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1. Whether the delay of one day in filing the income tax return (ITR) for the Assessment Year (AY) 2016-17 can be condoned under Section 119(2)(b) of the Income Tax Act, 1961, on the ground of genuine hardship.
2. Whether the Principal Commissioner of Income Tax (PCIT) was justified in rejecting the petitioner's application for condonation of delay on the basis that it was filed beyond six years from the end of the relevant assessment year.
Issue-wise Detailed Analysis
Issue 1: Condonation of Delay of One Day under Section 119(2)(b) on Grounds of Genuine Hardship
Relevant Legal Framework and Precedents: Section 119(2)(b) of the Income Tax Act empowers the tax authorities to condone delay in filing returns if there is a case of genuine hardship. The provision is intended to provide relief in exceptional circumstances where strict compliance with timelines is not possible.
Court's Interpretation and Reasoning: The Court examined the petitioner's claim that technical difficulties in uploading the ITR on the income tax portal caused the delay. The petitioner had successfully uploaded the tax audit report and Form 10CCB on the last date of filing (17.10.2016) but was unable to upload the ITR itself until the following day (18.10.2016).
The Revenue disputed the claim of a technical glitch, providing data showing multiple returns were filed after the petitioner's uploads on the same day, suggesting the portal was functional. However, the Court found it difficult to disregard the petitioner's assertion of hardship, acknowledging that the difficulty could have arisen from various technical or human errors. The Court accepted the petitioner's hardship because the petitioner had commenced the filing process and uploaded critical documents, indicating no intention to delay or default.
Key Evidence and Findings: The petitioner's timeline of document uploads and the inability to upload the ITR on time, coupled with the Revenue's data on portal activity, formed the factual matrix. The petitioner's income was ascertainable from the uploaded documents, reinforcing the genuineness of the hardship.
Application of Law to Facts: The Court emphasized that Section 119(2)(b) is designed to relax timelines in cases of genuine hardship. The petitioner's inability to file the ITR within the prescribed time, despite having uploaded related documents, constituted such hardship. The denial of relief for a single day's delay was therefore unsustainable.
Treatment of Competing Arguments: While the Revenue's contention of no portal malfunction was accepted, the Court balanced this against the petitioner's credible hardship claim. The Court acknowledged that technical difficulties or human errors could explain the delay, and the petitioner's proactive efforts to comply weighed in favor of condonation.
Conclusions: The Court held that the petitioner's delay in filing the return was due to genuine hardship and that the power under Section 119(2)(b) ought to have been exercised in the petitioner's favor. The refusal to condone the delay was thus set aside.
Issue 2: Validity of Rejection of Application on the Ground of Delay Beyond Six Years
Relevant Legal Framework and Precedents: The limitation period for entertaining applications under Section 119(2)(b) is not explicitly prescribed in the Act, but generally, applications filed beyond six years from the end of the relevant assessment year may be considered time-barred.
Court's Interpretation and Reasoning: The PCIT rejected the petitioner's application partly on the ground that it was filed beyond six years from the end of AY 2016-17. However, the petitioner demonstrated that the original application was filed on 22.10.2018, well within six years, and that subsequent communications (dated 06.02.2024) were only reminders or reiterations of the original request.
The Court noted that the PCIT's impugned order recorded the petitioner's claim of earlier filings and reminders, and the Revenue did not contest these facts in its counter affidavit. Therefore, these facts were accepted as correct.
Key Evidence and Findings: The petitioner's original application dated 22.10.2018 and subsequent reminders via e-mails in 2020 and 2021 were central. The PCIT's failure to respond to these applications was also significant.
Application of Law to Facts: Since the original application was filed within the permissible timeframe, the subsequent reminders could not be treated as fresh applications barred by limitation. The PCIT's rejection on the limitation ground was thus erroneous.
Treatment of Competing Arguments: The Revenue did not dispute the petitioner's timeline or the fact of repeated follow-ups. The Court relied on this absence of contest to accept the petitioner's position.
Conclusions: The Court concluded that the PCIT's rejection of the application on the ground of time-bar was patently erroneous and set aside that part of the order.
Significant Holdings
"The provisions under Section 119 (2) (b) of the Act have been enacted with the primary object of relaxing the conditions where a case of genuine hardship is made out. In the present case, the petitioner's inability to file the return would clearly fall within this category. Thus, the denial of relaxation of a single day in a case where the petitioner had already commenced the process of uploading the documents and its return, in our view, is unsustainable."
"Every statutory power is also coupled with a duty to exercise such power. The learned PCIT, having been conferred the power to relax the conditions in cases of genuine hardship, was required to exercise that power in the petitioner's case, as the existence of genuine hardship was evident from the facts."
"The impugned order is set aside. We direct that the petitioner's application under Section 119 (2) (b) be allowed and the delay of one day in filing the ITR for AY 2016-17 be treated as condoned."
Core principles established include:
- The power under Section 119(2)(b) must be exercised to provide relief in cases of genuine hardship, even for a delay as short as one day.
- The existence of hardship can be inferred from the petitioner's efforts to file returns and related documents, despite technical difficulties.
- Rejection of applications on limitation grounds must consider the actual date of filing and whether subsequent communications are mere reminders rather than fresh applications.
- Tax authorities have a duty to exercise their discretionary powers and cannot arbitrarily deny relief where genuine hardship is shown.
Final determinations:
- The petitioner's delay of one day in filing the ITR for AY 2016-17 is condoned under Section 119(2)(b).
- The rejection of the petitioner's application on the ground of delay beyond six years is set aside.
- The impugned order dated 31.05.2024 is quashed and the matter is disposed of accordingly.
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