Square Vision India Pvt Ltd Vs PCIT (Delhi High Court)
Delhi High Court has set aside an order by the Principal Commissioner of Income Tax (PCIT)-7, Delhi, which had rejected an application from Square Vision India Pvt Ltd seeking condonation for a one-day delay in filing its Income Tax Return (ITR) for Assessment Year (AY) 2016-17. The High Court’s ruling emphasizes the principle of genuine hardship under Section 119(2)(b) of the Income Tax Act, 1961.
The petitioner’s ITR for AY 2016-17 was due by October 17, 2016, an extended deadline set by the Central Board of Direct Taxes (CBDT). Along with the ITR, the company was required to file its tax audit report and Form 10CCB to claim a deduction under Section 80IC of the Act. Square Vision India Pvt Ltd stated that both the tax audit report and Form 10CCB were successfully uploaded online on October 17, 2016, at 6:28 PM and 6:42 PM, respectively. However, the company claimed that despite best efforts, it was unable to upload the ITR form on the same day due to alleged technical glitches on the income tax portal. The ITR was eventually uploaded on October 18, 2016, a day after the deadline.
Subsequently, the petitioner’s return was processed, and an intimation dated January 11, 2017, issued under Section 143(1) of the Act, disallowed the Section 80IC deduction of ₹15,73,413. This disallowance was directly attributed to the one-day delay in filing the return, leading to an increased assessed income of ₹49,90,690 against the declared ₹34,17,280.
In response, Square Vision India Pvt Ltd filed a rectification application under Section 154 of the Act on October 22, 2018. On the same date, it submitted an application under Section 119(2)(b) of the Act, seeking condonation for the one-day delay.
The Revenue, in its counter-affidavit, disputed the claim of a technical glitch on its portal, providing data on the hourly volume of ITRs filed on October 17, 2016, to demonstrate that the portal was functional. While acknowledging the successful upload of the tax audit report and Form 10CCB by the petitioner on the deadline, the Revenue contended that many other taxpayers managed to file their returns between 7:00 PM and midnight on the same day.
The High Court, however, adopted a nuanced view. While it found the Revenue’s contention regarding the absence of a general technical glitch in the portal acceptable, it found it “difficult to disregard the petitioner’s assertion that it had faced technical difficulties in uploading its ITR.” The court reasoned that there could be “myriad technical reasons” for such an issue, including a localized glitch or human error on the petitioner’s side. Crucially, the court was “persuaded to accept this also for the reason that there is no plausible reason for the petitioner to have refrained from filing its ITR after having commenced the process and uploaded two vital documents that were to be filed along with the ITR.” The court emphasized that the petitioner’s income could, in any event, be ascertained from the already submitted documents.
The judgment underscored that Section 119(2)(b) of the Act is designed to provide relaxation in cases of genuine hardship. The court asserted that the petitioner’s situation, where it was unable to complete the filing despite commencing the process, clearly falls under the category of genuine hardship. The court deemed the PCIT’s denial of a single-day relaxation in such circumstances as “unsustainable.”
Furthermore, the High Court addressed the second ground for rejection by the PCIT: that the application was filed beyond the six-year limitation period from the end of the relevant assessment year. The court found this reasoning “patently erroneous.” It noted that the impugned order itself recorded the petitioner’s claim of having initially filed the application under Section 119(2)(b) on October 22, 2018. Subsequent applications filed in 2020, 2021, and 2024 were merely reiterations of the original request due to a lack of response from the PCIT. The court highlighted that this fact was neither contested in the impugned order nor in the Revenue’s counter-affidavit, thus accepting it as correct.
Consequently, the Delhi High Court set aside the PCIT’s impugned order and directed that the petitioner’s application under Section 119(2)(b) be allowed. The delay of one day in filing the ITR for AY 2016-17 is now officially condoned. The petition was allowed in these terms, and the pending application was also disposed of. This ruling reinforces the judiciary’s approach towards a liberal interpretation of “genuine hardship” in tax matters, especially when minor procedural delays occur despite demonstrable efforts by the taxpayer.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
