Doctor's 80-day income tax filing delay condoned due to Covid hardship under Section 119(2)(b)

Bombay HC allowed petition challenging rejection of application for condonation of 80-day delay in filing income tax return. Petitioner, a doctor on Covid duty, faced genuine hardship due to father's Covid death, family illness, and delayed property valuation report from elderly valuer. HC held Section 119(2)(b) empowers authorities to avoid genuine hardship and found valid reasons existed. Revenue's rejection based on petitioner's education and access to tax practitioners was deemed inappropriate as delay resulted from Covid-related circumstances preventing timely valuation report completion. Impugned order quashed and delay condoned.

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Issues Involved:
1. Condonation of delay in filing the income tax return.
2. Legitimacy of the reasons provided for the delay.
3. Application of Section 119(2)(b) of the Income Tax Act, 1961.
4. Evaluation of genuine hardship due to delay.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Income Tax Return:
The petitioner sought condonation of an 80-day delay in filing the income tax return for the Assessment Year 2020-2021. The delay was attributed to several factors, including the Covid-19 pandemic, the petitioner's professional obligations as a doctor, and personal family tragedies. The petitioner had filed an application under Section 119(2)(b) of the Income Tax Act, 1961, with the Central Board of Direct Taxes (CBDT) to condone the delay and allow the carry forward of long-term capital loss. The application was initially rejected by the respondent, leading to the present petition.

2. Legitimacy of the Reasons Provided for the Delay:
The petitioner provided detailed reasons for the delay, including the impact of the Covid-19 pandemic, her father's death due to Covid-19, and the subsequent illness of other family members. The petitioner, being a doctor, was involved in Covid-19 duties, which further delayed her ability to coordinate with her tax consultant. Additionally, the valuation of ancestral property required for calculating capital gains was delayed due to the valuer's inability to conduct a physical site visit amid pandemic restrictions. The court found these reasons to be valid and justifiable, recognizing the genuine human challenges faced by the petitioner.

3. Application of Section 119(2)(b) of the Income Tax Act, 1961:
Section 119(2)(b) empowers the CBDT to condone delays to avoid genuine hardship. The court emphasized that the provision is meant to address situations where technicalities and rigid rules could prevent compliance due to genuine human issues. The court observed that the petitioner faced genuine hardship due to the pandemic and related circumstances, which justified the condonation of delay. The court criticized the respondent's mechanical approach in rejecting the application without adequately considering the petitioner's circumstances.

4. Evaluation of Genuine Hardship Due to Delay:
The court concluded that the petitioner would face genuine hardship if the delay was not condoned. It noted that the petitioner had provided substantial reasons for the delay, including her professional obligations and personal losses due to the pandemic. The court highlighted that the legislative intent behind Section 119(2)(b) is to provide relief in such genuine cases, and the respondent failed to appreciate the petitioner's predicament. The court drew parallels with previous judgments, emphasizing the need for a humane approach in such situations.

Conclusion:
The court quashed the impugned order dated 20th October 2023, passed by the respondent, and condoned the 80-day delay in filing the return. The respondents were directed to permit the petitioner to file the return without penalty, fees, and interest within two weeks. The court underscored that all contentions regarding the merits of the return were kept open, and no costs were awarded. The judgment reinforced the importance of considering genuine hardships and human factors in legal proceedings, particularly in the context of tax compliance during unprecedented times like the Covid-19 pandemic.

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