Petitioner granted relief for delayed tax return filing under Section 119(2)(b) despite revenue's hardship proof rejection

Gujarat HC allowed petition challenging revenue's rejection of application under Section 119(2)(b) for delayed return filing. Petitioner, residing in Mumbai, sought refund of excess tax deducted at source on interest and dividend income. Revenue rejected application citing insufficient proof of hardship per Circular 9/2015. Court held petitioner entitled to refund as no tax liability existed, emphasizing justice-oriented approach over technicalities in delay condonation matters. HC permitted belated return filing, remanded matter to revenue for appropriate order under Section 119(2)(b).

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Issues:
Challenge to validity of order under Income Tax Act for Assessment Year 2022-23 based on delay in filing return and refund entitlement.

Analysis:
The petitioner challenged the validity of an order dated 24.01.2024 under section 119 (2) (b) of the Income Tax Act, 1961 for Assessment Year 2022-23. The petitioner, an individual and citizen of India, had been regularly assessed for tax on income sources like salary, dividends, and interest for over 30 years. The petitioner, not engaged in economic activities except for a brief stint as a Clerk, filed income tax returns regularly. However, due to inadvertent delay, the return for Assessment Year 2022-23 was not filed on time. The petitioner sought condonation of delay under Circular No. 9/2015 issued by the Central Board of Direct Taxes. The respondent rejected the application citing lack of proof of genuine hardship faced by the petitioner for the delay.

The petitioner contended that despite the delay in filing the return, she was entitled to a refund of Rs. 52,592/- due to excess tax deducted at source. The petitioner's advocate argued that the delay should be condoned considering the circumstances, including the inadvertent delay, and the petitioner's entitlement to the refund. The advocate relied on legal precedents emphasizing a liberal approach in condoning delays to ensure substantive justice.

The High Court, considering the legal principles and facts, held that the petitioner, who was not liable to pay tax as per income computation, should be refunded the excess tax deducted at source. Referring to legal precedents, the Court emphasized a justice-oriented approach over technicalities in matters of condonation of delay. The Court directed the respondent to reconsider the petitioner's application under section 119 (2) (b) of the Act and pass an appropriate order within 12 weeks. Consequently, the petition was allowed, the impugned order was quashed, and the matter was remanded back to the respondent for further action in accordance with the law.

In conclusion, the judgment highlighted the importance of considering genuine hardship and substantive justice in tax matters, especially regarding condonation of delays and refund entitlements. The Court's decision emphasized a balanced approach to ensure fairness and proper application of legal provisions in tax assessment cases.

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