Introduction: The Allahabad High Court recently addressed a case involving the refusal to condone a delay in filing Income Tax Returns (ITRs) that occurred more than two decades ago. In the case of Sri Kailash Chand Agarwal vs. Principal Commissioner and Another, the Court quashed the decision made after such a prolonged delay. This article provides a detailed analysis of the court’s ruling and the implications for similar cases.
The Delayed ITR Filing
The petitioner filed two Income Tax returns for the assessment years 1994-95 and 1995-96 on 30th March 1998. These filings were significantly delayed, with a delay of 1095 days for one return and 730 days for the other. The original due dates for filing these returns were 30th June 1994 and 30th June 1995, respectively. The petitioner also submitted delay condonation applications along with the returns.
The Legal Framework
The petitioner’s case revolves around Section 119(2)(b) of the Income Tax Act, which empowers the Board to issue circulars authorizing officials to condone delays in various situations. The petitioner’s argument is based on the existence of a circular dated 9th June 2015, which, according to them, had a similar provision in place at the time when the returns were filed.
The Petitioner’s Contentions
The petitioner’s counsel argued that if the delay condonation application had been granted within the stipulated six months, as provided in various circulars, the case would have been decided on its merits. The petitioner’s contention is that after more than 20 years, it is unreasonable for the official to claim that the records could not be located, as all records should have been available at the time of the original application.
The Department’s Response
The Department’s counsel countered that the returns for the assessment years 1994-95 and 1995-96 were not filed within the prescribed time limits, rendering them nonest returns. Therefore, the Department contended that these returns could not be considered or examined.
The Court’s Decision
The Court acknowledged that the delay condonation applications should have been decided promptly when filed in 1998, at which time all records would have been available. Considering the Department’s commitment to reconstruct the records and obtain necessary receipts, the Court set aside the order dated 24th October 2019, which was passed more than 20 years after the application, citing unavailability of records.
Conclusion: In the Sri Kailash Chand Agarwal vs. Principal Commissioner and Another case, the Allahabad High Court emphasized the importance of timely decision-making in cases involving delayed ITR filings. The Court’s decision to quash the order, coupled with the Department’s commitment to reconstruct records, underscores the need for efficient and timely processing of such cases to ensure fair treatment for taxpayers. This ruling serves as a reminder of the significance of adhering to statutory timelines and the principles of natural justice in tax matters.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Sri Shambhu Chopra, learned Senior Counsel, assisted by Ms. Mahima Jaiswal leaned counsel for the petitioner and Sri Gaurav Mahajan learned counsel for the Department.
2. The petitioner filed two Income Tax returns for the assessment years of 1994-95 & 1995-96 on 30.3.1998 with a delay of 1095 days & 730 days respectively. The last dates of filing of those returns for the assessment years 1994-95 & 1995-96 were 30.6.1994 & 30.6.1995 respectively. The returns were accompanied with delay condonation applications.
3. Learned counsel for the petitioner has stated that the Board under Section 119(2)(b) of the Income Tax Act has been issuing circulars from time to time authorizing its officials to condone the delay. Learned counsel for the petitioner has submitted, relying upon a circular dated 9.6.2015, that similar circular was in existence at the time when the petitioner had filed Income Tax Returns along with the delay condonation applications.
4. It is the contention of the learned counsel for the petitioner that if the delay condonation application had been allowed in the year 1998 itself within 6 months as is provided in various circulars then the record would have been available and the case would have been decided on merits.
5. Learned counsel for the petitioner, therefore, submits that when the case was being decided after more than 20 years it did not lie in the mouth of the official who passed the order to say that the record could not be located and, therefore, the case could not be decided.
6. Learned counsel for the petitioner has submitted that no notice etc. was served upon the petitioner for presenting himself while the order was passed. Had that been done, the petitioner would have supplied the receipts of the TDS etc.
7. Learned counsel for the Department, in reply, however, has submitted that the return which was for the assessment years of 1994-95 & 1995-96 were not filed within the limitation provided i.e. till 30.6.1994 and 30.6.1995 respectively and therefore they had become nonest Returns, which could not be looked into.
8. However, learned counsel for the Department has submitted that if another opportunity is given to the Department to pass an order then every effort shall be made to reconstruct the record after including the TDS receipts etc. which could be obtained from the petitioner and he has further submitted that the petitioner shall also be afforded an opportunity of proper hearing.
9. Having heard the learned counsel for the petitioner and the learned counsel for the Department we are of the view that when the delay condonation application was filed on 30.3.1998 then the applications ought to have been decided within the time provided by the Act. The Court is definitely of the view that at that point of time all the records would have been available.
10. However, in view of the submission made by the learned counsel for the Department, we are of the view that the order dated 24.10.2019, which has been passed after more than 20 years of the filing of the applications on the ground that the records were not available, deserves to be set aside. The order is accordingly quashed.
11. The Principal Commissioner, Income Tax Department -I, Agra shall now decide the applications of the petitioner which were filed on 30.3.1998 afresh. While deciding the application every effort shall be made to get the record re-constructed with the help of the petitioner and all available records.
12. With these observations, the writ petition is disposed of. Order Date :- 11.8.2023