Tax authority must examine genuine hardship before rejecting condonation of delay in Form 10-IC filing under Section 115BAA

The Madras HC allowed a petition challenging the rejection of condonation of delay in filing Form 10-IC under Section 115BAA for availing concessional tax rates. The Court held that the tax authority misdirected itself by not examining whether the failure to file Form 10-IC within the stipulated period would cause genuine hardship to the petitioner. Finding that rejection would cause genuine hardship, the Court set aside the impugned order and directed the respondent to keep the portal open for the petitioner to upload Form 10-IC within four weeks from receipt of the order.

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The issues presented and considered in the judgment are as follows:1. Whether the petitioner's application under Section 119 (2) (b) of the Income Tax Act, seeking condonation of delay in filing Form 10-IC to avail the concessional tax rate under Section 115BAA of the Act, was unjustly rejected.2. Whether the rejection of the application under Section 119 (2) (b) would cause genuine hardship to the petitioner.3. Whether the Respondent Authority/Board misdirected itself in not examining the failure to consider the claim of option to discharge tax under Section 115BAA due to the petitioner's failure to file Form 10-IC within the stipulated period.The court analyzed the relevant legal framework and precedents, the interpretation and reasoning, key evidence and findings, application of law to facts, treatment of competing arguments, and reached the following significant holdings:The court found that the petitioner had foregone deductions as required under Section 115BAA of the Act but failed to file Form 10-IC within the prescribed period. The petitioner argued that the rejection of the application would cause genuine hardship and that the discretion under Section 119 (2) (b) should be exercised liberally. The court referred to previous judgments emphasizing the need to avoid genuine hardship and held that the power under Section 119 (2) (b) is coupled with a duty to advance the purpose of the provision.The court noted that there was substantial compliance with the requirements of Section 115BAA as the petitioner had declared the option to pay taxes under that section and had paid taxes at the prescribed rate. Citing the Doctrine of Substantial Compliance, the court held that the Respondent Authority misdirected itself in not considering the genuine hardship the petitioner would face if the claim under Section 115BAA was rejected due to the late filing of Form 10-IC. The court set aside the impugned order and directed the respondents to allow the petitioner to file Form 10-IC within a specified period for the claim to be dealt with on merit.In conclusion, the court disposed of the writ petition by setting aside the order under Section 119 (2) (b) and directing the respondents to enable the petitioner to upload Form 10-IC within a specified timeframe for the claim under Section 115BAA to be considered on its merits.

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