Mentaura Technologies Pvt Ltd Vs PCIT (Delhi High Court)
The Delhi High Court dismissed a writ petition challenging the rejection of an application filed under Section 119(2)(b) of the Income Tax Act seeking condonation of delay in filing Form 10-IC for claiming concessional tax benefits under Section 115BAA for AY 2020-21. The petitioner had filed its return of income on 03.02.2021 but failed to furnish Form 10-IC within the prescribed time. Subsequently, on 20.01.2025, the petitioner sought condonation of delay relying on CBDT Circular dated 18.11.2024, stating that both directors of the company, who were husband and wife, had contracted COVID-19 and therefore could not complete the filing process in time. The Commissioner rejected the application, holding that it was filed beyond the permissible three-year limitation period prescribed under the CBDT Circular and that the reasons furnished did not justify prolonged non-compliance, especially when the income tax return itself had been filed within time. Before the Court, the petitioner argued that the beneficial circular should be interpreted liberally to address genuine hardship, particularly because AY 2020-21 was the first year requiring filing of Form 10-IC. The Court observed that the Commissioner should not have adopted a hyper-technical approach while considering the COVID-related explanation supported by medical records and noted that beneficial circulars must generally be interpreted in a manner consistent with their purpose. However, the Court held that the language of the CBDT Circular clearly imposed an outer limit of three years from the end of the relevant assessment year for filing condonation applications. It further observed that the Circular dated 18.11.2024 was issued in supersession of earlier CBDT Circulars dated 17.03.2022 and 23.10.2023, and was intended to apply to pending applications while extending relief to subsequent years. Since the petitioner filed the condonation application only on 20.01.2025, whereas the last permissible date for AY 2020-21 was 31.03.2024, the application was held to be barred by limitation. The Court also noted that the petitioner had neither filed Form 10-IC nor sought condonation for AYs 2021-22 and 2022-23. Holding that a beneficial circular cannot be interpreted beyond its express language, the Court upheld the Commissioner’s order and dismissed the writ petition.
