Petitioner wins challenge against rejection of delayed corrected return filing under Section 119(2)(b) for presentation errors

Gujarat HC allowed petitioner's writ petition challenging rejection of application for condonation of delay in filing corrected return under Section 119(2)(b). Petitioner had made presentation errors in columns 15 and 18 of ITR-6 form, clubbing expenditure disallowance in column 23. CPC identified these mistakes and sought response. Though revised return filing deadline had expired, HC held that since corrections were merely presentational without impacting taxable income and were necessary for CPC processing, delay should be condoned. Court quashed impugned order dated 24/08/2023, condoned delay, and directed respondent to process revised return filed on 06/09/2019.

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ISSUES PRESENTED and CONSIDERED

The primary legal issues considered in this judgment were:

1. Whether the petitioner was entitled to have the delay in filing a corrected return condoned under Section 119(2)(b) of the Income Tax Act, 1961, given the circumstances of the case.

2. Whether the Centralized Processing Center (CPC) and the Jurisdictional Assessing Officer (JAO) correctly processed and responded to the petitioner's corrected return filed after the statutory deadline.

3. Whether the petitioner was eligible for a refund based on the corrected return, and if the refusal to process the return and grant the refund was justified.

ISSUE-WISE DETAILED ANALYSIS

1. Delay in Filing Corrected Return under Section 119(2)(b)

The legal framework under Section 119(2)(b) allows for the condonation of delay in certain circumstances where genuine hardship is demonstrated. The petitioner argued that the delay was due to receiving an intimation of a mistake after the deadline for filing a revised return had passed. The Court examined whether the petitioner demonstrated genuine hardship and whether the application for condonation was improperly rejected.

The Court found that the petitioner had no option but to file the corrected return electronically after the CPC's intimation of the error, as the deadline for revising the return had expired. The petitioner had filed applications to condone the delay, explaining the circumstances. However, the respondent rejected these applications, citing a lack of genuine hardship and suggesting other legal remedies, which the Court found were not applicable in this context.

The Court concluded that the rejection of the application to condone the delay was inappropriate, as the corrected return was necessary to address the CPC's intimation and facilitate the processing of the return for a refund.

2. Processing and Response by CPC and JAO

The CPC is responsible for processing returns under the Centralized Processing of Returns Scheme, 2011. According to the scheme, the CPC should process returns and issue intimations regarding any discrepancies. Upon receiving such an intimation, the petitioner filed a corrected return, which the CPC forwarded to the JAO.

The Court noted that the CPC's role was to process the return and that the petitioner had responded appropriately to the intimation by filing a corrected return. The CPC's failure to process the corrected return and the subsequent rejection by the JAO were deemed improper by the Court.

3. Eligibility for Refund

The petitioner sought a refund based on the original return, which was not processed due to the error identified by the CPC. The Court found that the corrected return did not alter the taxable income but merely corrected the presentation of figures. The refusal to process the return and grant the refund was found to be unjustified, as the petitioner was entitled to the refund based on the corrected figures.

SIGNIFICANT HOLDINGS

The Court held that the rejection of the application to condone the delay in filing the corrected return was improper. It emphasized that the corrected return was necessary to address the CPC's intimation and facilitate the processing of the return for a refund. The Court quashed the impugned order dated 24/08/2023 and directed the respondent to process the revised return filed on 06/09/2019.

Core Principles Established:

"The respondent no.2 ought to have allowed the applications to condone the delay in filing the corrected/revised return which was a formality only as only the correct presentation in Form-ITR-6 was not made by the petitioner which has prevented the CPC from processing the return."

The Court underscored the importance of considering the factual circumstances and the necessity of processing corrected returns to ensure fair treatment and avoid undue hardship to taxpayers.

The Court directed that the delay in filing the revised return be condoned and ordered the respondent to process the revised return in accordance with the law, ensuring the petitioner receives the legitimate refund due.

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