Condonation of nine-month delay in revised ITR under s. 119(2)(b) denied to non-resident assessee hospital trustee

HC upheld the rejection of the assessee's application under s. 119(2)(b) for condonation of a nine-month delay in filing a revised ITR for AY 2021-22. The assessee, a non-resident and president of a trust running a hospital, had filed the original return in time through the e-portal but claimed delayed awareness of mistakes. HC held that nine months is an inordinately long period and such a taxpayer is presumed to know the law and procedures. Finding no justifiable cause for delay, HC affirmed the authority's decision.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the assessee established "sufficient cause" and "genuine hardship" so as to warrant condonation of nine months' delay in filing a revised return of income under Section 119(2)(b) of the Income Tax Act, 1961.

1.2 Whether circumstances such as initial erroneous filing of return (showing business loss as speculative loss), reliance on professional advice, non-resident status, and the Covid situation can constitute grounds for condonation under Section 119(2)(b) in light of CBDT Circular No. 11/2024.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 & 2: Condonation of nine months' delay in filing revised return under Section 119(2)(b); relevance of erroneous initial return, professional advice, NRI status and Covid situation

Legal framework

2.1 The judgment proceeds on Section 119(2)(b) of the Income Tax Act, 1961, which empowers the Income Tax Authorities to condone delay in making claims for refund or carrying forward of loss where the assessee is prevented by "sufficient cause" and has suffered "genuine hardship".

2.2 The authority below relied on CBDT Circular No. 11/2024, particularly para 4(i), which guides that condonation discretion must be exercised judiciously, that delay should generally be due to reasons beyond the taxpayer's control, and that not every error or inadvertence qualifies as "genuine hardship".

Interpretation and reasoning

2.3 The Tribunal noted that the original return of income for AY 2021-22 was filed in time on 10.02.2022, while the time limit for filing a revised return extended till 31.03.2022. The same e-filing portal was available and accessible globally during both periods.

2.4 The claim that the assessee was a non-resident Indian, and therefore faced difficulty in timely filing the revised return, was rejected on the ground that the assessee had already used the same e-portal to file the original return from abroad, demonstrating that non-resident status did not impede access to the filing system.

2.5 The Court accepted the reasoning that "ignorance of law or dependence on an advisor" is generally not treated as "sufficient cause" under Section 119(2)(b), as stressed in the order of the Principal Commissioner and supported by CBDT Circular No. 11/2024.

2.6 The asserted necessity to correct the original return because business loss had been wrongly reported as speculative loss, and the fact that revised professional advice was later obtained, were not accepted as reasons beyond the assessee's reasonable control or as circumstances amounting to "genuine hardship".

2.7 The Court treated the nine months' delay in filing the revised return as excessive, holding that such a prolonged period could not be justified on the basis of discovery of an error and change of advice, particularly when the assessee had already demonstrated the ability to file electronically within the prescribed time for the original return.

2.8 The Court noted that the assessee was the President of a Trust running a hospital and therefore presumed to be conversant with legal and tax compliance obligations, including the manner of filing a correct return; it was held that it should not take nine months to notice and rectify such mistakes.

2.9 The explanation that the Covid situation contributed to the delay was not accepted, in the context of the long nine-month period and the demonstrated functioning of the e-filing system during the relevant time.

2.10 The Court endorsed the finding of the Principal Commissioner that the claim of "genuine hardship" was not established, and that the request appeared to be an afterthought for making a claim "not generally available" to the assessee, especially as the report of the concerned Commissioner (CIT(IT)-2) did not support the assessee's stand.

Conclusions

2.11 The Court held that neither "sufficient cause" for the delay nor "genuine hardship" within the meaning of Section 119(2)(b) and CBDT Circular No. 11/2024 was made out.

2.12 The rejection of the assessee's application for condonation of delay in filing the revised return for AY 2021-22 under Section 119(2)(b) was upheld as legally valid.

2.13 The writ petition challenging the order refusing condonation of delay was dismissed as being without merit.

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