In the case of Balaji Super Alloys Vs. PCIT, the Madras High Court examined the issue of condoning a 21-second delay in filing the Income Tax Return (ITR) and its impact on the claim of deduction under Section 80IA of the Income Tax Act, 1961.
The petitioner, Balaji Super Alloys, challenged the order passed by the Principal Commissioner, Coimbatore, which disallowed the deduction under Section 80IA due to a 21-second delay in filing the ITR for the assessment year 2020-2021. The court acknowledged that while the rejection of the deduction was justified, the delay was minimal and could be seen as a human error. The court deemed it appropriate to condone the delay and allowed the deduction claim.
The court emphasized the importance of timely compliance with statutory obligations, especially for companies like Balaji Super Alloys. However, it also noted that the software’s automated portal closure at midnight might have contributed to the delay. The court held that the decision to reject the condonation request should have been approached with a more lenient perspective.
Conclusion: In the case of Balaji Super Alloys Vs. PCIT, the Madras High Court’s judgment sets a precedent by condoning a minor delay in filing the ITR and upholding the claim for Section 80IA deduction. The ruling highlights the significance of adhering to filing deadlines and the need for businesses to exercise due diligence in statutory compliances. While the rejection of deductions for late filings is reasonable, the court’s decision underscores the consideration of human errors and substantial justice in such matters.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner is a company and has challenged order dated 24.11.2022 passed by the sole respondent, Principal Commissioner, Coimbatore under Section 119(2)(b) of the Income Tax Act, 1961 (in short ‘Act’) and a subsequent order passed by the respondent on 03.03.2023 rejecting the representation filed by the petitioner on 15.02.2023.
2. The petitioner has filed a return of income for assessment year (AY) 2020-2021 on 16.02.2021. Admittedly, the return had come to be uploaded only on 00.00.21 am of 16.02.2021, with a delay of 21 seconds, as the last date for filing of return was 15.02.2021 midnight.
3. This is explained by the petitioner at paragraph 5 of its affidavit to the effect that the return had been prepared in Extensible Markup Language (XML) format on 15.02.2021 and filed at 11.59 p.m. However, it so happened that the uploading of the return took place 21 seconds later. Hence, and on the basis that the return of income had been uploaded belatedly, the intimation issued under Section 143(1) on 24.12.2021 disallowed the claim of deduction under Section 80IA of the Act and a consequential demand was raised.
4. The petitioner thus sought condonation of the delay of 21 seconds for filing return of income which had come to be rejected by the respondent vide order dated 24.11.2022, wherein it is stated that the return of income had been due on or before 10.01.2021, not noticing that the time had been extended till 15.02.2021. This necessitated the petitioner to approach the respondent by way of a rectification petition dated 15.02.2023, which has also been dismissed on 03.03.2023, the respondent stating that the error in date only constitutes a typographical error.
5. There is nothing untoward in the rejection of the deduction under Section 80IA for the reason that the return has admittedly been uploaded belatedly. However, the quantum of delay is not substantial, being 21 seconds. Undoubtedly, the petitioner ought not to have undertaken the exercise of filing of the return literally at the last second, but in my considered view, the 21 seconds delay could be considered to be a human error and condoned, bearing in mind the dictates of substantial justice.
6. Even as per the affidavit filed in support of the Writ Petition, the return had been filed only at 11.59 p.m. on 15.02.2021. The petitioner, being a company, ought to have ensured that the filing of return was sufficiently in time factoring in possible glitches or technical difficulties.
7. The defence of the learned Standing Counsel is that there is nothing wrong in the rejection of the return, since the software is so programmed to automatically close the portal at midnight. This may well be right. However, the request for condonation has been considered not by a machine but a human being, who, in my view, could well have considered the request in proper perspective, condoning the delay of 21 seconds.
8. For the aforesaid reasons, the impugned orders are set aside and the delay is condoned. The return of the petitioner for assessment year 2020-2021 shall be taken to have been filed in time with all consequences thereof. The petitioner will ensure that, henceforth, statutory compliances and due diligence are effected well in time.
9. This Writ Petition stands allowed. No costs. Connected Miscellaneous Petitions are closed.