Additional CIT lacks authority to dismiss delay condonation applications under Section 119(2)(b) without proper delegation from CBDT

The Bombay HC quashed an order by Additional CIT (OSD) (OT WT) dismissing an application for condonation of 10 months delay in filing income tax return. The court held that Section 119(2)(b) empowers CBDT to decide such applications, and no valid delegation of authority to the Additional CIT was demonstrated. The matter was remanded to CBDT or its duly allocated member to pass a reasoned order after hearing the petitioner within 3 months.

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The judgment addresses the challenge against an order that dismissed the petitioner's application for condonation of a delay of approximately 10 months in filing the return of income for the assessment year 2020-2021. The core legal issues considered revolve around the authority and procedure for issuing such orders under Section 119 (2) (b) of the Income Tax Act, 1961.

The petitioner argued that the impugned order was improperly issued by the Additional Commissioner of Income Tax (CIT) (OSD) (OT & WT) "with the approval of competent authority," rather than by the Central Board of Direct Taxes (CBDT) or its members, as required by the statute. The petitioner contended that the order lacked clarity regarding which competent authority approved it and argued that even if approved by the CBDT or its members, it could not be considered an order made by them. The petitioner cited precedents from similar cases where the court had set aside orders made by officers without proper authorization from the CBDT.

Additionally, the petitioner claimed that sufficient cause for the delay was shown, particularly due to hardships caused by the COVID-19 pandemic, but these were not adequately considered in the impugned order.

The respondent defended the order, arguing that it was made in accordance with the Central Secretariat Manual for Office Procedure and the Central Boards of Revenue Act, 1963. The respondent also pointed out that the petitioner had a history of being a habitual defaulter in filing returns.

The court analyzed the relevant legal framework, emphasizing that Section 119 (2) (b) of the Income Tax Act empowers the CBDT to decide on applications for condonation of delay. The court noted that the CBDT might allocate work among its members, but there was no evidence of further delegation to the Additional CIT (OSD) (OT & WT). The court referred to previous judgments, such as Bharat Education Society, R. K. Madhani Prakash Engineers J V, and Tata Autocomp Gotion Green Energy Solutions (P.) Ltd., where similar orders were set aside due to improper authorization.

The court concluded that the impugned order was not validly made by the CBDT or its members and thus quashed it. The matter was remanded to the CBDT or its duly allocated member to reconsider the petitioner's application with a directive to hear the petitioner and issue a reasoned order within three months.

Significant holdings include the court's reiteration that orders under Section 119 (2) (b) must be made by the CBDT or its authorized members. The judgment underscores the importance of proper authorization and adherence to statutory procedures in issuing government orders. The court preserved the merits of the parties' contentions for future consideration and made the rule absolute without any cost order.

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