Delay in filing return due to sufficient cause should be condoned

Brief of the case:

• The Hon’ble Madras High court in the above cited case held that in deciding the application for condonation of delay in filling return of income the approach of the CBDT should be justice oriented so as to advance the cause of justice.
• Therefore, delay in filling return due to reasons beyond control of the assessee (sufficient cause) where such delay causing it a genuine hardship should be condoned by CBDT.
  

Facts of the case:

• The assessee company filed its return of income in midnight on 16.10.2010. As per Section 139 of the Income Tax Act, 2006, the due date for filing of returns is on 30th September of the relevant Assessment year. For the AY under dispute the Ministry of Finance-Government of India vide notification in No.402/92/2006-MC (42 of 2010) dated 29.09.2010 has extended the last date for filing of income tax returns from 30.09.2010 to 15.10.2010 on account of disturbance caused by floods.
• The assessee (petitioner) stated that on 15.10.2010, they had been trying to upload their returns on the online website of the Income Tax Department since 7.00 P.M. However, due to the last hour rush and due to technical snags in the web site of the Income Tax Department, the said return could not be uploaded on 15.10.2010 but only in the midnight of 15.10.2010 and hence, the date of filing has been reckoned by the Income Tax Department as 16.10.2010.
• During assessment proceedings, the AO took the date of filing of the return as 16.10.2010 and completed the assessment under Section 143(3) of the Act on 13.03.2013, allowing the carry forward loss of Rs.1,17,38,726/- .The AO did not treat the original return to be filed belatedly under Section 139(1) of the Act.
• The CIT proposed to revise the aforesaid assessment order under Section 263 of the Act for the this assessment year 2010-11 as according to him allowing carry forward of losses to the assessee under Section 143(3) is erroneous and prejudicial to the interest of revenue inasmuch as the Petitioner Company has filed their return beyond the last date of filing i.e., 15.10.2010.The application for condonation in filling the return of income was made by assessee before Central Board of direct Taxes u/s 119. CBDT rejected the application.
• Aggrieved by such rejection , assessee filed writ petition before Madras HC.
  

Contention of the Assessee:

• The learned counsel for assessee submitted that there was no justifiable reason to condone the delay in filing the return of their income by the petitioner company because one of the reason of dealy in filling e-return was technical snag in the income tax website.
• Further, in the similar circumstances the Hon’ble Bombay HC in the case of Cosme Matias Menezes (P) Ltd., V. Commissioner of Income Tax, Goa reported in 2015 (379) ITR 31 (Bombay) has held that the CBDT has got jurisdiction to condone the delay in filing the returns of income which if given sufficient reason by the petitioner/assessee for filing the return belatedly, the same can be condoned by it in the interest of assessee.
  

Contention of the Revenue:

• The learned counsel for the department submitted that the petitioner has not given sufficient cause for the condonation of delay and therefore, the CBDT has rightly rejected the petition for condonation of delay. In support of his contention, the learned counsel relied upon the judgment of High Court of Gujarat in Vahid K.Ravji vs. Central Board of Direct Taxes and others reported in 2009 (24) DTR 0268, wherein the Hon’ble Gujarat HC  held that in the absence of genuine hardship caused to the petitioner, the delay in filing the return cannot be condoned.

Held by Hon’ble Madras High Court:

• High court observed that the petitioner has satisfactorily explained the delay in filing the return on 16.10.2010 instead of 15.10.2010 and obviously the reason given by assessee that there was technical snag in the website of IT department was valid enough to prevent assessee to file return on due date (15.10.2010) and as a result could upload the return in midnight after 12PM of 15.10.2015 with a delay of approximately 2 hours only.
• Further, it is not the case of department that that the petitioner is otherwise not entitled to claim the carry forward loss under Section 139(3) of the Act. When the petitioner is entitled to claim the carry forward loss under Section 139(3) of the Income Tax Act, it cannot be stated that the delay in filing the return had occurred deliberately or on account of culpable negligence or on account of malafide intention.
• Further, the petitioner do not stand to benefit by resorting to delay as held by the High Court of Bombay. In fact, it runs a serious risk.
• Moreover, since the petitioner explained a valid reason which prevented it to file return on due date and delay involved was only 2 hours (approx.), in such case the approach of CBDT should be justice oriented so as to advance the cause of justice.
• Therefore, the petitioner delay should be condoned and should be allowed to carry forward loss. In result the writ petition was allowed.