of the case Thus this writ-application succeeds and is hereby allowed. The impugned order passed by the respondent dated 17.06.2021 is hereby quashed and set aside. The delay condone application filed by the writ-applicant is hereby allowed. Issues Involved:1. Condonation of delay in filing Form No.10B for A.Y. 2014-15.2. Validity of the impugned order dated 17.06.2021 under Section 119(2)(b) of the Income-tax Act, 1961.3. Interpretation of 'genuine hardship' under Section 119(2)(b) of the Income-tax Act, 1961.4. Judicial precedents on condonation of delay and genuine hardship.Issue-wise Detailed Analysis:1. Condonation of Delay in Filing Form No.10B for A.Y. 2014-15:The petitioner sought condonation of a delay in filing Form No.10B for A.Y. 2014-15, citing 'technical problems and no support from software' as reasons. The respondent rejected the application, stating the reasons were not satisfactory, and the delay of over six years was excessive and unjustified. The petitioner argued that the delay was due to circumstances beyond their control and that the rejection of the condonation application was arbitrary and caused genuine hardship.2. Validity of the Impugned Order Dated 17.06.2021:The respondent's impugned order dated 17.06.2021, rejecting the condonation application, was challenged. The respondent maintained that the petitioner showed a lethargic and casual approach, failing to provide sufficient cause for the delay. The respondent argued that the decision was made diligently and judiciously, with no violation of natural justice principles.3. Interpretation of 'Genuine Hardship' under Section 119(2)(b) of the Income-tax Act, 1961:The court examined the term 'genuine hardship' as interpreted in various judicial precedents. It referred to the Supreme Court's definition, emphasizing that genuine hardship means real difficulty, not fake or counterfeit. The court noted that a person cannot take advantage of their own wrong, and the delay must be due to circumstances beyond the taxpayer's control. The court highlighted that the phrase should be construed liberally, especially when the applicant does not benefit from lodging the claim late.4. Judicial Precedents on Condonation of Delay and Genuine Hardship:The court cited several precedents to support a liberal interpretation of 'genuine hardship' and the need for a justice-oriented approach:- Artist Tree Pvt. Ltd. vs. Central Board of Direct Taxes: The court emphasized that genuine hardship should be construed liberally, and the authorities should avoid a hyper-technical approach.- Jay Vijay Express Carriers vs. Commissioner of Income Tax-III: The court noted that genuine hardship should be considered to avoid destroying a valid claim due to technicalities.- State of Jharkhand vs. Ambay Cements: The court stressed that exceptions in taxing statutes should be strictly construed, and mandatory requirements must be followed.- B.M.Malani vs. Commissioner of Income Tax: The court reiterated that genuine hardship means genuine difficulty, and a person cannot take advantage of their own wrong.- Dr. (Smt.) Sujatha Ramesh vs. Central Board of Direct Taxes: The court highlighted the need for a judicious and holistic view of facts, balancing revenue interests with equitable treatment of taxpayers.- G.V. Infosutions Pvt. Ltd. vs. Deputy Commissioner of Income Tax: The court emphasized that reasonable construction should be adopted to avoid hardship, and bona fide reasons for delay should be considered.Conclusion:The court concluded that the respondent's rejection of the condonation application was unduly restrictive and failed to consider the genuine hardship caused to the petitioner. The impugned order dated 17.06.2021 was quashed, and the delay condone application was allowed. The court emphasized that a liberal and justice-oriented approach should be adopted in interpreting 'genuine hardship' and condoning delays to ensure substantive justice.