2026 (3) TMI 1575 - HC - Income Tax

Genuine hardship and liberal condonation support acceptance of delayed Form 10-IC for concessional tax treatment.

Section 119(2)(b) requires a liberal construction of 'genuine hardship' where a delayed Form 10-IC filing is bona fide and the assessee is otherwise ... Condonation of delay in filing Form 10-IC - Genuine hardship - “reasonable cause” behind “delay” of “53 days” in filing “Form 10-IC” before the “due-date” prescribed under “section 139(1)” - Rejection of the petitioner's application for condonation of delay in filing Form 10-IC for claiming the benefit under section 115BAA HELD THAT: - As decided in BM MALANI [2008 (10) TMI 2 - SUPREME COURT] ingredients of genuine hardships must be determined keeping in view the dictionary meaning thereof and the legal conspectus attending thereto. For the said purpose, another well-known principle, namely, “a person cannot take advantage of his own wrong”, may also have to be borne in mind. The Court found that the delay of 53 days occurred after the petitioner, having initially pursued certification as an eligible start-up, was informed that such certification had been refused and thereafter sought professional advice before opting for the alternative regime under section 115BAA and arranging funds for payment of self-assessment tax. On these undisputed facts, the delay was held not to be deliberate, concocted or tainted by mala fides. Applying the principle that the expression genuine hardship in section 119(2)(b) must receive a liberal construction, the Court held that refusal to condone the delay would deprive the petitioner of the benefit under section 115BAA despite its otherwise admitted eligibility and would expose it to substantial additional tax liability, thereby causing genuine financial hardship. The authority was therefore required to exercise its power judiciously to advance substantial justice. [Paras 14, 15, 16, 17, 18] The impugned order rejecting condonation was quashed, and the matter was remanded with a direction to the competent authority to accept the Form 10-IC filed for Assessment Year 2022-23. Final Conclusion: The Court held that the petitioner had shown bona fide reasons constituting genuine hardship for the delayed filing of Form 10-IC. The rejection of condonation was set aside, and the competent authority was directed to accept the form for Assessment Year 2022-23. Issues: Whether the delay of 53 days in filing Form 10-IC for claiming the benefit under section 115BAA of the Income-tax Act, 1961 was liable to be condoned under section 119(2)(b) on the ground of genuine hardship.Analysis: The assessee had applied for start-up recognition and sought the eligible business certificate, but the application was rejected shortly before the return-filing due date. After receiving the rejection and taking professional advice, the assessee arranged funds, paid self-assessment tax, and filed Form 10-IC. The delay was not found to be deliberate, concocted, or tainted by mala fides. Refusal to condone the delay resulted in denial of the concessional tax regime under section 115BAA and a substantial tax burden at the normal rate, which constituted financial hardship. The expression 'genuine hardship' in section 119(2)(b) was required to be construed liberally, and the authority ought to have exercised its condonation power judiciously to advance substantial justice.Conclusion: The delay ought to have been condoned under section 119(2)(b), and the rejection of the application was unsustainable; the assessee is entitled to have Form 10-IC accepted for the relevant assessment year.Ratio Decidendi: The power under section 119(2)(b) to admit a delayed claim must be exercised liberally where the delay is bona fide and refusal would cause genuine hardship, especially when the assessee is otherwise substantively eligible for the relief sought.