Court Quashes Rejection of Late Income Tax Return Filing by Agricultural Co-op, Cites Genuine Hardship for Delay.

The HC of Madras quashed the rejection of an application under Section 119(2)(b) of the Income Tax Act, condoning the delay in filing the income tax return by an Agricultural Co-operative Credit Society. The Court acknowledged genuine hardship and adopted a liberal interpretation. Consequently, the related intimation under Section 143(1) was also quashed, remanding the matter for reassessment based on the filed return. The judgment was delivered without costs, and all connected miscellaneous petitions were closed.

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Issues:
Challenge to rejection of application under Section 119(2)(b) of the Income Tax Act
Challenge to consequential intimation under Section 143(1) of the Income Tax Act

Analysis:
In the present judgment, the High Court of Madras dealt with two issues. Firstly, the challenge was made against the rejection of an application under Section 119(2)(b) of the Income Tax Act, 1961. The petitioner, an Agricultural Co-operative Credit Society, underwent a statutory audit for the financial year 2018-2019, completed in September 2019, but the audit report was received in December 2019. Due to amendments in Section 80AC of the Income Tax Act and lack of awareness, the petitioner filed the income tax return belatedly in June 2020. The application under Section 119(2)(b) was rejected on 29.12.2023. The petitioner argued genuine hardship due to the delay in filing the return. The respondent contended that non-compliance with statutory requirements should not be condoned to prevent encouraging others to flout the law.

Secondly, the challenge was against the consequential intimation under Section 143(1) of the Income Tax Act. The Chief Commissioner of Income Tax, while rejecting the application, noted the completion of the audit on 30.09.2019, the original deadline for filing the return. The impugned order emphasized the petitioner's failure to provide evidence of hardship faced or diligence in pursuing the matter. However, the Court considered the nature of the petitioner's society and the scale of operation, acknowledging genuine hardship to members if the delay was not condoned. Referring to precedents, the Court adopted a liberal interpretation of Section 119(2)(b) and decided to condone the delay in filing the return of income.

Consequently, the Court allowed W.P.No.7329 of 2024 by quashing the order dated 29.12.2023 and condoning the delay in filing the return of income. Subsequently, the impugned intimation in W.P.No.7333 of 2024 was quashed, and the matter was remanded for assessment based on the petitioner's filed return of income. The judgment was delivered without costs, and connected miscellaneous petitions were closed.

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