TaxTMI 
TaxTMI 
2023 (9) TMI 1226
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....oner requesting to condone delay in filing return of income for AY 2014-15; (c) any other and further relief deemed just and proper be granted in the interest of justice; (d) to provide for the cost of this petition." 3. Facts in brief are as under:- 3.1 The petitioner is a Hindu Undivided Family individual. The petitioner filed return of income for the Assessment Year 2014-15 on 31.12.2014 declaring total income 'NIL' and claim of loss to be carried forward of Long Term Capital Loss of Rs. 1,39,41,852/-. 3.2 The due date of filing the return was 30.07.2014. However, it is the petitioner's case that due to genuine hardship, the petitioner could not file the return within stipulated time. Due to delay in filing such return, loss was not allowed to be carried forward under Section 139(3) of the Income Tax Act, 1961. 3.3 On 14.11.2016, the petitioner filed an application under section 119(2) of the Act to condone the delay in filing the return and allow carry forward of the loss. By the order impugned dated 16.05.2018, the application was rejected. 4. Mr. B.S. Soparkar, learned advocate appearing for the petitioner, would make the following submissions....
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....hmi Co-operative Bank Ltd vs. Central Board of direct Taxes, reported in [2013] 33 taxmann.com 615 (Karnataka). (7) Dr.(Smt) Sujatha Ramesh vs. Central Board of Direct Taxes, New Delhi, reported in [2017] 87 taxmann.com 228 (Karnataka) (8) Bombay Mercantile Co-op Bank Ltd vs. Central Board of Direct Taxes., reported in [2010] 195 Taxman 106 (Bombay) (9) Bhatewara Associates Manik vs. Union of India, reported in [2023] 147 taxmann.com 297 (Bombay) (10) PDS Logistics International (P) Ltd vs. Chief Commissioner of Income-tax, Bang, reported in [2018] 93 taxmann.com 194 (Karnataka) (11) M.Rajan Vs. Principal Commissioner of Income-tax, Calicut, reported in [2016] 76 taxmann.com 164 (Kerala) (12) Madhya Pradesh State Electricity Board vs. Union of India, reported in [2011] 197 Taxman 238 (Madhya Pradesh) (13) Pala Marketing Co-operative Society Ltd vs. Union of India, reported in [2008] 167 Taxman 238 (Kerala) (14) Jay Vijay Express Carriers vs. Commissioner of Income-tax-III, reported in [2013] 34 taxmann.com 61 (Gujarat). 5. Mr. Dev D. Patel, learned advocate appearing for the revenue would submit that the ord....
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....t shall observe and follow such orders, instructions and directions of the Board: XXX XXX XXX (2) Without prejudice to the generality of the foregoing power:- (a) ** (b) the Board may, if it considers is desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorize any income-tax authority, not being a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law." 6.1 Let us examine this provision in context of the facts set out by the petitioner. The petitioner had filed the application under Sec. 119(2)(b) of the Act requesting the Board to condone the delay of 152 days in filing the return of income. The due date of filing the return of income was 30.07.2014. The return of income was filed on 31.12.2014. The reasons listed for the petitioner's failure to file the return within the stipulated time under Sec. 139(1) of the Income-tax Act were as under ....
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....ew 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. 8.1 In the case of Sitaldas K. Motwani vs. Director General of Income-tax (International Taxation), New Delhi., the Division Bench of the High Court was considering the issue of condonation of delay in filing a claim. The Court held that the approach of the authorities should be justice oriented so as to advance the cause of justice. While considering the application for condonation of delay in filing the claim, the authority is to satisfy itself that the claim is a genuine one. The Bombay High Court has held as under: "14. The Apex Court, in the case of BM Malani v CFT [2008] 10 SCC 617 has explained the term "genuine" in following words : 16. The term 'genuine' as per the New Collins Concise English Dictionary is defined as under: 'Genuine means not fake or counterfeit, real, not pretending (not bogus or merely a ruse)'. 17. **** 18. The ingredients of genuine hardship must be determined keeping in view t....
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....hat can happen is that a cause would be decided on merits after bearing the parties. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. The approach of the authorities should be justice-oriented so as to advance cause of justice. If refund is legitimately due to the applicant, mere delay should not defeat the claim for refund. 16. Whether the refund claim is correct and genuine, the authority must satisfy itself that the applicant has a prima facie correct and genuine claim, does not mean that the authority should examine the merits of the refund claim closely and come to a conclusion that the applicant's claim is bound to succeed. This would amount to prejudging the case on merits. All that the authority has to see is that on the face of it the person ap....
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....y exemption, deduction, refund or any other relief under the Act after the expiry of period prescribed under the Act for making such application or claim and appeal and to deal with the same on merits in accordance with law. Instruction No.12/2003 contemplates that the cases where delayed claims of refunds are being considered would be taken up for scrutiny. Similar instruction No.13/2006, interalia provides that no interest would be admissible on the belated refund claims. Phrase "genuine hardship" was interpreted by the Hon'ble Apex Court in B.M.MALANI V/S. COMMISSIONER OF INCOME TAX. It was held that the genuine hardship means a genuine difficulty. The Bombay High Court in the case of SITALDAS K. MOTWANI V/S. DIRECTOR - GENERAL OF INCOME TAX, held that the expression genuine hardship used in Section 119(2)(b) of the Act should be construed liberal, particularly in matters of entertaining of applications seeking condonation of delay. The same view was taken in another judgment of the Bombay High Court in the case of BOMBAY MERCANTILE COOPERATIVE BANK LIMITED V/S. CENTRAL BOARD OF DIRECT TAXES. It is also the case of the petitioner that it is not avoiding any scrutiny; the Authori....
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....y forward of losses. During the course of arguments, Mr. Soparkar, learned counsel for the petitioner, has placed before us a copy of Circular No. 8/2001 dated 16.05.2001. Reading of the Circular would indicate that the Board prescribed additional conditions which were required to be fulfilled before condonation of delay in filing belated revision claims could be considered. Paragraphs 3,4 & 5 of the Circular, read as under: "3. Subsequently the Karnataka High Court in the case of Associated Electro Ceramics Chairman, CBDT [1993] 201 ITR 501 held that the Board have power to condone the delay in cases having claim of carry forward of losses. The department did not file special leave petition against this order Subsequently the matter was taken up with the Ministry of Law who also agreed with the view that the Board have power to condone the delay in filing the return under section 119(2)(b) of the Income-tax Act 1961 in a case having claim of carry forward of losses. 4. Hence, conditions at Serial No. (i) of order under section 119(2)(6), dated 12th October 1993 stipulating that the delay cannot be condoned in cases where returned income is a loss and assessee cla....
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....condoned by the Board. It rejected the finding of the Board that the application of claim referred to in Section 119 (2)(b) did not cover a loss claim made in a return. 6. The learned counsel for the petitioner has also drawn our attention to Circular No. 8/2001 dated 16.05.2001 which was with reference to the Board's order under Section 119 (2)(b) dated 12.10.1993 and Circular No. 670 dated 26.10.1993 which laid down the procedure for condonation of delay in the case of belated claims of refund. In paragraph 3 of the said Circular dated 16.05.2001, the decision of the Karnataka High Court in the case of Associated Electro Ceramics (supra) has been specifically noted. The said circular also notes the fact that as per the said decision, the Board had the power to condone the delay in cases having claims of carry forward of losses. It also notes that the department did not file any Special Leave Petition against the said order of the Karnataka High Court and subsequently the matter was taken up with the Ministry of Law which also agreed with the view that the Board had the power to condone the delay in filing the return under Section 119 (2)(b) of the said Act in a case ....
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....s of the Board for condoning delay, held that the powers of condoning delay must be used to cure genuine hardship. Moreover, when it is found that the delay was neither deliberate nor on account of culpable negligence or any mala fides, such a delay could be condoned. 9.4 On the perception of the revenue that the reasons assigned in the impugned order are not arbitrary or whimsical, the reasons indicated therein when read shows that the approach of the authority was in taking the view that was not judicious and holistic. After referring to the several judgements in the case on hand, what was observed was that the approach of the authorities in dealing with an application for condonation of delay, the approach should be equitious, balancing and judicious. It should reflect application of mind and genuine claim of the assessee merely on the ground that the claim is delayed should not be rejected. Paragraphs 24 to 32 of the decision read as under: "24. The respondent no. 2. however, declined to condone the delay and rejected the said application by the impugned order dated 19th August 2019 (Annexure-A) assigning the following reasons in the impugned order:- "ORDER....
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....r submission filed on 13-11-2018. 3. The reply of the assessee is carefully examined in light of CBDT's circular no. 10/2019 dated 22-5-2019. In para 4(ii) of the said circular, it has been emphasized that the Commissioner shall satisfy himself that the assessee was prevented by reasonable cause from such belated application in filing Form no. 10B within the stipulated time. After going through the submission of the applicant, it is found that it does not meet the criteria of Para 4(ii) of reasonable cause which prevented it from timely compliance. In the present case, Form no. 10B was to be e-filed on or before 17-10-2016 but it was e-filed on 2-9- 2018, after a gap of 23 months, more so when filing of return of income for Assessment years i.e. 2017-18 was over. Simply saying that the trustees of the trust remained under the impression that the auditor of the trust would have filed Form no. 10B audit report in Form no. 10B could not be filed is not acceptable. 4. It should be noted the Legislature has provided time limits for certain obligations under the Act and these time limits have to be observed to be able to claim certain deductions, allowances and avoi....
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....ency the onus of statutory duty does not get shifted. As per provisions of section 12A(1)(b) of I.T. Act, the assessee should have ensured that the audit report duly signed by the accountant, as defined in Explanation below sub-section (2) of section 288 of the Act, is submitted alongwith the return of income on time. As the lapse is on the part of the assessee without any genuine cause, there is no reason for which condonation can be granted. Therefore, in exercise of the powers conferred on me u/s 119(2)(b) of the Act, I hereby reject the Condonation application for delay in filing the Form No. 10B for the A.Y 2016-17." 25. The rectification application also came to be rejected vide order dated 12th February 2020. The order reads thus: "The application trust vide letter filed in this office on 19-9-2018 has requested to condone the delay in filing of Form 10B for A.Y. 2016-17 on account of the reasons mentioned in the application. The assessee has attached copy of documents to substantiate its claim. The said application of the assessee was disposed off by an order dated 19.08.2019, by the then Commissioner of Income-tax (Exemptions), Ahmedabad, wherein the appl....
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.... debatable as has been held in the case of CIT vs. Lakshmi Prasad Lahkar (1996) 220 ITR 100 (GAU). 5. After considering the submissions of the assessee and on perusal of documents on file it is seen there is no apparent mistake in the records, with regard to the order dated 19.8.2019, passed under section 119(2)(b) of the Income Tax Act, 1961, which requires rectification. Therefore, the application for rectification is rejected." 26. Mr. Soparkar, the learned counsel is right in his submission that a fair and dispassionate view of the facts ought to have persuaded the respondent no. 2, who possesses wide discretion in the matter under Section 119 of the Act, to condone the delay and allow the assessee to avail the said exemption under Section 12 of the Act being a public charitable trust. 27. We should look into the position of law as regards the subject matter of this writ-application : (i) In Artist Tree Pvt. Ltd. vs. Central Board of Direct Taxes and others, (2014) 369 ITR 691 (Bombay). The relevant paragraphs 11 to 14 and 23 of the said judgment are quoted below for ready reference : "11. The expression 'genuine hardship' ca....
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....g of the matters on the merits. The expression 'genuine' has received a liberal meaning in view of the law laid down by the apex court referred to hereinabove and while considering this aspect, the authorities are expected to bear in mind that ordinarily the applicant, applying for condonation of delay does not stand to benefit by lodging its claim late. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold an cause of justice being defeated. As against this, when delay is condoned the highest that can happen is that a cause would be decided on the merits after hearing the parties. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have a vested right in injustice being done because of a nondeliberate delay. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. The approach of the authorities should be justice oriented so as to advance the....
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....t of gear, if such powers are routinely exercised without considering its desirability and expedience to do so for avoiding genuine hardship. In the present case, however, considering special facts, we are of the opinion that the Commissioner ought to have exercised such powers. It is true that the Appellate Commissioner recorded that the petitioner did not remain present in the appellate proceedings. However that by itself would not take away the petitioner's case for genuine hardship nor contrary to what is vehemently contended before us by the counsel for the Revenue, convince us to hold that filing of revised return beyond limitation lacked bona fides." (iii) In the case of State of Jharkhand and others vs. Ambay Cements and another, (2005 Sales Tax Cases Vol.129). The relevant extract of the said judgment is quoted from the Head Note below for ready reference : "An exception or an exempting provision in a taxing statute should be construed strictly. If the condition under which an exemption is granted stands changed on account of any subsequent event the exemption would not operate. (see paras 23 and 24). Whenever the statute prescribes that a pa....
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....ady reference : Instructions to subordinate authorities: "119. (1) the Board may, from time to time, issue such orders, instructions and directions to other income- tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board: xxx xxx xxx (2) Without prejudice to the generality of the foregoing power: (a) xxx xxx xxx (b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorize any income-tax authority, not being a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law:" 29. We may also refer to a decision of the Karnataka High Court in the case of Dr. (Smt.) Sujatha Ramesh vs. Central Board of Direct Taxes, New Delhi, (2017)....
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....ch condonation is sought is not abnormally large. It will of course depend upon the facts of the each case, where such a time period or the merit of the claim deserves such exercise of discretion in favour of the assessee under Section 119(2)(b) of the Act or not and therefore, no straight jacket formula or guidelines can be laid down in this regard. However, such orders passed by the Central Board of Direct Taxes being a quasi-judicial order is always open to judicial review by the higher constitutional courts. If the good conscience of the Courts is pricked, even though such orders rejecting the claims on the bar of limitation may appear to be prima facie tenable, the Courts may exercise their jurisdiction to set aside such orders and allow the claims on merits, setting aside the bar of limitation. 14. The present case is one of such nature, where the Court finds that the substantial conditions for claiming the exemption from capital gain tax stood satisfied and the prescribed investment was made by the assessee in the Bonds of the National Highways Authority, for the minimum lock-in period of three years also is an undisputed fact, and therefore, the delay in making suc....
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.... authorities - including Revenue Authorities have to construe them in a reasonable manner. That was the effect and purport of this court's decision in Indglonal Investment & Finance Ltd. (supra). This court is of the opinion that a similar approach is to be adopted in the circumstances of the case." 31. Having given our due consideration to all the relevant aspects of the matter, we are of the view that the approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, the respondent no. 2 might be justified in denying the exemption under Section 12 of the Act by rejecting such condonation application, but an assessee, a public charitable trust past 30 years who substantially satisfies the condition for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned. 32. We may also refer to the decision of this Court in CIT v. Gujarat Oil and Allied Industries Limited, (1993) 201 ITR 325 (Gujarat), wherein it is held that the provision regarding ....
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....ion application for claim of refund or loss shall be entertained beyond six years. It inter alia contemplates that the powers of acceptance or rejection of the application would be subject to two conditions. Firstly is that at the time of considering the case under section 119(2)(b) of the Act, it shall be ensured that the income/loss declared and/or refund claim is correct and genuine and also that it is a case of genuine hardship on merits. The second consideration to be applied states the circular is that in dealing with the case, the competent authority is empowered to direct the jurisdictional Assessing Officer to make necessary inquiries or scrutinize the case in accordance with the provisions of the Act to ascertain the correctness of the claim. 5.3 The Kerala High Court in Pala Marketing Co-Opereative Society Limited vs. Union of India [(2009) 311 ITR (Ker)] stated, "Even though courts while considering application for condonation of delay under section 5 of the Limitation Act may be justified in considering the merits of the case and consequences to the party for non-consideration of the case on merits, I do not think section 119(2)(b) is just an incorpor....
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....aining the delay which should overweigh with the authorities. 6. Adverting to the facts of the present case, the assessee explained by cogent reasons that the accountant who was handling the work to file Return etc. suffered Covid 19 vires and due to his indisposed health the completion of work was delayed resulting into delayed filling of return. The Chief Commissioner of Income Tax could not have been insensitive to the cause which was genuine. In the matters of condonation of delay, where the condonation is to be permitted to avoid the genuine hardship, liberal rather than technical approach is expected from the authorities. It is the substantive consideration and not the pedantic approach which should govern the decision under section 119(2)(b) of the Act. 6.1 The respondent Commissioner has come to a conclusion that there was nothing on record to suggest that it was a case of genuine hardship. There is no basis for arriving at such conclusion by the respondent. Not only that, the respondent Commissioner proceeded to observe that the application of the assessee did not contain any convincing evidence to prove that the return could not be filed within extended ....