Hospital's 26-day delay in filing income tax return condoned due to COVID-19 second wave hardship

Gujarat HC set aside tax authority's order rejecting condonation of 26-day delay in filing income tax return for A.Y. 2020-21. Court found petitioner hospital's claim of genuine hardship due to COVID-19 second wave valid, noting staff absence and preoccupation with COVID duties. Authority's rejection was deemed arbitrary given unprecedented circumstances and hospital's designation as dedicated COVID facility. Court held delay condonation application must be admitted, permitting return filing with waived time limit for subsequent scrutiny under Income Tax Act provisions.

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Issues Involved:
1. Rejection of application for condonation of delay in filing income tax return.
2. Examination of the correctness and genuineness of the refund claim.

Summary:

Issue 1: Rejection of Application for Condonation of Delay in Filing Income Tax Return

The petition challenges the order dated 04.10.2023 by the respondent rejecting the application for condonation of delay and permission to file the income tax return for A.Y. 2020-21. The delay was 26 days, attributed to Covid-19 related issues, including the inaccessibility of the hospital's directors and the unavailability of accounting staff. The respondent found the claim factually incorrect, stating that the hospital managed operations throughout the year, and the gradual easing of travel restrictions provided ample time to finalize accounts and file the return. The respondent concluded that the reasons provided were of a general nature and did not constitute genuine hardship as per the guidelines in paragraph 5(I) of the circular dated 09.06.2015.

Issue 2: Examination of the Correctness and Genuineness of the Refund Claim

The respondent also examined the correctness of the refund claim, concluding that the petitioner failed to establish the genuineness of the income and refund claim for A.Y. 2020-21. The claim that the hospital's revenue was negatively impacted due to a decrease in patients was found unsubstantiated as no supporting documents were provided.

Judgment:

The court noted the overwhelming situation due to the second wave of Covid-19, which paralyzed the country, and acknowledged the genuine hardship faced by the petitioner, a hospital establishment declared a dedicated Covid facility. The court found the rejection of the application for condonation of delay arbitrary, considering the circumstances. It was also noted that the respondent's examination of the refund claim's correctness was premature at the admission stage of the application.

Based on precedents and the statutory scheme, the court set aside the order dated 04.10.2023, directed the admission of the application for condonation of delay, and permitted the petitioner to file the return for A.Y. 2020-21. The return is to be scrutinized in accordance with the provisions of the Income Tax Act, 1961. The writ petition was disposed of with these observations and directions.

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