Income Tax Department's 799-day delay condoned for filing Form 9A under Section 119(2)(b) after revised computation

The Bombay HC allowed condonation of 799 days delay in filing Form 9A under Section 119(2)(b) of the IT Act. The petitioner had uploaded revised income computation to rectify calculation mistakes. The court found the delay bona fide and sufficiently explained through letters to the assessing officer. The HC rejected the assessing officer's hyper-technical approach that characterized the delay as non-procedural lapse, holding that dissuading assessees from filing returns would be counter-productive to tax law objectives. The delay was condoned as it served the statutory purpose.

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Issues Involved:
1. Whether the respondent was justified in rejecting the application for condonation of delay in filing Form 9A for AY 2017-2018 under Section 119(2)(b) of the Income Tax Act, 1961.
2. Whether the impugned order failed to consider the CBDT Circulars authorizing the condonation of delay.
3. Whether the petitioner's claim for deductions was improperly disallowed.

Issue-wise Detailed Analysis:

1. Justification of Rejection of Condonation Application:
The primary issue was whether the respondent was legally justified in rejecting the petitioner's application for condonation of a 799-day delay in filing Form 9A for AY 2017-2018. The petitioner argued that the delay was due to a change in the filing procedure from manual to electronic, which was beyond their control. The petitioner contended that the delay was neither deliberate nor intentional and should be condoned under Section 119(2)(b) of the IT Act, which provides discretion to the Commissioner to admit belated applications to avoid genuine hardship. The court found that the assessing officer failed to consider the bona fide reasons for the delay, which were sufficiently explained by the petitioner, and thus, the rejection was not justified.

2. Consideration of CBDT Circulars:
The petitioner relied on various CBDT Circulars, particularly Circular No. 7 of 2018 and Circular No. 30 of 2019, which extended the time for filing Form 9A for AY 2017-2018. These circulars allowed the Commissioners to condone delays in filing Form 9A if the assessee was prevented by reasonable cause. The court noted that the petitioner filed Form 9A within three days of the issuance of the CBDT Circular extending the deadline, demonstrating their intent to comply. The impugned order failed to consider these circulars and the legislative intent to mitigate hardship, which was a significant oversight.

3. Disallowance of Deductions:
The petitioner claimed deductions for depreciation and capital expenditure, which were disallowed by the respondent. The court observed that the petitioner had filed a revised computation of income to rectify these claims during the assessment proceedings. The assessing officer's decision to disallow these deductions was linked to the belated filing of Form 9A, which the court found to be an incorrect approach. The court emphasized that the delay in filing Form 9A was procedural and should not have affected the substantive claims for deductions.

Conclusion:
The court concluded that the impugned order suffered from non-application of mind and a hyper-technical approach. It failed to consider the bona fide reasons for the delay, the legislative intent of the CBDT Circulars, and the genuine hardship that would be caused to the petitioner. The court set aside the impugned order, allowed the petition, and directed the respondents to admit the belated filing of Form 9A and consider the petitioner's claims for deductions on merits. The rule was made absolute in terms of the reliefs sought by the petitioner, with no order as to costs.

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