Court grants condonation of delay in filing income tax return, allowing carry forward of capital loss.

The court allowed the petitioner's application for condonation of delay in filing the income tax return for AY 2014-15, enabling the carry forward of capital loss amounting to Rs. 1,39,41,842. The court held that the reasons for delay were genuine and beyond the petitioner's control, criticizing the authorities for not considering the circumstances adequately. The court emphasized the Board's discretionary power under Section 119(2)(b) of the Income Tax Act to condone delays to prevent genuine hardship, overturning the previous rejection of the petitioner's application.

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Issues Involved:
1. Condonation of delay in filing the return of income.
2. Genuine hardship as a ground for delay.
3. Powers of the Board under Section 119(2)(b) of the Income Tax Act, 1961.

Summary:

Issue 1: Condonation of Delay in Filing the Return of Income
The petitioner, a Hindu Undivided Family, filed a return of income for AY 2014-15 on 31.12.2014, declaring a total income of 'NIL' and a claim of Long Term Capital Loss of Rs. 1,39,41,852/-. The due date for filing was 30.07.2014. Due to genuine hardship, the petitioner could not file the return within the stipulated time, resulting in the loss not being allowed to be carried forward under Section 139(3) of the Income Tax Act, 1961. An application under Section 119(2) of the Act to condone the delay was rejected by the authorities on 16.05.2018.

Issue 2: Genuine Hardship as a Ground for Delay
The petitioner cited several reasons for the delay, including health problems of a Senior Accountant, corruption of computer data, the retirement of key personnel, and heavy rainfall disrupting routine work. The petitioner argued that these reasons constituted genuine hardship, and the delay should have been condoned. The petitioner also relied on Circular No. 9/2015 and several judicial decisions supporting the condonation of delay in similar circumstances.

Issue 3: Powers of the Board under Section 119(2)(b) of the Income Tax Act
The court examined Section 119(2)(b) of the Income Tax Act, which allows the Board to condone delays to avoid genuine hardship. The court noted that the Board has wide discretionary powers to condone delays, especially in cases where the delay is not deliberate or due to culpable negligence. The court referred to various judgments, including those of the Supreme Court and High Courts, which emphasized a liberal and justice-oriented approach in condoning delays to avoid genuine hardship.

Judgment:
The court found that the reasons for the delay provided by the petitioner were genuine and beyond the control of the petitioner. The court held that the authorities had not taken a judicious and holistic view of the facts and had adopted an unduly restrictive approach. The court quashed the impugned order dated 16.05.2018 and allowed the application filed by the petitioner under Section 119(2)(b) of the Income Tax Act for condonation of delay in filing the return of income for AY 2014-15, thereby allowing the petitioner to carry forward the capital loss of Rs. 1,39,41,842/-. The petition was allowed, and the rule was made absolute to the aforesaid extent.

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