JUDGMENT
Bhargav D. Karia, J.- Heard learned advocate Mr.Jaimin A. Gandhi for the petitioner and learned Senior Standing Counsel Mr.Karan G.Sanghani for the respondent.
1. Having regard to the controversy involved in this petition in narrow compass, with the consent of the learned advocates for the parties, the matter is taken up for hearing.
2. Rule, returnable forthwith. Learned Senior Standing Counsel Mr.Karan Sanghani waives service of notice of rule for and on behalf of the respondent.
3. By this petition under Articles 226 and 227 of the Constitution of India, the petitioner has challenged the order dated 26th February, 2025 passed by the respondent-Principal Commissioner of Income Tax, Surat-1, Surat whereby, the application filed by the petitioner under Section 119(2)(b) of the Income Tax Act, 1961 (for short ‘the Act’) to condone the delay occurred in filing the return of income for the Assessment Year 2024-25 is rejected.
4. The brief facts of the case are as under:
4.1. The petitioner is a Co-operative Society registered under the provisions of the Gujarat Co-operative Societies Act, 1961.
4.2. It is a case of the petitioner that tax audit for the Financial Year 2023-24 pertaining to Assessment Year 2024-25 was conducted by M/s.Nangalia Gandhi and Company, Chartered Accountants and tax audit report was uploaded on the Income Tax Portal in Form-3CA and Form-3CD on 28th September, 2024. The petitioner also claimed the deduction under Section 80P of the Act for Rs.26,42,135/- under the said tax audit report.
4.3. It is the case of the petitioner that the Chartered Accountant of the petitioner could not file the return of income due to various technical glitches creating a confusion as to whether the return was properly filed or not and every time when the Chartered Accountant tried to log-in, the message “Session has Expired” appeared on the screen which created a false belief in the mind of the Chartered Accountant that return was uploaded.
4.4. The petitioner thereafter received an SMS dated 14.12.2024 from the Income Tax Department indicating that return was not filed. The petitioner therefore contacted the Chartered Accountant informing about the message received from the Income Tax Department and thereafter, the verification was done by the Chartered Accountant on the Income-tax Portal and it was found that the return of income was not filed.
4.5. The petitioner therefore, immediately filed an application dated 16.12.2024 under Section 119(2)(b) of the Act on 20.12.2024 with a prayer to condone the delay occurred in filing the return and seeking permission to file the return. It is also the case of the petitioner that the petitioner was conscious that the petitioner could have filed the return belatedly but in view of the provisions of the Act, by filing a belated return, the petitioner would not be entitled to claim the deduction under Section 80P of the Act and therefore, the petitioner filed application under Section 119 of the Act.
4.6. It is also the case of the petitioner that the delay in filing the return of income was only 35 days in view of the extension of the time to file the return from 31.10.2024 to 15.11.2024 as per the Circular No.13 of 2024 dated 26.10.2024. The respondent issued a show-cause notice dated 07.01.2025 calling upon the petitioner to provide various explanations and to give concrete evidence of technical glitches faced by the Chartered Accountant. The petitioner filed reply dated 17.01.2025 providing the explanation to the respondent along with an affidavit of the Chartered Accountant mentioning about the technical glitch which happened while filing the return of income.
4.7. The respondent by the impugned order dated 26th February, 2025 rejected the application of the petitioner and refused to condone the delay occurred in filing the return of income by observing as under :
“4. The application of the assessee has been examined. It is seen that the assessee has not filed its original return for the year under consideration and submitted an application u/s.119(2) (b) of the Act seeking condonation of delav in claiming refund on account of TDS amounting to Rs.81,600/-. The assessee has claimed that due to certain technical glitches on the portal & some confusion arose about the ITR fillings process in the mind of the staff of his consultants, IT of the assessee has not been uploaded. Later on, while logging on the portal, “Session has Expired” message used to appear, which created the false belief in the mind of the office staff that the ITR filing process is completed and due to work pressure, office staff of the consultant forgot to check the date and Acknowledgment number of the ITR filed on the portal. The contention of the assessee is not acceptable as the assessee failed to submit the necessary supporting evidence to back up the claim of technical glitches causing the delay. According to Section 119(2)(b) of the Act, for the Department to exercise discretion to condone a delay, the assessee must present a reasonable and justifiable cause supported by evidence. In this case, the claim of technical glitches was not substantiated by any verifiable documents or proofs, which raises doubts about the veracity of the explanation.
The assessee had ample time to file a belated return till 15.01.2025 before submitting the application for condonation on 20.12.2024. This implies that the delay was not due to any genuine hardship or an unforeseen circumstance as the assessee had the opportunity to rectify the situation. The fact that the return could still have been filed during this period, yet was not, further strengthens the position that the delay was due to negligence or casualness on the part of the assessee, rather than an unavoidable event.
The assessee’s failure to act promptly and the absence of compelling reasons or valid evidence indicate a lack of genuine hardship. Condonation of delay u/s.119(2)(b) of the Act, is intended to assist taxpayers who face unforeseen difficulties, not those who demonstrate carelessness or lack of due diligence. The assessee’s casual approach to filing the return does not qualify for relief under the provisions of the Act, especially when no substantive proof of a technical glitch has been provided.
The Department has stringent timelines for filing returns and the taxpayers are expected to comply with these deadlines. The purpose of these timelines is to ensure a smooth and organized processing of tax returns. Granting relief in this case could set a precedent for other taxpayers to claim delays without valid justifications or evidence, undermining the integrity of the tax administration process.
Also, the assessee has not submitted any concrete evidences which prove genuine hardship in filing return of income for the year under consideration hence, the request of the assessee is not genuine & hence not acceptable.
4.1 The application of the assessee has also been examined with reference to Circular No.09/2015 F. No.312/22/2015-01 dated 09.06.2015. The Central Board of Direct Taxes has clearly specified that at the time of considering the case under section 119(2)(b) of the Act, it shall be ensured that the case is of the genuine hardship on merits and that the income/loss declared and/or refund claimed is correct and genuine. Relevant para 5(i) of the above mentioned Circular is reproduced hereunder:-
“5. The powers of acceptance/rejection of the application within the monetary limits delegated to the Pr. CCSIT/CSIT/pr. CIT/CSIT in case of such claims will be subject to Following conditions:
i. At the time of considering the case under Section 119(2)(b), it shall be ensured that the income/loss declared and/or refund claimed is correct and genuine and also that the case is of genuine hardship on merits.”
In the present case, the assessee has not filed its return for A.Y. 2024-25. The assessee had enough time up to 15.01.2025 to file its belated return
but the assessee failed to avail this opportunity. Further, the assessee has not furnished any concrete details/documents/reasons which prove genuine hardship in filing return of income for the year under consideration. Hence, the request of the assessee is not found genuine and not found acceptable.
5. It is pertinent to mention here that genuine challenges or unanticipated circumstances might occasionally make it difficult to fulfil tax-related duties on schedule and in such circumstances, to help taxpayers who have good grounds for missing the deadlines; the provision for condonation of delay has been enacted. Section 119(2)(b) of the Act, along with CBDT’s Circular No. 09/2015 dated 09.06.2015, is the statutory provision for condoning the delay for not filing of return of income due to genuine hardship. Through Circular No. 09/2015, as per provisions of section 119(2)(b) of the Act, the CBDT had issued orders to its subordinate authorities to condone for delay in filing of return of income due to genuine hardship caused due to circumstances beyond the control of the assessee. Thus, while condoning the delay, the authorities must be cautious and only on genuine reasons for hardship, the authorities are empowered to condone the delay. The power of discretion to condone the delay is to be exercised judiciously. The reasons furnished for condonation of delay must be candid and convincing. However, the reason stated by the assessee is not found to be correct and true. Discipline on time limits regarding filing of returns have to be complied and respected, unless compelling and good reasons are shown and established for grant of extension of time which cannot be claimed as a vested right on mere asking. Routine, liberal and overindulgent approach in condoning delay would open floodgates of applications, completely throwing the tax assessment and recovery machinery out of gear. As discussed in para 3 & 4 herein above, the case of the assessee is beyond the scope of section 119(2)(b) of the Act. Therefore, in absence of genuine and satisfactory reasons, the assessee’s request to condone the delay and allow filing Return of Income is found to be not acceptable.”
4.8. Being aggrieved, the petitioner has preferred this petition.
5.1. Learned advocate Mr.Jaimin Gandhi for petitioner is a Co-operative Society run by the employees and once the task of filing the income tax return was assigned to the Chartered Accountant, petitioner was under bonafied belief that the Chartered Accountant would have filed the return of income but only when the petitioner received an SMS on 14.12.2024, it was known that the return of income was not filed and immediately, the petitioner has taken steps by approaching the Chartered Accountant and making an application under Section 119(2) (b) of the Act.
5.2. Learned advocate Mr.Jaimin Gandhi for further submitted that the petitioner prayed for filing the return under Section 139 (1) of the Act in view of the provisions of Section 80AC of the Act which prohibits the deduction under Chapter 6, if the return is not filed within the prescribed time limit under Section 139(1) of the Act.
5.3. It was further pointed out that the petitioner has also provided the affidavit of the Chartered Accountant explaining the reason why the return could not be filed within the prescribed time limit under Section 139(1) of the Act. It was therefore submitted that the respondent ought to have condoned the delay occurred in filing the return without raising technicalities, so as to enable the petitioner to claim the deduction under Section 80P of the Act. It was also pointed out that it is not the case of the respondent that the petitioner is not entitled to any deduction, however, the petitioner did not have any other proof of technical glitch except the affidavit of the Chartered Accountant. It was therefore submitted that the respondent ought to have condoned the delay. In support of his submissions, reliance was placed on the following decisions :
“(i) Dy. CIT v. Surendranagar District Co-operative bank Ltd. (SC);
(ii) Surendranagar District Co-operative Bank Ltd. v. Dy. CIT (Guj.);
(iii) Sarvodata Charitable Trust v. ITO (Exemption) (Gujarat);
(iv) Bhatewara Associates Manik v. Union of India (Bombay);
(v) Shri Visha Oswal Tap. Shantibhuvan Upashray and Derasar v. CIT (Exemptions) (Gujarat);
(vi) ADCC Infocom (P.) Ltd. v. Principal Chief CIT ITR (Bombay);
(vii) G.V. Infosutions (P.) Ltd. v. Dy. CIT 482 (Delhi)”
6.1. Per-contra, learned Senior Standing Counsel Mr.Karan Sanghani for the respondent submitted that the petitioner has failed to provide any proof that there were technical glitches preventing the Chartered Accountant to file the return of income. Learned Senior Standing Counsel Mr.Karan Sanghani referred to and relied upon the following averments made by the respondent in the affidavit-in-reply :
“5. With reference to Grounds no. A and B, the Petitioner has contended that if the delay in filing the return is not condoned, then the petitioner will not be entitled to claim deduction under section 80P. The petitioner contends that as per section 80AC, the petitioner will be entitled to claim deduction only if the return is filed under section 139(1). Consequently, the petitioner will be compelled to pay for a tax liability for which it is not supposed to pay. The petitioner has stated that payment of tax liability, which the petitioner is not supposed to pay, is by itself considered as genuine hardship.
In this regard, it is submitted that the petitioner has not filed return of income for the AY 2024-25. Further, it is necessary to mention that while filing of application for condonation of delay, the petitioner has failed to submit concrete evidences of genuine hardship in support of its claim faced in filing of return. Further, it is crucial to state that petitioner was having sufficient time to file belated return, which was available upto 15.01.2025, but the petitioner insisted on condonation of delay, thus, the attempt of the petitioner is a deliberate one. On going through the application of petitioner, it is seen that the petitioner has mentioned the issue of refund as the reason for condonation. This shows that the issue of 80P deduction is nothing but an afterthought. Thus, it becomes clear that the contention of the petitioner is incorrect and totally misleading.
6. With respect to Ground no. C, the petitioner has contended that compelling the petitioner to pay tax liability, which the petitioner is not supposed to pay, will cause genuine hardship to the petitioner. In this regard, it is submitted that there is no compulsion from the side of respondent to pay any undue tax liability. The petitioner is a well-established society who is well versed with the laws since long time. Not filing of return on the part of the petitioner is against the law. Further, petitioner has not substantiated any proof which suggest that there was any genuine hardship because of which return of income could not be filed by the petitioner in due time. The contention of the petitioner lacks merit.
7. With respect to grounds no. D and E, the petitioner has contended that nonfiling of the income tax return within the time limit is completely beyond the control of the petitioner. The petitioner further contends that the inadvertent clerical error on the part of the Chartered Accountant firm was completely beyond the control of the petitioner and that there was no element of negligence attributable to the petitioner.
In this regard, it is submitted that the petitioner had ample time to file a belated return till 15.01.2025 before submitting the application for condonation on 20.12.2024. This implies that the delay was not due to any genuine hardship or an unforeseen circumstance as the petitioner had the opportunity to rectify the situation. The fact that the return could still have been filed during this period, yet was not filed, further strengthens the position that the delay was due to negligence or casualness on the part of the assessee, rather than an unavoidable event.
8. The assessee’s failure to act promptly and the absence of compelling reasons or valid evidence indicate a lack of genuine hardship. Condonation of delay u/s. 119(2)(b) of the Act, is intended to assist taxpayers who face unforeseen difficulties, not those who demonstrate carelessness or lack of due diligence. The assessee’s casual approach in filing the return does not qualify for relief under the provisions of the Act.
9. It is further submitted that the Central Board of Direct Taxes (CBDT) has unequivocally stipulated, in paragraph 5(i) of its Circular No. 09/2015 dated June 09, 2015, that:
“At the time of considering the case under Section 119(2)(b), it shall be ensured that the income/loss declared and/ or refund claimed is correct and genuine and also that the case is of genuine hardship on merits.”
This clearly mandates that the grounds for condonation must demonstrate genuine hardship. The case of not filing return because of the clerical mistake of Chartered Accountant cannot be termed as genuine hardship.
10. I submit that the Honble Supreme Court, in B.M.Malani v. Commissioner of Income Tax, (SC) (2008), has held that the “ingredients of genuine hardship must be determined.” The Court emphasized that while Section 119(2)(b) of the Act and CBDT Circular No. 09/2015 dated June 9, 2015, provide for condonation of late filing due to genuine hardship, statutory compliance with time limits is imperative and cannot be disregarded lightly. Condonation of delay cannot be claimed as a vested right. A routine, liberal, or overindulgent approach in condoning delay would invariably lead to a proliferation of applications, thereby significantly disrupting the tax assessment and recovery mechanisms.
11. Reference is made to the decision of the Hon’ble Delhi High Court in the case of Lava International Limited v. CBDT, 148 (Delhi). The relevant paragraphs underscore the necessity of statutory compliance with prescribed time frames:
“9. It should be noted that 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 those deductions, allowance and avoid interest and penalty. This cannot be termed as hardship but it is compliance requirements imposed by law in the interest of proper regulation of the Act. If these time limits were to be relaxed in a particular case on mere fact that a default occurred due to some inadvertence then there will be no sanctity of limitation prescribed by the legislature. Therefore, power of condonation u/s 119(2) can be exercised to deal with the extraordinary circumstances only which would have led to delay in statutory compliance and the same cannot be exercised routinely.”
6.2. Referring to the above averments, it was submitted that no interference may be made in the impugned order passed by the respondent while exercising the jurisdiction and powers under Section 119(2)(b) of the Act.
7. Having heard the learned advocates for the respective parties and considering the facts of the case, it appears that similar facts were subject to the challenge for rejecting the order under Section 119(2)(b) of the Act before this Court in case of Surendranagar District Co-operative Bank Ltd. (supra) wherein, this Court after considering the similar submissions made on behalf of both the sides held as under :
“20. Having regard to the conditions laid down in the above Circular, this court is of the view that the contention raised by the learned counsel for the respondent that there is no provision for revenue to ascertain genuineness of such loss is misconceived and contrary to the circular.
21. Insofar as the question of genuine hardship as contemplated under clause (b) of sub-section (2) of section 119 of the Act is concerned, the Supreme Court in B.M.Malani v. Commissioner of Income Tax (supra) has held that compulsion to pay any unjust dues per se would cause hardship. But a question, however, would further arise as to whether the default in payment of the amount was due to circumstances beyond the control of the assessee.
22. Thus, the contention advanced by the learned counsel for the petitioner that the section does not contemplate circumstances beyond his control, does not merit acceptance. Thus, a case of genuine hardship would apart from the fact that the assessee is likely to suffer hardship if the claim is not admitted beyond the period specified under the Act for making such claim, be a case where the assessee was prevented by circumstances beyond his control from making such claim within the specified period.
23. In the present case, the petitioner has produced contemporaneous evidence on record to show that it had in fact incurred the loss claimed by it in the year under consideration. Not being able to carry forward such loss, therefore, per se would cause hardship to the petitioner. The mere fact that the petitioner is now making a profit and may be in a position to bear the loss does not mean that the petitioner would not suffer hardship. Evidently therefore, if the time limit for filing revised return of income is not extended the petitioner would have to suffer from hardship as otherwise the entire loss of Rs.7,91,66,338/- would not be permitted to be carried forward for being set off against the profits of the subsequent assessment years.
24. Insofar as the question as to whether the claim could not be made within the specified time for circumstances beyond the control of the petitioner is concerned, the petitioner is a bank which is run by various employees who are engaged in the banking business. The officers of the bank may not have any knowledge about the intricacies of the Income Tax Act or the manner in which a return of income has to be filed. It is for this reason that the petitioner avails of the services of an expert, viz. a Chartered Accountant, for filing its returns of income and handling other matters under the Act. While it is true that the return of income would be based upon the books of account maintained by the petitioner, in this case the concerned Chartered Accountant failed to claim the loss which was duly reflected in the record of the relevant assessment year in the return of income filed for that year. While it is true that the authorised signatory and CEO of the Bank had signed the return of income, it cannot be gainsaid that the concerned officer would have relied upon the Chartered Accountant to have prepared a correct return of income. It is only after the income tax matters were handed over to another firm of Chartered Accountants, and the authorised representative called for the old records so as ascertain and substantiate the amount of brought forward losses available for set-off that it could be detected that though there was a book loss of Rs.8,56,85,868/- for assessment year 2009-10, the return of income was filed declaring income at Nil in ITR-7 without claiming carry forward loss of Rs.7,91,66,338/-. Besides, though the original return was defective inasmuch as it was filed in ITR-7 instead of ITR-5, the Assessing Officer did not declare such return to be invalid. Moreover, as the return was merely processed under section 143(1) of the Act the error went unnoticed. Hence, upon being properly advised, the petitioner filed the correct return of income in ITR-5 for the assessment year 2009-10 on 24.3.2015 declaring loss of Rs.7,91,66,338/-.
25. Thus, it was because of circumstances beyond its control that the petitioner could not file the return of income under section 139(9) of the Act within the specified time, inasmuch as the error committed while filing of the return of income did not come to its notice till the Chartered Accountants were changed and the authorised representative called for the old records so as ascertain and substantiate the amount of brought forward losses available for set-off. Therefore, the petitioner has made out a case of genuine hardship for admitting the claim after the expiry of the period specified under the Act.
26. In the opinion of this court, if one considers the reasoning adopted by the Board for rejecting the application, in no case would a bank or a company be in a position to avail of the benefit of section 119(2)(b) of the Act as all banks and companies would have employees who maintain the daily accounts and prepare or assist in preparation of Profit and Loss account as well as balance sheet; such books of account are subject to audit by regular auditors as well as tax auditors. It is in cases like the present one, wherein despite the aforesaid position, in case of genuine hardship, if on account of reasons beyond the control of the assessee, an application or claim is not made by the assessee within the period specified in the Act, that powers under section 119(2)(b) of the Act are required to be exercised.
27. In PDS Logistics International (P.) Ltd. v. Chief Commissioner of Income Tax, 167 (Karnataka), the Karnataka High Court has held thus:-
“7. It is trite law that rendering substantial justice shall be paramount consideration of the Courts as well as the Authorities rather than deciding on hypertechnicalities. It is obvious that there is some lapse on the part of the petitioner, that itself would not be a factor to turn out the plea for filing of the return, when the explanation offered was acceptable and genuine hardship is established. It was with a fond hope of getting justice at the hands of the Chief Commissioner of Income Tax, petition was filed on 11-06-2010. However, no decision was taken for nearly 6 years. Finally on 11-03-2016, the said petition has been dismissed which has to be viewed seriously while rendering substantial justice to the parties.”
28. Thus, rendering substantial justice is the paramount consideration of the courts as well as the authorities rather than deciding on hyper-technicalities.
29. Insofar as the decisions on which reliance has been placed by the learned counsel for the respondents are concerned, in Deep Narayan Gupta v. Central Board of Direct Taxes (supra), the Patna High Court had noted that the reason for rejecting the application was that though the due dates for filing the returns were before March 31, 1995 and March 31, 1996, they were filed only on October 9, 1998. It was also noticed that the assessee had deliberately filed his returns much after the due date only to escape scrutiny assessment. For example, for the assessment year 1993-94, the net profit shown by the assessee was very low. No audit report was enclosed with the return. In the balance-sheet, the assessee had shown unsecured loans and other finance as liabilities. It was found that the late filing of return apparently indicated that the assessee had manipulated his accounts and had prevented scrutiny assessment by the Department. It is in such circumstances that the court dismissed the writ applications. In the facts of the present case, the original return on income was filed within time. It is the subsequent return in Form ITR-5 which was beyond the specified period for the reasons discussed hereinabove. The above decision would therefore not be applicable to the facts of the present case.
30. Insofar as the decision of the Delhi High Court in B U Bhandari Nandgude Patil Associates v. CBDT, (supra) is concerned, in that case the assessee had not filed return of income within the prescribed period of limitation on the ground that the audit was not completed by the auditors in time. It was the case of the assessee that the statutory audit could not be completed as the Chartered Accountant who had conducted the audit of the assessee had suffered from some illness. However, no record of such illness was produced. Moreover, the Chartered Accountant had completed audits of other assessees within time limit. There was a delay of five months in filing the return of income and this was the only explanation put forth. The CBDT took note of the fact that the assessee had not been able to show that it had pursued the matter diligently as the responsibility of filing the return in time is of the assessee and he is expected to be more diligent if a large claim of deduction is involved. It was further found that there was nothing to show that the assessee pursued the matter with the auditor to get audit done. The fact that all other audits were done timely by the auditor except for the said audit also did not help the assessee’s case as any medical exigency of the magnitude being claimed would have delayed at least a few more audits. The court found the findings recorded by the CBDT were primarily factual and also lucid and cogent and that the application under section 119(2)(b) was made only at the stage when the assessment order reached the stage of the Tribunal. The above decision would also, therefore, not be applicable to the facts of the present case.”
8. The aforesaid decision of this Court was challenged before the Hon’ble Apex Court, however, the Hon’ble Apex Court by order dated July 12, 2019 has dismissed the Special Leave Petition.
9. Similarly, while considering the scope and powers to be exercised under Section 119(2)(b) of the Act, this Court in case of Sarvodaya Cheritable Trust (supra) has analysed the entire law on the subject of exercise of powers by the respondent for the benefit of the assessed at large as under :
“27. We should look into the position of law as regards the subject matter of this writ-application :
| (i) | | In Artist Tree Pvt. Ltd. v. 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’ came up for consideration of the Supreme Court in the case of B.M.Malani (supra), wherein, by reference to New Collins Concise English Dictionary, the Supreme Court accepted the position that “genuine” means not fake or counterfeit, real, not pretending (not bogus or merely a ruse). Further, a genuine hardship would, inter alia, mean a genuine difficulty. The ingredients of genuine hardship, must be determined keeping in view the dictionary meaning thereof and legal conspectus attending thereto. For the said purpose, another well known principle, namely, that a person cannot take advantage of his own wrong, may also have to be borne in mind. Compulsion to pay any unjust dues per se would cause hardship. But a question as to whether the default in payment of the amount was due to circumstances beyond the control of the assessee, also bears consideration.”
12. In the case of R. Seshammal (supra), the Madras High Court was pleased to observe as under (page 187 of 237 ITR):
“This is hardly the manner in which the State is expected to deal with the citizens, who in their anxiety to comply with all the requirements of the Act pay monies as advance tax to the State, even though the monies were not actually required to be paid by them and there after seek refund of the monies so paid by mistake after the proceedings under the Act are dropped by the authorities concerned. The State is not entitled to plead the hyper technical plea of limitation in such a situation to avoid return of the amounts. Section 119 of the Act vests ample power in the Board to render justice in such a situation. The Board has acted arbitrarily in rejecting the petitioner’s request for refund.”
13. In the case of Sitaldas Motwani (supra), this court has held that the expression “genuine hardship” used in section 119(2)(b) of the said Act should be construed liberally, particularly in matters of entertaining of applications seeking condonation of delay. This court was pleased to observe as under (page 228 of 323 ITR):
“The phrase ‘genuine hardship’ used in section 119(2) (b) should have been construed liberally even when the petitioner has complied with all the conditions mentioned in Circular dated October 12, 1993. The Legislature has conferred the power to condone delay to enable the authorities to do substantive justice to the parties by disposing 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 herein above 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 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 the cause of justice. If refund is legitimately due to the applicant, mere delay should not defeat the claim for refund.”
14. In the case of Bombay Mercantile Co-operative Bank Ltd. (supra), this court again observed that it is well settled that in matters of condonation of delay highly pedantic approach should be eschewed and a justice-oriented should be adopted. It also observed that a party should not be made to suffer on account of technicalities.
23. In the light of the aforesaid discussion, we are of the opinion that an acceptable explanation was offered by the petitioner and a case of genuine hardship was made out. The refusal by the Central Board of Direct Taxes to condone the delay was a result of adoption of an unduly restrictive approach. The Central Board of Direct Taxes appears to have proceeded on the basis that the delay was deliberate, when from the explanation offered by the petitioner, it is clear that the delay was neither deliberate nor on account of culpable negligence or any mala fides. Therefore, the impugned order dated May 16, 2006, made by the Central Board of Direct Taxes refusing to condone the delay in filing the return of income for the assessment year 1997-98 is liable to be set aside.
| (ii) | | In Jay Vijay Express Carriers v. Commissioner of Income Tax-III, (2013) .61 (Gujarat), in relevant paragraph 16 of the said judgment, this Court held as under : |
“16. In our opinion, in the present case, there would be genuine hardship, if the time limit is not extended as otherwise, the entire claim of Rs.17,84,323/- would be destroyed. The petitioner would neither get deduction in the assessment year 2005-06 nor in the year 2008- 09 as per then prevailing Section 40(a)(ia) of the Act. In our opinion, the petitioner was neither lethargic nor lacking in bona fides in making the claim beyond the period of limitation, which should have a relevance to the desirability and expedience for exercising such power. Before proceeding further we may caution that undoubtedly such powers are not to be exercised in routine manner to extend limitation provided by the Act for various stages. We are conscious that such routine exercise of powers would neither be expedient nor desirable, since the entire machinery of tax calculation, processing of assessment and further recoveries or refunds, would get thrown out 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 v. 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 particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. If the statute provide that a particular thing should be done, it should be done in the manner prescribed and not in any other way (see para 26).”
| (iv) | | In the case of B.M.Malani v. Commissioner of Income Tax and another, (2008) 219 CTR 313), the Court observed : |
“8. 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).”
For interpretation of the aforementioned provision, the principle of purposive construction should be resorted to. Levy of interest although is statutory in nature, inter alia for recompensating the Revenue from loss suffered by non-deposit of tax by the assessee within the time specified therefor. The said principle should also be applied for the purpose of determining as to whether any hardship had been caused or not. A genuine hardship would, inter alia,mean a genuine difficulty. That per se would not lead to a conclusion that a person having large assets would never be in difficulty as he can sell those assets and pay the amount of interest levied.
The ingredients of genuine hardship 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 said principle, it is conceded, has not been applied by the Courts below in this case, but we may take note of a few precedents operating in the field to highlight the aforementioned proposition of law. (See Priyanka Overseas (P) Ltd. & Anr. v. Union of India & Ors.1991 Suppl.(1)SCC 102, para 39, Union of India & Ors. v. Maj.Gen.(Retd.) Madan Lal Yadav (1996)4 SCC 127 at 142, paras 28 and 29, Ashok Kapil v. Sana Ullah (dead) & Ors. (1996) 6 SCC 342 at 345, para 7, Sushil Kumar v. Rakesh Kumar (2003) 8 SCC 673 at 692, para 65, first sentence, Kusheshwar Prasad Singh v. State of Bihar & Ors. (2007) 11 SCC 447, paras 13, 14 and 16).”
28. Section 119 of the Act is couched in very wide terms. The same is quoted below for ready 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 incometax 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 v. Central Board of Direct Taxes, New Delhi, (2017) 228 (Karnataka), wherein the Court has observed as under :
“12. It is true that the so called reasons assigned by the respondent Central Board of Direct Taxes (CBDT) in the impugned order, on the face of it, do not appear to be whimsical or arbitrary reasons and it is equally true that such investment could be made by assessee very well before the cut off date also when she was physically present in India or even when she had gone back to USA on 20th February 2013. Nonetheless, the delay of six months in the circumstances in which it occurred, especially, in view of the fact that the investment condition was undisputably met by the assessee could have been condoned taking a judicious and holistic view of the facts. The wide powers of the Central Board of Direct Taxes or other higher authorities of the Department to whom such powers can be delegated under Section 119 of the Act, need not always take only a pro revenue approach in such matters. Their approach in such cases should be equitious, balancing and judicious which should reflect the application of mind to the facts of the case and before denying the genuine claim of the assessee on the grounds of mere delay in making such claim, something more than the user of innocuous terms as employed in the present case, should be forthcoming. Technically, strictly and literally speaking, the Board might be justified in denying the exemption from capital gains tax by rejecting such condonation application, but an assessee, 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 highest executive authority of the Central Board of Direct Taxes under the Act.
13. The general and wide powers given to the Board in this regard, “if it considers it desirable or expedient so to do for avoiding genuine hardship in any case.”, not only gives wide powers to the Board, but confers upon it a obligation to consider facts relevant for condonation of delay as well as the merit of the claim simultaneously. If the claim of exemption or other claim on merits is eminently a fit case for making such claim, it should not normally be defeated on the bar of limitation, particularly, when the delay or the time period for which 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 such investment of six months deserved to be condoned, in view of the fact that, the assessee-petitioner, a Doctor by profession was traveling from India to USA a long distance country where she normally resided and came to India not only to meet her family members, but to sell the immoveable property belonging to her and sought to avail the genuine exemption from such tax liability upon making the investment in the prescribed investment in the form of Bonds of Infrastructure which she did make in the National Highways Authority.”
30. We may also refer to and rely upon a decision of the Delhi High Court in the case of G.V.Infosutions Pvt. Ltd. v. Deputy Commissioner of Income Tax, Circle 10(2) and others, reported in (2019) 482 (Delhi). We may quote the relevant observations thus:
“8. The rejection of the petitioner’s application under Section 119(2)(b) is only on the ground that according to the Chief Commissioner’s opinion the plea of omission by the auditor was not substantiated. This court has difficulty to understand what more plea or proof any assessee could have brought on record, to substantiate the inadvertence of its advisor. The net result of the impugned order is in effect that the petitioner’s claim of inadvertent mistake is sought to be characterised as not bonafide. The court is of the opinion that an assessee has to take leave of its senses if it deliberately wishes to forego a substantial amount as the assessee is ascribed to have in the circumstances of this case. “Bonafide” is to be understood in the context of the circumstance of any case. Beyond a plea of the sort the petitioner raises (concededly belatedly), there can not necessarily be independent proof or material to establish that the auditor in fact acted without diligence. The petitioner did not urge any other grounds such as illness of someone etc., which could reasonably have been substantiated by independent material. In the circumstances of the case, the petitioner, in our opinion, was able to show bonafide reasons why the refund claim could not be made in time.
9. The statute or period of limitation prescribed in provisions of law meant to attach finality, and in that sense are statutes of repose; however, wherever the legislature intends relief against hardship in cases where such statutes lead to hardships, the concerned 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 furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment. This Court took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either before the Income Tax Officer or before the appellate authority by assigning sufficient cause.”
10. Similarly the Bombay High Court in case of Bhatewara Associates (supra) and Delhi High Court in case of Infosutions Private Limited (supra) have also permitted the condonation of delay occurred in filing the return of income under the provisions of Section 119(2)(b) of the Act.
11. In view of the above dictum of law and considering the facts of the case, more particularly, when the petitioner has filed the affidavit of the Chartered Accountant explaining the cause for non-filing of the return in the prescribed period of limitation, as held by this Court in case of Surendranagar District Co-operative Bank Ltd. (supra) that “rendering substantial justice shall be paramount consideration of the Courts as well as the Authorities rather than deciding on hyper-technicalities”, we are of the considered view that the respondent ought to have condoned the delay.
12. The petition therefore succeeds and is accordingly allowed. The impugned order dated 26th February, 2025 passed by the respondent under Section 119(2)(b) of the Act is hereby quashed and set aside. The respondent is remanded to pass an order to condone the delay occurred in filing the return by the petitioner, so as to enable the petitioner to file the return of income for Assessment Year 2024-25 to claim the deduction under Section 80P of the Act. Such exercise shall be completed within a period of twelve weeks from the date of receipt of the copy of this order.
13. Rule is made absolute to the aforesaid extent. No orders as to cost.