2023 (11) TMI 1348 - HC - Income Tax

Court Quashes Rejection of Delay Condonation Application; Reaffirms Delay Calculation From ITR Filing Date Under Section 119(2)(b)

Shri Vivek Krishnamoorthy S/O S. Krishnamoorthy Versus The Principal Commissioner Of Income Tax Bangalore - 3, The Income Tax Officer Circle-5 (3) (1), Bangalore

The Court quashed the first respondent's order rejecting the petitioner's application for condonation of delay under Section 119(2)(b) of the Income Tax ... Refusal to condone the delay in filing Income Tax Returns [ITR] - HELD THAT:- Delay to be condoned is to be considered as of the date on which ITR is filed and not on the date on which the application is filed and the provisions of Section 119[2][b] of the IT Act would not impose any limitation for the purposes of filing an application for condonation of delay. This Court, in the light of this proposition, which is very persuasive must opine that the impugned order cannot be sustained and the petitioner’s application for condonation of delay in filing the ITR on 22.08.2015 must be restored for consideration in the light of the reasons offered to explain the delay between 31.03.2015 and 22.08.2015 and with the directions to so consider the application within a reasonable period from the date of receipt of a certified copy of this order. ISSUES PRESENTED and CONSIDEREDThe primary issue considered by the Court was whether the first respondent erred in rejecting the petitioner's application for condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961, for the assessment year 2013-14. Specifically, the Court examined whether the delay should be calculated from the date the Income Tax Return (ITR) was filed or from the date the application for condonation was submitted.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe legal framework centers on Section 119(2)(b) of the Income Tax Act, 1961, which allows the tax authorities to condone delays in filing returns if genuine hardship is demonstrated. The Court also considered Circular No.9/2015, which provides guidelines on the time frame for condonation applications. The decision in K C Antony v. The Principal Commissioner and Others by the High Court of Kerala was a key precedent relied upon by the petitioner.Court's Interpretation and ReasoningThe Court interpreted Section 119(2)(b) as not imposing a limitation period for filing an application for condonation of delay. It emphasized that the relevant date for assessing the delay is when the ITR was filed, not when the condonation application was made. This interpretation aligns with the reasoning of the High Court of Kerala, which found that the delay should be considered from the date of the ITR filing.Key Evidence and FindingsThe petitioner filed the ITR on 22.08.2015, beyond the due date of 31.03.2015, and subsequently applied for condonation on 15.11.2021. The first respondent rejected the application, citing negligence and the application being beyond six years. However, the Court found that the six-year period should be calculated from the ITR filing date, not the application date.Application of Law to FactsThe Court applied the interpretation of Section 119(2)(b) and the precedent from the Kerala High Court to the facts, concluding that the first respondent misapplied the law by considering the wrong date for calculating the delay. The Court determined that the petitioner's delay should be assessed from the ITR filing date, which falls within the permissible period for condonation consideration.Treatment of Competing ArgumentsThe respondent argued that the application was beyond the permissible period and demonstrated negligence. However, the Court found the petitioner's argument, supported by the Kerala High Court's decision, more persuasive. The Court emphasized that the statutory provision and judicial interpretation do not impose a limitation on the application filing date.ConclusionsThe Court concluded that the first respondent's order was unsustainable because it misdirected the legal interpretation of Section 119(2)(b) concerning the date for calculating the delay. The petitioner's application for condonation of delay was restored for reconsideration.SIGNIFICANT HOLDINGSThe Court held that the impugned order was quashed, and the application for condonation of delay was restored for reconsideration. It directed the first respondent to reassess the application within one month of receiving the order. The Court's decision established the principle that the delay should be calculated from the ITR filing date, not the application date.Core Principles EstablishedThe judgment reinforced the principle that Section 119(2)(b) does not impose a limitation period for filing an application for condonation of delay. The relevant date for assessing the delay is when the ITR was filed, aligning with judicial interpretations that prioritize the substantive filing date over procedural application dates.Final Determinations on Each IssueThe Court determined that the petitioner's application for condonation of delay should be reconsidered based on the correct legal interpretation of Section 119(2)(b). It directed the first respondent to evaluate the application within a specified time frame, ensuring compliance with the Court's interpretation.