Delay condonation for late tax return granted where director disputes delayed audit; return allowed as s.139(4) filing.

Petition challenges refusal to condone a 169 day delay in filing the income tax return for AY 2022 23; court applied the discretionary standard for delay condonation, treating internal director disputes that prevented finalisation of accounts and delayed the tax audit as a reasonable cause. Balancing the petitioner's consistent prior compliance and the prejudice of denying a substantive tax claim, the court found the revenue orders unsustainable and allowed relief: the delay is condoned and the return is to be accepted as a belated statutory return with an opened e filing window for submission.

---

---

Issues: Whether the delay of 169 days in filing the return of income for Assessment Year 2022-23 should be condoned under section 119(2)(b) of the Income-tax Act, 1961 and the petitioner be permitted to upload the return on the e-filing portal as a return under section 139(4) of the Act.

Analysis: The petitioner admittedly has a history of timely filings for prior and subsequent assessment years, and the only default concerns AY 2022-23. The audit report was furnished late because financial statements could not be finalised due to internal disputes between directors which led to proceedings before the National Company Law Tribunal. The audit report was ultimately filed and the petitioner sought condonation under section 119(2)(b) along with supporting documents. The revenue authority rejected the applications on the ground that the reasons did not amount to genuine hardship or reasonable cause and that relevant documents were not placed earlier. The petition record shows the delay and the NCLT-related disputes which prevented finalisation of accounts and thereby delayed the tax audit and return filing. Balancing the petitioner's otherwise consistent compliance, the nature of the cause of delay (internal disputes affecting finalisation of financial statements), and the prejudice that would follow from denial (loss of substantial tax claim), the delay is a matter fit for exercise of discretionary relief under section 119(2)(b). The impugned orders rejecting condonation are therefore unsustainable.

Conclusion: The delay of 169 days in filing the return for AY 2022-23 is condoned. The impugned orders dated 11th December, 2024 and 10th March, 2025 are quashed and set aside. The petitioner is permitted to upload the return within four weeks from the date of uploading of this order and the return shall be treated as a return under section 139(4) of the Income-tax Act, 1961; the department is directed to open the e-filing window for that period.

---