Case Law Details
Sirez Limited Vs Union of India & Ors. (Supreme Court of India)
In Sirez Limited Vs Union of India & Ors., the issue concerned condonation of delay in filing the Income Tax Return (ITR) for Assessment Year (AY) 2018–19 under Section 119(2)(b) of the Income Tax Act, 1961. The petitioner filed its ITR on 20.09.2021 with a delay of 30 months beyond the extended due date of 31.10.2018. An application was made seeking condonation of delay to enable carry forward of business loss of Rs. 1,06,60,750/- and claim refund/credit of TDS amounting to Rs. 19,73,540/-. The Central Board of Direct Taxes (CBDT) rejected the application by order dated 23.11.2023.
The petitioner contended that delay occurred due to inter se disputes among directors and financial hardship. It was argued that the dispute led to resignations, operational disruption, and inability to ensure timely compliance. The petitioner also relied on various judicial precedents emphasizing liberal interpretation of “genuine hardship” and argued that refusal to condone would result in denial of benefits under Section 72 and loss of TDS credit.
The respondents opposed the plea, submitting that statutory timelines must be adhered to and that internal disputes do not constitute genuine hardship. It was pointed out that the petitioner had filed ITRs for AY 2017–18 and AY 2019–20, demonstrating capacity to comply. The respondents further contended that no documentary evidence substantiated the alleged disputes or extraordinary circumstances.
The High Court held that the delay of 30 months was substantial and that internal disputes among directors of a company, which is a separate legal entity, do not amount to genuine hardship. It observed that no documents were produced to prove that such disputes prevented filing of the return within the extended period. The Court distinguished the precedents relied upon by the petitioner, noting that in those cases, extraordinary circumstances or documented litigation had established genuine hardship. The Court concluded that allowing condonation on general grounds would dilute statutory timelines and legislative intent. Accordingly, the writ petition was dismissed.
Before the Supreme Court, the short issue framed was whether delay in filing the return of income can be condoned under Section 119(2)(b) of the Act. The Court noted prima facie that there was delay on the part of the petitioner in filing the return and that refusal to condone resulted in denial of carry forward of loss and TDS credit. The Supreme Court issued notice and listed the matter for further consideration, keeping the issue open.
Read HC Judgment in this case: Internal Director Disputes Not ‘Genuine Hardship’ for ITR Filing Delay: Delhi HC
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
Heard Mr. Santosh Kumar, the learned senior counsel appearing for the petitioner assessee.
2. It appears prima facie from the materials on record that there was a delay at the end of the petitioner in filing the Return of Income for AY Year 2018-2019.
3. The Central Board of Direct Taxes (CBDT) rejected the application filed by the petitioner under Section 119(2) (b) of the Income Tax Act, 1961 (for short, “the Act, 1961”) thereby declining to condone the delay.
4. The refusal to condone the delay has led to (i) denial of carry forward of business loss of Rs.1,06,60,750/-, and (ii) denial of refund/credit of TDS of Rs.19,73,540/-.
5. The short point that falls for our consideration is whether delay in filing the Return of income can be condoned under Section 119(2)(b) of the Act, 1961.
6. Issue notice.
7. The learned Advocate on Record shall serve one set of his entire paper book to Mr.Raghavendra P. Shankar, the learned ASG, at the earliest.
8. List on 09.03.2026.
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