2025 (8) TMI 545 - HC - Income Tax

Condonation of delayed return for A.Y. 2024-25; professional advice not a defence; s.80IBA deduction to be examined at assessment

The HC allowed the petition, set aside the impugned order and condoned the delay in filing the return for A.Y. 2024-25. The court held that reliance on ... Condonation of Delay in filing the Return of Income - ground for rejecting the Petitioner’s Application is that since Petitioner was guided by professionals, the explanation offered by Petitioner was not acceptable - scope of phrase “genuine hardship” - HELD THAT:- We are of the opinion that just because an assessee is guided by professionals cannot mean that there is no possibility of errors or delay. Moreover, the second ground of rejection is that the Petitioner did not submit the documentary evidences to substantiate its claim of deduction u/s 80IBA of the Act. We are of the firm view that there is no requirement in law to prove the claim of deduction at the stage of condonation of delay. The same would be subjected to examination by the authorities during assessment which would commence only if Petitioner’s Return of Income is accepted. Therefore, this reason for rejection is also unsustainable. If the delay is not condoned, there will be genuine hardship caused to the Petitioner inasmuch as the Petitioner would be unable to even claim the deduction u/s 80IBA of the Act, which is a substantial amount. While interpreting what would constitute ‘genuine hardship’, this aspect is also to be borne in mind. This view is supported by a decision rendered in K. S. Bilawala [2024 (1) TMI 950 - BOMBAY HIGH COURT] In cases like the present one (delay in filing Return of Income) the phrase “genuine hardship” is to be construed liberally and that refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and the cause of justice being defeated. As against this, when the delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. We set aside the Impugned Order and the delay in filing the Return of Income for A. Y. 2024-25 is hereby condoned. ISSUES: Whether delay in filing the Return of Income can be condoned under Section 119(2)(b) of the Income Tax Act, 1961.Whether guidance by professional Chartered Accountants precludes acceptance of explanations for delay in filing Return of Income.Whether documentary evidence substantiating claim of deduction under Section 80IBA is required at the stage of condonation of delay.How the phrase 'genuine hardship' is to be interpreted in the context of condonation of delay in filing Return of Income. RULINGS / HOLDINGS: The delay in filing the Return of Income was condoned under Section 119(2)(b) of the Act, as the explanation for delay due to ill-health was found acceptable and refusal would cause 'genuine hardship'.The fact that the assessee was guided by professional Chartered Accountants does not mean that errors or delays cannot occur; hence, this ground alone cannot justify rejection of condonation application.There is 'no requirement in law to prove the claim of deduction at the stage of condonation of delay'; such claims are to be examined during assessment after acceptance of the Return of Income.The phrase 'genuine hardship' is to be construed liberally in cases of delay in filing Return of Income, to avoid 'a meritorious matter being thrown out at the very threshold and the cause of justice being defeated.' RATIONALE: The Court applied Section 119(2)(b) of the Income Tax Act, 1961, which empowers the authority to condone delay in filing returns for sufficient cause.The Court relied on the principle that professional guidance does not eliminate the possibility of delay or error, thus explanations for delay must be considered on their merits.The Court emphasized that substantive claims such as deductions under Section 80IBA are to be adjudicated during assessment proceedings and not at the condonation stage.The Court referred to precedent interpreting 'genuine hardship' liberally to ensure that justice is not defeated by procedural delays, citing a coordinate bench decision that supports this approach.