Natural justice in delay condonation: refusal to accept a revised return set aside for lack of competent decision-maker and reasons.

The Bombay HC examined whether refusal to condone delay in filing a revised return under section 119(2)(b) of the Income-tax Act, 1961 was valid when the order was signed by an Additional Commissioner with only recorded approval of the competent Member. It held that the power lies with the CBDT and its assigned Member, and the record must show actual consideration by that authority; a mere endorsed approval is insufficient. Because the refusal had serious civil consequences, natural justice required a personal hearing and a speaking order. The impugned order was set aside and the matter remanded for fresh decision after hearing and reasons.

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Issues: Whether the order refusing condonation of delay in filing a revised return was liable to be set aside for being signed by a subordinate officer with only stated approval of the competent Member and for want of a personal hearing and reasoned decision.

Analysis: The power to condone delay under section 119(2)(b) of the Income-tax Act, 1961 is vested in the CBDT and its assigned Member. The impugned order was signed by an Additional Commissioner and only recorded approval of the Member, without showing that the Member himself decided the application. In similar matters, such an order has been quashed where the record did not show actual decision-making by the competent authority. The refusal to condone delay carried serious civil consequences and, in the absence of any exclusionary provision, principles of natural justice required an opportunity of personal hearing and a speaking order.

Conclusion: The impugned order was set aside and the matter was remanded to the CBDT for fresh consideration after granting a personal hearing and passing a reasoned order.

Ratio Decidendi: Where an application under section 119(2)(b) of the Income-tax Act, 1961 is decided by a subordinate signatory with only recorded approval of the competent Member, and the decision entails serious civil consequences, the order is vulnerable unless it reflects actual consideration by the competent authority and compliance with natural justice, including a hearing and a reasoned decision.

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