2024 (9) TMI 1770 - HC - Income Tax

Delay filling application u/s119 (2)(b) - As submitted Income tax return for the AY 2020-21 was liable to be filed by the petitioner on or before 31.07.2021 but because of the COVID-19 pandemic and lockdown all over the world he could not submit the return within time. According to the petitioner in June 2021 his wife suffered from various ailments at that time they were living with their son at Hernando (USA). HELD THAT - Admittedly the petitioner is a non-resident Indian and aged about 85 years. He could not file the return for the assessment year 2020- 21 as at that time the fear of the spreading of the COVID-19 virus was in full force in the entire world. Everyone was under tremendous tension for the safety of his as well as other family members. The petitioner himself was near about 80-82 years of age and his wife was also not keeping good health at the relevant time. Therefore they might have escaped the last date for submission of the Income Tax Return. There is no allegation by the IT department that there is a concealment of income in the Income Tax Return or with malafide intention the return could not be filed. The income tax had already been deducted by the bank. The petitioner was only required to claim the refund therefore there cannot be an intentional delay in filing the return. The main principle which is to be applied to condone the delay is to examine whether there was an intentional delay or bonafide intention is missing. If the person seeking condonation of the delay has explained the reasons for the delay in approaching the Court or competent authority that should be considered by the learned authority or Courts keeping in mind the bonafide intention of the party. Even otherwise during this entire period the Apex Court in the matter 2021 (3) TMI 497 - SC ORDER has extended the period of limitation for filing cases or proceedings before each and every quasi-judicial or administrative authority. The learned authority has adopted a hyper-technical approach while considering the application filed for condonation of delay. The order is unsustainable and the same is accordingly set aside. Application u/s 119(2)(b) of the Income Tax Act is hereby allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court include:

- Whether the delay in filing the Income Tax Return (ITR) for the assessment year 2020-21 can be condoned under Section 119(2)(b) of the Income Tax Act.

- Whether the petitioner's reasons for delay, including the COVID-19 pandemic and personal health issues, constitute sufficient cause for condonation.

- Whether the Income Tax Department's rejection of the condonation application was justified, particularly in light of the availability of online filing facilities during the pandemic.

- The applicability of principles established by higher courts regarding "sufficient cause" and bona fide intention in condonation of delay cases.

- Whether the petitioner's failure to file the return was intentional or due to bona fide reasons.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Condonation of Delay under Section 119(2)(b) of the Income Tax Act

Relevant legal framework and precedents: Section 119(2)(b) empowers the Commissioner of Income Tax to condone delay in filing returns or applications if sufficient cause is shown. The Supreme Court's ruling in Sridevi Datla v. Union of India (2021) 5 SCC 321 was cited, which clarified that "sufficient cause" is a relative, fact-dependent concept requiring bona fide intention, absence of negligence, and that condonation should not cause serious prejudice to the other party.

Court's interpretation and reasoning: The Court emphasized that the principal test for condonation is whether the delay was intentional or whether there was a bona fide reason. The petitioner, an elderly non-resident Indian aged about 85 years, faced genuine difficulties due to the COVID-19 pandemic and his wife's ill health. The Court found these reasons to be credible and constituting sufficient cause.

Key evidence and findings: The petitioner's evidence included his age, residence in the USA, the global COVID-19 lockdown, his wife's ailments, and the fact that the income tax was already deducted by the bank, indicating no concealment or malafide intent. The petitioner applied for condonation promptly upon discovering the delay.

Application of law to facts: The Court applied the principle that delay caused by extraordinary circumstances such as a pandemic, combined with personal health issues, can amount to sufficient cause. The absence of concealment or fraudulent intent weighed in favor of condonation.

Treatment of competing arguments: The Income Tax Department argued that online filing was available during COVID-19 and the petitioner could have filed the return from his residence, thus negating sufficient cause. The Court rejected this hyper-technical stance, recognizing the real difficulties faced by the petitioner due to age and health concerns.

Conclusions: The Court held that the delay was not intentional or negligent and that the petitioner had a bona fide intention to comply with tax laws. Therefore, the delay deserved to be condoned.

Issue 2: Validity of the Commissioner's Rejection of the Condonation Application

Relevant legal framework and precedents: The Commissioner's discretion under Section 119(2)(b) must be exercised judiciously, considering all relevant facts and circumstances. The Apex Court's suo motu extension of limitation periods during the COVID-19 pandemic was also relevant.

Court's interpretation and reasoning: The Court found that the Commissioner adopted a hyper-technical approach by focusing solely on the availability of online filing and not adequately appreciating the petitioner's age, health, and pandemic-related difficulties.

Key evidence and findings: The petitioner had furnished documentary evidence explaining the delay, which the Commissioner did not accept as sufficient. The Court noted the absence of any allegation of concealment or malafide intent from the Income Tax Department.

Application of law to facts: The Court applied the principle that discretion under Section 119(2)(b) should be exercised liberally in cases involving genuine hardship, particularly when no prejudice is caused to the revenue.

Treatment of competing arguments: The Department's argument that the petitioner could have filed online was countered by the Court's recognition of the petitioner's personal circumstances and the broader context of the pandemic.

Conclusions: The Court concluded that the Commissioner's rejection was unsustainable and set aside the impugned order.

3. SIGNIFICANT HOLDINGS

- The Court held that "the main principle which is to be applied to condone the delay is to examine whether there was an intentional delay or bona fide intention is missing."

- It was emphasized that "if the person seeking condonation of the delay has explained the reasons for the delay in approaching the Court or competent authority that should be considered by the learned authority or Courts keeping in mind the bona fide intention of the party."

- The Court quoted the Supreme Court in Sridevi Datla stating: "It is evident that the term sufficient cause is relative, fact-dependent, and has many hues, largely deriving colour from the facts of each case, and the behaviour of the litigant who seeks condonation of delay (in approaching the court). However, what can broadly be said to be universally accepted is that in principle, the applicant must display bona fides, should not have been negligent, and the delay occasioned should not be such that condoning it would seriously prejudice the other party."

- The Court found that the petitioner's failure to file the return within time was not due to negligence or malafide intent but due to extraordinary circumstances including the COVID-19 pandemic and personal health issues.

- The impugned order declining condonation was set aside and the petitioner was permitted to file the return for the assessment year 2020-21.