TMI Blog2023 (9) TMI 1226X X X X Extracts X X X X X X X X Extracts X X X X ..... as hindrance as the loss suffered by the petitioner is genuine and not set off the same would result into denial of substantial justice. The three reasons given by the assessee for delay, namely, health problems of Senior Accountant Pragna Patel, computer system having got corrupted and heads of accounts being on the verge of retirement and heavy rainfall in the month of July disrupting routine were genuine and cannot be termed as an excuse for filing delayed returns. The petitioner has explained in detail all the above reasons for delay in filing the return. The delay is also of not more than 152 days. It is a settled position of law that the respondent Board has wide powers to condone the delay and in the facts of the case, such powers ought to have been exercised judiciously so as to render substantial justice. We, therefore, find that the rejecting the application of the petitioner by the impugned order dated 16.05.2008, the respondent-Board ignored the facts and the settled legal position of law while considering the genuine claim of the petitioner to condone the delay in filing the return of the income. We find that in rejecting the application of the petitioner vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. Soparkar, learned advocate appearing for the petitioner, would make the following submissions: 4.1 That the due date for filing the return was 30.07.2014. The return was filed on 31.12.2014, and therefore, the delay was merely of five months. Genuine hardship was pointed out in the application seeking condonation of delay and grounds are stated therein. All the factors narrated in the case was one of bringing in circumstances beyond the control of the assessee and reflected a case of genuine hardship. The delay ought to have been condoned. 4.2 The observation in the impugned order that the petitioner was a habitual defaulter was misconceived and unwarranted. The finding was largely incorrect as in three out of five years, there is no delay since the due dates were extended by the tax authorities themselves. The case, therefore, had to be considered only on the basis of the year under consideration. 4.3 The order is bad as the authority ought to appreciate that the period of limitation would not come as a hindrance to do substantial justice. The loss suffered by the petitioner was genuine and not allowing to set-off the same would result in hindrance to do substantial ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned advocate appearing for the revenue would submit that the order passed under Sec. 119(2)(b) of the Income-tax Act, 1961, is a reasoned order. He would submit that it is evident on reading the order that the circumstances listed out by the petitioner that one of the employee was unwell, that data in computers had got corrupted and that the employees were busy with the work of statutory accounts of the company etc., were circumstances related to his business and as held by the authorities, these were completely attributable to his decision and account. From the table in the order, it was indicative of the fact that the petitioner-assessee was a habitual offender and that the delay was a result of a conscious decision made by him in diverting the resources for the purpose of meeting the statutory liability of the company. He would further submit that it cannot be said that the delay in filing the return of income was beyond the control of the assessee and that there was a genuine hardship. 5.1 Mr. Dev Patel, learned advocate, relied on the following decisions: (I) Shyam Sunder Nirankari vs. Commissioner of Income-tax, Karnal., reported in [2016] 65 taxmann.com 104 (Punj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Income-tax Act were as under (i) One of its employees viz. Mrs Pragna Yogesh Patel who handled the work of maintenance of record and filing of its return, suffered with severe medical problems as well as an incidence of death of her family member resulting in prolonged absence and irregularity at work. (ii) The Data of petitioner's business maintained in its computers got corrupted in mid July 2014 and it took three weeks to reconstruct data from back up. (iii) There was heavy rainfall on 29th and 30th July 2014 in the city of Ahmedabad disrupting the routine work. (iv) All the employees of petitioner firm were engaged in and occupied with work of statutory accounts of Ashima Ltd., a group company of Sri Chintan N Parikh, Karta of assessee HUF, so that the deadline of the said company may be met. (v) The due date for filing the ROI of petitioner was extended to 30.11.2014 by Circular No. 30.11.2014. (vi) Sri Jayesh B Thakkar, being on verge of retirement and due to ill health was very irregular in attending office. 6.2 The case of the petitioner is that the circumstances narrated hereinabove were such cases which indicated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view the dictionary meaning 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 Gujarat High Court in the case of Gujarat Electric C. Lid (supra) was pleased to hold as under: ..The Board was not justified in rejecting the claim for refund on the ground that a case of genuine hardship was not made out by the petitioner and delay in claiming the relief was not satisfactorily explained, more particularly when the returns could not be filed in time due to the ill health of the officer who was looking after the laxation matters of the petitioner . The Madras High Court in the case of R Seshammal (P) Ltd (supra), was pleased to observe as under 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, thereafter, seek refund of the monies so paid by mistake after the proceedings under the Act are dropped by the authorities co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund after condonation of delay has a case which needs consideration and which is not bound to fail by virtue of some apparent defect. At this stage, the authority is not expected to go deep into the niceties of law. While determining whether refund claim is correct and genuine, the relevant consideration is whether on the evidence led, it was possible to arrive at the conclusion in question and not whether that was the only conclusion which could be arrived at on that evidence. 8.2 So also in the case of PDS Logistics (supra), the Karnataka High Court considered the cases where the company could not file its returns as, there was a sudden crash of computer system, and therefore, the substantial data had to be updated. In such circumstances, the Karnataka High Court held as under: 5. The factual matrix of the case as narrated above is not in dispute. The petitioner filed petition for condonation of delay under Section 119(2)(b) of the Act before erstwhile Income Tax-III, Bengaluru on 24.02.2009 and further a letter was addressed to Chairman, CBDT, New Delhi seeking permission to file the said return of income and requesting to allow the refund claim of ₹ 30,83,829/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an verify the genuineness of the petitioner by taking up the matter for scrutiny. It is also not in dispute that the petitioner was regularly filing the return of income and a genuine tax payee. It is prima- facie apparent that only for the assessment year 2006-07, owing to the alleged crashing of the system, no income of return was filed within the prescribed time, the petitioner is not avoiding any scrutiny. The circumstance that financial report and audit reports were signed by the Managing Director on 04.09.2006 would not be a ground to reject the condonation of delay in filing the report. It cannot be said that the petitioner has obtained any undue advantage of the delay in filing the income tax returns. 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 hyper-technicalities. 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the loss, is not legally tenable. 5. In view of above, the board, hereby clarify that delay in making refund claim as well as claim of carry forward of losses, both, can be condoned in cases where returned income is a loss, provided other conditions are satisfied. The monetary limits prescribed for condonation of delay in making refund claims, by different IT authorities will apply to condonation of delay in cases of claim of carry forward of losses as well. 9.2 Reading of the aforesaid circular would indicate that the Board has powers to condone the delay in cases where the return of income is a loss. Considering this Circular, the Delhi High Court in the case of Lodhi Property Co. Ltd (supra), held as under: 5. We find that the very same contention was raised before the Karnataka High Court in the case of Associated Electro Ceramics v. Chairman Central Board of Direct Taxes and Another: 201 ITR 501 (Kar). In that case, the board had disposed of the application under Section 119 (2) of the said Act taking the view that Section 119 (2)(b) did not cover the case of a belated return on the basis of which loss, for the purposes of carrying forward the loss, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losses. The said circular dated 16.05.2001 further clarified that the delay in making a refund claim as well as a claim of carry forward of losses, both could be condoned in cases where the returned income is a loss provided the other conditions are satisfied. 7. In view of the foregoing, it is absolutely clear that the submissions sought to be raised before us by the learned counsel for the respondent have specifically and categorically been rejected by the Karnataka High Court and the same have been accepted not only by the Board, but also by the Ministry of Law. We notice that a similar view has also been taken by the Bombay High Court in the case of Sitaldas K. Motwani v. Director General of Income-tax (International Taxation): 187 Taxman 44 (Bom). Consequently, agreeing with the Karnataka High Court, we are of the view that the Board has the power under Section 119 (2) to condone the delay in the case of a return which is filed late and where a claim for carry forward of losses is made. 8. Coming back to the facts of the present case, we find that the impugned order under Section 119 passed by the Board is a non-speaking one. Normally, we would have remanded the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The applicant. Sarvodaya Chantable Trust has filed an application dated 5-9-2018 in the office on 19-9-2018, for condonation of delay in filing Form No. 10B of the IT Act 1961 for the A.Y 2016-17. The application stated that the assessee received notice of demand of Rs 1,67,41,980/-from CPC, Bangalore under reference no CPC/ 1617/C94/1803900360 dated 28-8-2018. The reason provided therein by CPC for raising of demand was non filing of Audit report in Form 108. The assessee thereafter filed Form 10B on 2-9-2018 and submitted application for Condonation of delay. 2. As no specific reason was given in the application for the delay in fling Audit Report in Form No. 10B, show cause notice was issued to the assessee vide letter dated 23-10-2018. In response to the show cause notice the assessee submitted a detailed reply vide letter dated 1211-2018 filed in this office on 13-11-2018. The assessee, in its reply, further submitted that the assessee trust is primarily running a school named lshvarlal Gulabbhai Desai Vidya Sankal providing education to the children from slum and low income group and it has been regularly filing its return of income and Form 10B on time. It was under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed in a particular case, mere fact that a default occurred due to some reason is not enough to establish the claim of genuine hardship. Discipline on time limits regarding uploading Audit report in Form no. 10B online have to be complied and respected, unless compelling and good reasons are shown and established for grant of extension of time. Extension of time cannot be claimed as a vested right on mere asking and on the basis of vague assertions without proof. 5. In determining whether genuine hardship is caused to the assessee, one has to see whether the delay in filing audit report in Form no. 10B electronically was due to a reasonable cause or not. In this case, delay is stated to be attributed to the Auditor. However in such a case on ehas to see whether the assessee pursued the matter due to diligence to get his audit report in Form no. 10B uploaded in time. 6. There is no details and evidences on record filed by the assessee in support of such contention. When the other functions of filing of return of income and other formalities were being taken care of by the said auditor then why such failure can be attributed on the accountant? The said plea taken by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 9-92019 requested for rectification of the order dated 19-8-2019. Accordingly, the assessee was given an opportunity of being heard on 27-112019. The assessee requested for adjournment. Accordingly, an another opportunity of being heard was given on 10-12-2019. The assessee again requested for adjournment vide letter dated 10-12-2019. Therefore, a final opportunity was given to the assessee on 9-12020. In response the representative of the assessee attended and case discussed. Further, the assessee furnished a letter dated 13-12020, wherein it was submitted that Form No. 10B was uploaded by the auditor of the assessee in the e-filing portal on 17.10.2016, however, as the trustees were unaware of the procedure they did not approve the Form No. 10B by the due date. The Form No. 10B was uploaded on 1.9.2018. The assessee has accordingly requested that the delay has occurred due to a bonafide reason and therefore, requested for rectification of the order dated 19.8.2019. 3. I have examined the submissions made by the assessee and also perused order dated 19.8.2019 passed u/s. 119(2)(b) of the I.T. Act (which is sought to be rectified by the assessee). In para nos. 5 6 of ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. In the case of Bombay Mercantile Cooperative 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 vs. Commissioner of Income Tax-III, ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, 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 vs. 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DT) 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 Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mally 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. vs. Deputy Commissioner of Income Tax, Circle 10(2) and others, reported in (2019) 261 taxmann.com 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 9.5 As recently as on 26.07.2022, in the case of Shailesh Vitthalbhai Patel (supra), the Division Bench of this Court, while considering the application for condonation of delay in the circumstances that the assessee had explained the delay by stating that the accountant who was handling the accounts was suffering from corona virus and therefore finalizing of accounts was not possible, referring to the Circular of the Board dated 09.06.2015, held as under: 5. Section 119(2)(b) of the Act reads as under, 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, authorise any income-tax authority, not being a Commissioner (Appeals) to admit an application or claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Board should consider is hardship to the party if delay is not condoned. The Board should condone the delay if failure to condone the delay cause genuine hardship to the assessee, no matter whether the delay in filling return is meticulously explained or no . 5.4 In Sitaldas K. Motwani vs. Director General of Income Tax and others [(2009) SCC online 2195], the Bombay High Court observed that words genuine hardship used in section 119(2)(b) should have been construed liberally. It was observed that refusing to condone the delay could result into a meritorious matter being thrown out the very threshold defeating the cause of justice. 5.5 Section 119(2)(b) of the Act is a statutory authorisation whereby the Board may authorise an income tax authority to hear an application or claim for any exemption, deduction, refund or for any other relief under the Act after expiry of period specified for the purpose in the relevant provisions of the Act for making such application. After hearing any such application post the expiry of period specified, the authority may deal with the same on merits in accordance with the law. It is avowed purpose of the provision in section 119(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed to the erroneous conclusion that it was not a good case of genuine hardship. 9.6 The Court held that the words in the section if it considers it desirable or expedient to do so for avoiding genuine hardship given wide powers on the Board and obligates the authority concerned dealing with the request for acceptance of the application, to consider the relevant facts and reasons which may have been advanced for condoning the delay. The object is to help the assessee, who for good and valid reasons is prevented from making an application. 10. Considering the conspectus of law and the facts of the case emerging from the record, it is not in dispute that the observations made in the impugned order regarding that the petitioner was a habitual defaulter is misconceived, as in three out of five years, there was no delay since the due dates were extended by the authorities. Moreover, in order to do substantial justice, the period of limitation would not come as hindrance as the loss suffered by the petitioner is genuine and not set off the same would result into denial of substantial justice. The three reasons given by the assessee for delay, namely, health problems of Senior A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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