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2010 (9) TMI 23 - HC - Income TaxCondonation of delay in filing the return - carry forward loss - return was filed after the statutory audit was completed on 15-11-2001 and the audit under Section 44AB was completed on 28-11-2001. The principal ground on which the condonation of delay was sought by the Petitioner was on account of the fact that the statutory auditors for the Assessment Year 2000-2001 were appointed by the Commissioner of Corporation and the Registrar Cooperative Societies Maharashtra State Pune on 3-9-2001 and since the said statutory auditors had to complete the audit of 53 branches spread all over the country the same consumed some time and the said statutory auditors were able to complete the audit only on 15-11-2001 and the audit under Section 44AB was completed on 28-11-2001 and that the return for the said year was filed the very next day. The other reason cited in the said application was that there was a change in management Held that - the Petitioner cannot be blamed for the delay in carrying out its audit as the same was beyond its control. - It is well settled that in matters of condonation of delay a highly pedantic approach should be eschewed and a justice oriented approach should be adopted and a party should not be made to suffer on account of technicalities. - the delay in filing the return to stand condoned and the Petitioner would be entitled to the carry forward and set off of losses in accordance with law.
Issues:
- Condonation of delay in filing the return and carrying forward loss for Assessment Year 2001-2002 under Section 119(2)(b) of the Income Tax Act. Analysis: Issue 1: Condonation of Delay in Filing the Return The petitioner, a Multi State Cooperative Bank, filed a return of income for Assessment Year 2001-2002 declaring a loss. The delay in filing the return was attributed to various reasons, including the time taken by statutory auditors to complete the audit and a change in management. The application for condonation of delay under Section 119(2)(b) was rejected by the Government of India, Ministry of Finance, citing lack of exceptional circumstances beyond the control of the petitioner. However, the court noted that the delay was due to the appointment of new statutory auditors by the Central Registrar, a decision beyond the petitioner's control. The court held that the petitioner's reasons were valid and deserving of acceptance for condonation of delay. Issue 2: Legal Provisions and Circulars The court referred to Section 119(2)(b) of the Income Tax Act, which empowers the Board to admit applications for exemption or relief after the specified period if genuine hardship is demonstrated. The circular No.8 of 2001 issued by the CBDT was also considered in evaluating the petitioner's grounds for delay. The court emphasized that the power to appoint statutory auditors rested with the Central Registrar, and the change in auditors was a significant factor contributing to the delay in filing the return. The court held that the petitioner's situation fell within the purview of genuine hardship as contemplated under the legal provisions and circular. Issue 3: Penalty Imposed and Appeal The assessing officer had imposed a penalty under Section 271(b) of the Income Tax Act, but the CIT (Appeal) set aside the penalty, acknowledging the reasonable delay in filing the return. The CIT (Appeal) accepted the same facts presented by the petitioner in the application for condonation of delay under Section 119(2)(b). The court highlighted the need to adopt a justice-oriented approach in matters of condonation of delay and emphasized that technicalities should not cause undue hardship to the party involved. Conclusion The court allowed the petition, setting aside the impugned order and condoning the delay in filing the return. Consequently, the petitioner was entitled to carry forward and set off losses in accordance with the law. The court emphasized the importance of a fair and just approach in matters of condonation of delay, ensuring that parties are not unduly penalized due to technicalities.
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