Condonation of Delay in filing ITR under section 119(2)(b) – Lessor Used Tool

Condonation of Delay under Income Tax Act, u/s 119(2)(b) to File ITR-Lessor Used Tool

Recognizing the possibility of unforeseen circumstances and legitimate difficulties in the way to timely tax compliance, section 119(2)(b) of the Income Tax Act, 1961 (The Act), was placed in tax statute which provides essential support by allowing filling of ITR after due dates to such assessee, who face challenges in meeting crucial tax-related deadlines for valid reasons.

The provision and related guidelines on the one hand reflects the flexibility and fairness of the Indian tax system ensuring that assessee is not unfairly penalized for circumstances beyond their control, on the other hand it adhere to specific deadlines to ensure finality to the issues.

On comprehensive analysis of the provision regarding condonation of delay in filing ITRs, in the light of applicable Circular No. 11/2024 dt. 01.10.2024 (Earlier Circular No. 09/2015 dt. 09.06.2015), following moot points emerges:-

Steps in Application u/s 119(2)(b):-

1. File an application (manually) to the competent authority as applicable. The application should contain all the material facts alongwith evidence particularly as regards to : a) Circumstances due to which the delay was caused and b) Reasoning of the genuine hardship to be caused to the taxpayer if such a claim is not allowed. (The application for condonation of delay in EVC of ITR only may be filed online on the income tax portal in the ‘Condonation request’ section under the ‘services’ tab.)

2. Any Enquiries may be undertaken by office of JAO on the instance of competent authority and/or by the office of Competent Authority itself.

3. Assessee replies to notice issued by the AO/Competent authority from time to time seeking relevant information regarding the claim.

4. JAO finalize his enquiry report and send to competent authority through proper channel.

5. The Competent Authority will decide upon the merits of the case and pass an order under section 119(2)(b).

6. ITR u/s 119(2)(b) is to be filed mentioning the Document Identification Number (DIN) of the order at Part A-General Information-A19.

Some Judicial & Other Takeaways

• ^cBhavesh Ghanshyam Advani Vs CIT (ITAT Mumbai) in Appeal Number : ITA No. 5808/Mum/2017, ITAT Mumbai held that order of Commissioner passed under section 119(2)(b) of the Income Tax Act is not appealable before the ITAT and is appealable directly to the Sectary, CBDT or can be challenged before High Court.
• Honourable Supreme Court in B.M. Malani Vs. Commissioner of Income Tax, 174 Taxman 363 (SC) (2008) held that the Commissioner has the discretion not to accede to the request of the assessee, but that discretion must be judiciously exercised. Any compulsion to pay unjust dues as per se would cause hardship. Hon’ble Apex Court further held that 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). The ingredients of genuine hardship must be determined keeping in view the dictionary meaning thereof and 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.
• S. Bilawala v. Pr. CIT [2024] 158 taxmann.com 658/297 Taxman 464 (Bom.) ‘There cannot be a straight jacket formula to determine what is genuine hardship. In our view certainly the fact that an assessee feels he has paid more tax than what he was liable to pay will certainly cause hardship and that will be certainly a ‘genuine hardship’.’
• Honourable Bombay High Court in Sitaldas K. Motwani Vs. Director General of Income Tax (International Taxation), New Delhi, reported in 187 Taxman 44(Bom) (2010) held the term genuine hardship has to be construed liberally and that authority cannot examine refund closely to see, if the claim succeeds. The authority is not expected to go deep into the niceties of law.
• Ignorance of law is not excuse but at the same time no legal maxim which says that everybody knows full law. Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P. [1979] 118 ITR 326 (SC).
• Hon’ble ITAT AMRITSAR in [2003] 125 Taxman 268 (Amritsar) (Mag.)/[2003] ‘Ordinarily a plea as to the ignorance of law cannot support the breach of a statutory provision, but the fact of such an innocent mistake due to ignorance of the relevant provisions of law coupled with the fact that the transactions, in question, were genuine and will constitute a reasonable cause.’
• Hon’ble High Court of Bombay in CG Power and Industrial Solutions Ltd. v. Assistant Commissioner of Income-tax[2024] 162 Taxman 315 (Bombay) ‘Respondent should keep in mind, while considering an application of this nature, that the power to condone the delay has been conferred to enable the authorities to do substantial justice to the parties by disposing the matters on merits.’ SLP of the Department dismissed by Hon’ble Supreme Court of India in *2025] 170 taxmann.com 542 (SC)
• Rajan v. Principal Commissioner of Income-tax, Calicut (164 Kerala 2016) Kerala High Court ‘It was contended that the petitioners health condition was so poor that he could not make necessary arrangements for initiating the return filing process. The court held that it would only be appropriate to condone the delay.’
• Artist Tree (P.) Ltd vs The CBDT (2014) (52 Taxman 152), Bombay High Court ‘One of the grounds for delay in filing was misplacement of TDS certificates due to change in the office, and considerable time was spent to re-extract these certificates resulting in delay. The court considered it a case of genuine hardship.’
• Optra Health Pvt. Ltd. v Addl. CIT (HQ) *Writ Petition No. 15544 of 2023 dated 19-12-2023], Bombay High Court ‘The Legislature has conferred the power to condone the delay to enable the authorities to do substantial justice to the parties by disposing the matters on merits. The expression ‘genuine’ has received a liberal meaning in view of the law laid down by the Apex Court and while considering this aspect, the authorities are expected to bear in mind that ordinarily the applicant, applying for condonation of delay does not stand to benefit by lodging erroneous returns. Refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties…………. A litigant does-not stand to benefit by resorting to delay in fact, he runs a serious risk.’
• Hon’ble High Court of Punjab and Haryana in Shyam Sunder Nirankari v. Commissioner of Income-tax, Karnal *2016] 65 com 104 (Punjab & Haryana) Wherein assessee pleaded reasonable cause as his family life had remained disturbed on account of his field duty, being a distributor of ‘Cable Master’ in State of Haryana; and that his TDS certificates had got misplaced – On the facts of the case Hon’ ble Court held that since assessee had miserably failed to convince that he had any ‘genuine hardship’ in filing his income-tax return late by 30 months, no benefit under section 119(2) could be given to him.
• Benefit of Circular:- No. 14(XL-35), dated 11-4-1955 one may also plead the circular in such proceedings as the circular contains some beneficial rules such as Para No. 3(a) of the Circular which makes it duty of the officer to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs.  The purpose of the circular itself was emphasized that department should not take advantage of an assessee’s ignorance to collect more tax out of him than is legitimately due from him.

Notes:

^a One can approach Board for other relief/s in accordance with provisions of Section 119.

^b W.e.f. 01.10.2024 and earlier, it was six years. Further in case of refund claim arisen consequent to a Court Order, the period of pendency of proceedings before Court is be excluded.

^d Reasonable Cause is not defined under the Act, it will be read as per the established law as interpreted by the competent courts.