Delay in filing AY 2020-21 condoned under s.119(2)(b); NRI COVID prevention allowed belated return and refund claim

HC quashed the order under s.119(2)(b) and held that delay in filing the return for A.Y.2020-21 must be condoned. The petitioner, an NRI resident in Nairobi since 1965, was genuinely prevented by COVID-19 from filing; the petitioner had furnished income computation and the purchaser deposited TDS reflected in Form 26AS. The court directed that the delay be condoned and permitted belated filing of the return for A.Y.2020-21, enabling the petitioner to claim the refund as per the filed computation.

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ISSUES PRESENTED AND CONSIDERED

1. Whether the authority under Section 119(2)(b) of the Income Tax Act was justified in rejecting an application to condone delay in filing a return where the assessee, a non-resident, failed to file the return within time due to COVID-19 related travel restrictions.

2. Whether inconvenience or statutory relaxations already granted during the pandemic disentitle an assessee from relief under Section 119(2)(b) when genuine hardship is shown.

3. Whether late reflection of TDS in Form 26AS and the fact of TDS having been deposited by the purchaser are relevant considerations in exercising powers under Section 119(2)(b) to permit belated filing and allow claim of refund.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Validity of rejection under Section 119(2)(b) where COVID-19 travel restrictions prevented timely filing

Legal framework: Section 119(2)(b) confers power on the revenue authority to condone delay in statutory compliance where it deems fit, taking into account genuineness of hardship and the facts and circumstances of the case.

Precedent treatment: The Court relied on prior decisions of this High Court addressing condonation of delay during the COVID-19 pandemic, treating pandemic-related travel restrictions as potential grounds for relief under Section 119(2)(b).

Interpretation and reasoning: The Court found as a fact that the assessee was a non-resident permanently abroad, sold property in India, and could not return due to COVID-19 restrictions; the assessee furnished computation of income and the TDS position was documented. The Court held that genuine prevention from filing by reason of the pandemic constituted sufficient hardship to invoke the discretionary power to condone delay. The respondent's mere assertion that the impugned order was within jurisdiction was rejected because the record established genuine COVID-19 hardship.

Ratio vs. Obiter: Ratio - Pandemic-related inability to travel, coupled with documentary steps taken (income computation, TDS evidence), justifies exercise of power under Section 119(2)(b) to condone delay. Obiter - general observations about administrative discretion during pandemic relief measures.

Conclusion: The rejection of the condonation application on the facts was not tenable; the delay must be condoned and the assessee permitted to file a belated return.

Issue 2 - Effect of statutory relaxations and timing of the condonation application

Legal framework: Relief under Section 119(2)(b) is discretionary and fact-sensitive; earlier statutory relaxations do not automatically preclude subsequent exercise of discretion where genuine hardship persists.

Precedent treatment: The Court considered decisions addressing pandemic relief and condonation applications filed after statutory relief periods, recognizing that delay in seeking condonation does not ipso facto negate genuine hardship if reasons are shown.

Interpretation and reasoning: The respondent argued that government had granted multiple statutory extensions during the pandemic and that the applicant sought condonation only in 2024, implying lack of urgency or bona fides. The Court examined the record and concluded that the fundamental impediment (inability to return to India) existed at the relevant time and that the assessee had followed up by furnishing required computations and responding to notices. The lapse in filing the condonation application long after the due date, without evidence that the delay was in bad faith or prejudicial, did not outweigh the demonstrated hardship.

Ratio vs. Obiter: Ratio - Timing of a condonation application is relevant but not determinative; delay in filing that application can be excused where genuine hardship prevented compliance and the assessee has otherwise acted to procure tax compliance (e.g., furnishing computations, cooperating with notices). Obiter - administrative convenience and prejudice considerations in Section 119(2)(b) adjudications.

Conclusion: Statutory relaxations and the late filing of the condonation application did not justify rejection where COVID-19 prevention and cooperative conduct were established; the authority must reconsider and condone the delay.

Issue 3 - Relevance of TDS deposit and Form 26AS entries to exercise of discretion under Section 119(2)(b)

Legal framework: The existence and timing of TDS deposit and its reflection in Form 26AS bear on whether an assessee can meaningfully file a return and claim a refund; such facts are material in the exercise of discretion under Section 119(2)(b).

Precedent treatment: The Court referred to a closely analogous earlier decision where late deposit of TDS by the purchaser prevented timely filing and justified condonation; that precedent was followed for its factual and legal parity.

Interpretation and reasoning: On the facts, the purchaser had deducted TDS and deposited it with the tax authorities; the TDS appeared in Form 26AS (albeit recorded under a different assessment year). The Court treated the presence of TDS deposit and the assessee's production of income computations as evidence that permitting belated filing would serve substantive tax administration (allowing claim of refund or matching of TDS), not obstruct it. The late reflection of TDS in records was a cogent reason why the assessee could not earlier complete return filing and justified condonation.

Ratio vs. Obiter: Ratio - Materiality of TDS deposit and Form 26AS entries is directly relevant to the exercise of discretion under Section 119(2)(b); where TDS is deposited and the assessee has cooperated, condonation to enable matching and refund claims is warranted. Obiter - observations on administrative practices regarding TDS reconciliation.

Conclusion: The TDS deposit and documentary support weighed in favor of condonation; denial of relief despite these facts was unsustainable.

Cross-References and Remedies Ordered

Cross-reference: Issues 1-3 interlock - the proven COVID-19 travel restriction (Issue 1), considered alongside timing/statutory relief (Issue 2) and the TDS/Form 26AS position (Issue 3), collectively formed the basis for exercising discretion under Section 119(2)(b) in favor of the assessee.

Conclusive direction (ratio): The impugned order refusing condonation was quashed; the delay in filing the return is to be condoned and the assessee permitted to file the belated return. The revenue authority was directed to pass a fresh de novo order condoning the delay within a specified timeframe. This direction constitutes the operative relief grounded in the Court's factual findings and legal application of Section 119(2)(b).

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