Case Law Details
Oneness Educational Vs CIT (Exemption) (Orissa High Court)
Orissa High Court ruled in favor of Oneness Educational Trust, an educational and charitable institution registered under Section 12A of the Income Tax Act, 1961. The case arose after the trust’s tax exemption claims were disallowed due to a delay in filing the audit report in Form-10B for Assessment Year (AY) 2021-22. This led to a tax demand of ₹5.47 crore. Additionally, the trust inadvertently failed to claim a past deficit of ₹5.41 crore against its income for AY 2021-22, which would have reduced its tax liability. In an attempt to rectify the error, the trust filed an appeal and a rectification request under Section 154 of the Act. When these efforts were unsuccessful, it applied under Section 119(2)(b) seeking condonation of delay for filing a revised return to claim a refund of ₹21,350. However, the application was rejected by the tax authorities on the grounds that the trust had originally filed its return after due consideration and had sufficient time to submit a revised return earlier.
The High Court found the rejection arbitrary and contrary to the purpose of Section 119(2)(b), which allows for condonation of delays to prevent genuine hardship. The court noted that the First Appellate Authority had acknowledged the trust’s claim regarding the deficit but required it to be pursued through a revised return. Since the trust had followed this recommendation, the rejection of its condonation request was unjustified. The court quashed the tax authority’s order and directed them to take further action in accordance with the law. The ruling reinforces the principle that tax authorities should consider genuine hardships and procedural fairness when assessing condonation requests.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
The petitioner, by means of this writ petition, seeks to quash the order dated 22.01.2024 under Annexure-1, by which opposite party no.1 has rejected his application filed under Section 119(2)(b) of the Income Tax Act, 1961 for condonation of delay in filing the revised return of income claiming refund for the assessment year 2021-22, and to issue direction to the opposite party authority to allow all consequential reliefs, allowances, deductions and exemptions as permissible under the Act.
2. The factual matrix of the case, in brief, is that the petitioner is an educational and charitable trust constituted by execution of trust deed dated 16.08.2008 for educational and charitable purposes. It has been duly registered under Section 12A(1)(aa) of the Income Tax Act, 1961 (for short “I.T. Act”), as per registration certificate dated 30.06.2017 and the said registration has been renewed from time to time. In terms of the said registration, the petitioner is entitled to get exemption under Sections 10(23C), 11 & 12 of the I.T. Act and subjected to nil taxable income and such exemptions have been granted to the petitioner since the date of registration.
2.1. For the assessment year 2021-22, the petitioner had filed its return of income on 15.03.2022 claiming exemption/deduction as available under Section l1 of the I.T. Act. While processing the return of income under Section 143(1) of I.T. Act, the exemption claimed by the petitioner was disallowed on the ground of delay in filling audit report in Form-10B, which was to be done before one month from the due date of filling of return of income and, thereby, a demand of Rs.5,47,24,100/-was raised by issuing order under Section 143(1) of the I.T. Act. At the beginning of the financial year 2020-21, the petitioner accumulated deficit of Rs.5,41,52,906/-, as evident from the audited financial statement for the financial year 2019-20. During the financial year 2020-21 corresponding to the assessment year 2021-22, there was one time settlement (0TS) of loan availed from its Banker-Union Bank of India and an amount of Rs.6,36,03,707.49 was sacrificed by the said banker in the OTS. Although the petitioner has never claimed the loan principal amount as income or repayment as application and further the accumulated interest also remained unabsorbed and duly reflected as deficit in the balance sheet, the said sacrificed amount of Rs.6,36,03,707.49 was shown as income and included in the total income of Rs.10,39,22,994.49 in the audited income and expenditure account of the petitioner for the financial year 2020-21. Further, the past accumulated deficit of Rs.5,41,52,906.70 was not adjusted in the said audited income and expenditure account, which resulted in excess of income over expenditure of Rs.6,37,56,104.56. The petitioner inadvertently failed to claim such deficit in the return of income filed for the assessment year 2021-22. Consequently, it filed First Appeal bearing No. NFAC/2020-21/10199005 before the Commissioner of Income Tax (Appeal) assailing the order dated 27.10.2022 processing the return under Section 143(1) of the I.T. Act. Upon discovering the apparent mistake, the petitioner also filed a rectification petition under Section 154 of the I.T. Act seeking rectification of the intimation order under Section 154 of the I.T. Act.
2.2. Opposite party no.2-Assessing Officer, vide order dated 21.06.2023 rejected the rectification petition filed by the petitioner under Section 154 of the I.T. Act stating that the mistakes pointed out in the order under Section 143(1) of the IT Act are not coming within the purview of Section 154 of the I.T. Act. While rejecting the application of the petitioner, opposite party no.2 did not dispute the claim of the petitioner regarding non-adjustment of accumulated deficit. In the meantime, on the application of the petitioner, opposite party no.1, vide order dated 23.08.2023, in exercise of power under Section 119(2)(b) of the I.T. Act, condoned the delay in filling Form-10B. Consequently, the Assessing Officer, by giving effect to the order dated 23.08.2023 passed by opposite party no.1, rectified the demand raised in the intimation under Section 143(1) of the IT Act by reducing it from Rs.5,47,24,000/- to Rs.3,29,30,185/- vide rectification order dated 30.08.2023.
2.3. The petitioner took additional grounds regarding rejection of the rectification application before the First Appellate Authority by filing grounds of appeal agitating about not allowing the set off of past deficit as application of income. The petitioner further stated about its inadvertent mistake in claiming the past deficit of Rs.5,41,52,906.70 against the current year’s income under Section 11(1) of the I.T. Act. It highlighted that a bare look at its audited statement for the Financial Year 2019-20 & 2020-21 would reveal that the petitioner has complied with the requirement under Section 11(1) of the I.T. Act and it also referred to the judgments of the Supreme Court governing the field. But, the Appellate Authority, however, failed to consider this aspect of the matter and dismissed the appeal by observing that the claim of the petitioner, that in the return it had not set off the past years’ deficit against the income on account of interest waiver under the 0.T.S. by the Bank, can only be considered if the petitioner files revised return claiming such set off. It was further observed that if the time limit for filing revised return has lapsed, the only remedy available to the petitioner is, to make application under Section 119(2)(b) of the IT. Act.
2.4. The Central Board of Direct Taxes (CBDT) issued circular no.09 of 2015 dated 09/06/2015 containing comprehensive guidelines to deal with applications for condonation of delay in filing returns inter alia claiming set off under Section 119(2)(b) of the I.T. Act. The said circular was modified on 31.05.2023 vide circular no.07 of 2023 to the extent of revising the monetary limits for applications for condonation of delay.
2.5. The petitioner, in terms of the said circulars, filed application dated 16.10.2023 registered on 27.10.2023 under Section 119(2)(b) of the I.T. Act before opposite party no.1 seeking condonation of delay in filing revised return of its income to claim refund of Rs.21,350/- for the assessment year 2021-22. In the said application, the petitioner stated that at the time of filing of its return of income for the assessment year 2021-22, it had erred in claiming the past deficit of Rs.5,41,52,906.70 against the current year’s income under Section 11(1) of the I.T. Act of Rs.6,37,56,104.56 as application of income and offered the said total income of Rs.6,37,56,104.56 as income chargeable to tax. Had the past deficit of Rs.5,41,52,906.70 been claimed as application of income, the net surplus would have been Rs.96,03,197.86, which is 9.24% of the total income. In other words, the petitioner had applied 90.76% of its total income against the requirement of 85% of the total income which complies with the requirement under Section 11(1) of the I.T. Act. Such allowing of set off of previous years’ deficit against income of the assessment year 2021-22 would entitle the petitioner to a refund of Rs.21,350/-. The petitioner also referred the judgments of the Supreme Court and other High Courts holding that any excess expenditure incurred by the Trust/Charitable Institution in earlier assessment year could be allowed to be set off against income of subsequent years in terms of Section 11 of the IT. Act. Under the circumstances, the petitioner prayed for condonation of delay in filing the revised return of income claiming refund of Rs.21.350/- for the assessment year 2021-22 by annexing comparative statement of computation as per the original return filed and proposed revised return.
2.6. Opposite party no.1 in utter disregard to the statutory provisions under Section 119(2)(b) of the I.T. Act as well as the governing circulars, vide order dated 22.01.2024 under Annexure-1, rejected the application filed by the petitioner for condonation of delay in filing the revised return stating that the petitioner having filed the original return of income after due consideration with an undertaking that the said information is correct and in spite of enough time, no revised return of income having been filed, the genuine hardship for non-filing of revised return of income is not justified. Hence, this writ petition.
3. Mr. G.M. Rath, learned counsel along with Mr. S.S. Padhy, learned counsel appearing for the petitioner vehemently contended that the order dated 22.01.2024 under Annexure-1 passed by opposite party no.1 in rejecting application for condonation of delay in filing the revised return is in utter disregard to the statutory provision contained in Section 119(2)(b) of the I.T. Act as well as the circular no.09 of 2015 dated 09.06.2015 issued by the CBDT. Thereby, the order so passed by opposite party no.1 is arbitrary, unreasonable and contrary to the provisions of law which cannot be sustained in the eye of law. It is further contended that Section 119(2)(b) of the I.T. Act empowers CBDT to issue order authorizing any income tax authority to condone the delay in filing revised return claiming refund if the same is considered desirable or expedient so as to avoid genuine hardship to an assessee. Therefore, opposite party no.1 has not applied its mind to that effect and has not made any endeavor to see that the claim made by the petitioner is correct or genuine or whether there is any genuine hardship on merits caused to the petitioner. Instead of doing so, opposite party no.1 rejected the application merely observing that the petitioner had filed the original return of income after due consideration and undertaken that the information so submitted is correct and has not filed the revised return in time. It is further contended that opposite party no.1 has failed to consider that it is only to avoid genuine hardship to the assesses, who have not been able to comply with the provisions under the I.T. Act within the time stipulated therein that such power has been vested with the CBDT to issue appropriate order to deal with such belated claims. It is further contended that the First Appellate Authority in its order dated 27.12.2023 while considering the propriety of rejection of the rectification application of the petitioner, has categorically observed that the claim of set off of past years’ deficit against the income on account of interest waiver under OTS can only be made by filing revised return and seek condonation of delay for revised return in terms of Section 119(2)(b) of the I.T. Act. Therefore, invoking such provision if the application was filed for condonation of delay, the same could not have been rejected. It is further contended that the petitioner, in the application for condonation of delay, highlighted the genuine hardship caused to it due to non-consideration of its claim and further highlighted that in the audited balance sheet, the accumulated deficit of Rs.5,41,52,906/- although has been adjusted against the excess of income over the expenditure, yet such deficit has inadvertently not been claimed in the return of income. Further, if such past years’ deficit of Rs.5,41,52,906/- is claimed as an application of income, then the next surplus would be 9.24% of the total income, which is within the mandated 15% as per Section 11(1) of the I.T. Act. Therefore, it is contended that the order dated 22.01.2024 under Annexure-1 passed by opposite party no.1 rejecting the application of the petitioner for condonation of delay in filing the revised return is arbitrary, unreasonable and illegal, which warrants interference of this Court at this stage.
To substantiate his contentions, learned counsel for the petitioner has relied upon Commissioner of Income Tax (Exemptions) v. Subros Educational Society, (2018) 11 ITR-OL 468; Shree Maharaja Agrasen Seva Sansthan v. Commissioner of Income Tax (Exem), MANU/GJ/3206/2022; Dr. Sujatha Ramesh v. Central Board of Direct Taxes and Anr., 2017 SCC OnLine Kar 6868 and G.V. Infosutions Pvt. Ltd. v. Deputy Commissioner of Income-tax and Anr., 2019 SCC OnLine Del 6861.
4. Mr. S.C. Mohanty, learned Senior Standing Counsel appearing for the opposite parties, while justifying the order dated 22.01.2024 passed by opposite party no.1, contended that no illegality has been committed in the said order and, as such, the impugned order has been passed by the competent authority after due application of mind considering the merits and facts of the case and it does not suffer from any infirmity, as alleged by the petitioner. It is further contended that the contention raised by learned counsel for the petitioner, that the order dated 22.01.2024 passed by opposite party no.1 rejecting the application filed under Section 119(2)(b) of the I.T. Act for condonation of delay is illegal and complete disregard to the CBDT circulars governing the field, is factually incorrect. It is further contended that the petitioner has failed to demonstrate the genuine hardship or sufficient cause that prevented it from filing the revised return within the prescribed time, as per applicable circulars of the CBDT and judicial precedents, which require such hardship to be proved by cogent evidence. It is further contended that at the time of considering the case under Section 119(2)(b) of the I.T. Act, the petitioner shall ensure that the income/loss declared and/or refund claimed is correct and genuine and also that the case is of genuine hardship on merits. Opposite party no.1 is empowered to direct the jurisdictional Assessing Officer to make necessary enquiries or scrutinize the case in accordance with the provisions of the Act to ascertain the correctness of the claim. If the petitioner failed to justify the genuine hardship on merits that prevented it from filing revised return, the rejection of the application for condonation of delay in filing the revised return is well justified. It is further contended that the delay has not been substantiated with cogent explanation and evidence which is a pre-requisite for condonation. It is further contended that the petitioner has not explained each day’s delay, as required under the law laid down by the apex Court in Ranka & Others v. Rewa Coalfields, AIR 1962 SC 361. Therefore, it is contended that the order dated 22.01.2024 under Annexure-1 passed by opposite party no.1 in rejecting the application of the petitioner for condonation of delay in filing the revised return is well justified and it does not warrant interference of this Court at this stage and, therefore, seeks for dismissal of the writ petition.
5. This Court heard Mr. G.M. Rath, learned counsel appearing for the petitioner and Mr. S.C. Mohanty, learned Senior Standing Counsel appearing for the opposite parties in hybrid mode. Pleadings have been exchanged between the parties and with the consent of learned counsel for the parties, the writ petition is being disposed of finally at the stage of admission.
6. Before delving into the merits of the case, for better appreciation, certain provisions of Income Tax Act and circulars are extracted hereunder.
Section 119(2)(b) of the Income Tax Act reads as follows:-
“119. Instructions to subordinate authorities.
1. xxxxx xxxxx xxxx
2. Without prejudice to the generality of the foregoing power:-
a) xxxx xxxx xxxx
b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorize to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law; ”
Clause Nos.3 to 5 of Circular No.09 of 2015 (F.No.312/22/2015-OT) dated 09.06.2015 CBDT read as follows:-
“3. No condonation application for claim of refund/loss shall be entertained beyond six years from the end of the assessment year for which such application/claim is made. This limit of six years shall be applicable to all authorities having powers to condone the delay as per the above prescribed monetary limits, including the Board. A condonation application should be disposed of within six months from the endo f the months in which the application is received but the competent authority, as far as possible.
4. In a case where refund claim has arisen consequent to a Court order, the period for which any such proceedings were pending before any Court of Law shall be ignored while calculating the said period of six years, provided such condonation application is filed within six months from the end of the month from the end of the month in which the Court order was issued or the end of financial year whichever is later.
5. The powers of acceptance/ rejection of the application within the monetary limits delegated to the Pr. CCsIT/ CCsIT /Pr. CsIT /CsIT in case of such claims will be subject to Following conditions:
I. At the time of considering the case under Section 119(2) (b), it shall be ensured that the income/loss declared and/or refund claimed is correct and genuine and also that the case is of genuine hardship on merits.
II. The Pr. CCIT/CCIT/Pr. CIT/CIT dealing with the case shall be empowered to direct the jurisdictional assessing officer to make necessary inquiries or scrutinize the case in accordance with the provisions of the Act to ascertain the correctness of the claim.”
7. The petitioner filed an application under Section 119(2)(b) of the Income Tax Act, 1961 for condonation of delay claiming refund for assessment year 2021-22 before opposite party no.1 referring to circular no.07/2023 dated 31.05.2023 in F.No.312/ 63/2023-OT issued by CBDT stating as follows:-
“1. That the legal counsel of the assessee had filed an incorrect Return of Income for AY 2021-22 on 15.03.2022 disclosing a net tax payable of Rs.3, 29, 08,840.00 instead of claiming a refund of Rs. 21,350.00 with NIL income. (ITR-V Copy Attached vide Annexure:2)
2. That there was an inadvertent mistake of disclosing unearned interest income of Rs.6,36,03,707.49 without adjusting the deficit of Rs. 5,41,52,906.70 primarily resulting due to unabsorbed interest.”
The opposite party no.1, while rejecting the application of the petitioner for condonation of delay in filing the revised return of income, vide impugned order dated 22.01.2024 under Annexure-1, assigned reasons to the following effect:-
“After careful consideration of the submission made by you regarding condonation for filling or revised return, the original return of income was filed by you after due consideration and you have undertaken that, all the information filed as verified and correct and it is hence concluded that, genuine hardship for non-filling of revised return of income is not justified. Moreover, the assessee had enough time to file the revised return of income, you chose not to file revised return of income in time.”
In view of the aforesaid provisions, the petitioner having made out a case of genuine hardship in its favour, the rejection of application filed for condonation of delay in filing of revised return of income, vide order dated 22.01.2024, has no justification.
8. In paragraph-10 of the counter affidavit, the opposite parties have stated as follows:-
“10. That the averments made in paragraphs 15, 16 and 17 of the Writ Petition are wrong and hence denied. It is submitted that the Petitioner has only made vague claims of “genuine hardship” and has been unable to substantiate the same with cogent documentary evidence, which is a prerequisite for delay condonation as per settled legal position. The petitioner stated in its petition that has highlighted the genuine hardship caused to it due to non- consideration of its claim and the CIT (E) has not considered the genuine hardship for non-filing of revised return of income is not justified. Hence impugned order contravenes principles of Natural Justice.”
The reason assigned in the counter affidavit is contrary to the impugned order dated 22.01.2024 and, therefore, the same cannot be sustained in the eye of law
9. On scrutiny of the impugned order dated 01.2024 vis-à-vis the counter affidavit filed by the opposite parties, the petitioner emphatically that the illegality and sustainability of the allegation made by the opposite parties cannot be substantiated by way of counter affidavit by giving/supplanting fresh reasons.
10. In Commissioner of Police, Bombay v. Gordhandas Bhanji, AIR 1952 SC 16, the apex Court held as follows :
“Public orders publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the acting and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself. Orders are not like old wine becoming better as they grow older.”
11. In Mohinder Singh Gill and another v. The Chief Election Commissioner, New Delhi and others, AIR 1978 SC 851, the apex Court held as follows:
“When a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise an order bad in the beginning may by the time it comes to Court on account of a challenge, get validated by additional grounds later brought out.”
Similar view has also been
Bhikhubhai Vithlabhai Patel and others v. State of Gujarat and another, (2008)4 SCC 144. This Court has also taken the same view in M/s. Shree Ganesh Construction v. State of Orissa & Ors., 2016 (II) OLR 237, in which one of us (Dr. B.R. Sarangi, J.) is a Member.
12. In view of law laid down by the apex Court, the reasons which have been assigned in the counter affidavit cannot be sustained in the eye of law and accordingly the same are not accepted.
13. On perusal of the provisions contained in Section 119(2)(b) of the Income Tax Act read with circular no.09/2015 dated 09.06.2015 issued by CBDT, it appears that “genuine hardship” which the petitioner is required to establish is the hardship that would be caused to the petitioner if the delay is not condoned or the time limit is not extended. In other words, at the time of considering the application under Section 119(2)(b) of the I.T. Act, the statutory authority is to ensure that the income/loss declared and/or refund claimed by the assessee is correct and genuine and the same will cause genuine hardship to the assessee unless the time limit is extended.
14. The petitioner has clearly stated in its application filed under Section 119(2)(b) of the I.T. Act under Annexure-11 that at the time of filing of its return of income for assessment year 2021-22, it has inadvertently erred in claiming the past years’ deficit of Rs.5,41,52,906.70 against the current year’s income under Section 11(1) of the I.T. Act of Rs.6,37,56,104.56 as application of income and instead offered the total income of Rs.6,37,56,104.56 as income chargeable to tax. Had the past deficit of Rs.5,41,52,906.70 been claimed as application of income, the petitioner would have entitled to a refund of Rs.21,350/-. But for such inadvertent mistake of the petitioner, it has been saddled with a demand of Rs.3,29,08,840.00. The petitioner has also demonstrated that past deficit of Rs.5,41,52,906.70 mentioned in the balance sheet filed by it and, as such, set off of past deficit is permissible in law. A bare reading of the application under Section 119(2)(b) of the Act filed by the petitioner demonstrates that its claim is genuine and unless the time limit is extended for filing revised return making such claim, the petitioner would be liable to pay a sum of Rs.3,29,08,840.00 instead of getting refund of Rs.21,350/-, which will cause genuine hardship to the petitioner
15. In B.M. Maiani v. Commissioner of Income Tax & Anr., (2008) 10 SCC 617, the apex Court held as follows:
“16. 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)”.
17. For interpretation of the aforementioned provision, the principle of purposive construction should be resorted to. Levy of interest is statutory in nature, inter alia, for recompensating the Revenue from loss suffered by non-deposit of tax by the assessee within the time specified therefor. The said principle should also be applied for the purpose of determining as to whether any hardship had been caused or not. A genuine hardship would, inter alia, mean a genuine difficulty. That per se would not lead to a conclusion that a person having large assets would never be in difficulty as he can sell those assets and pay the amount of interest levied.
18. The ingredients of genuine hardship must be determined keeping in view 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. The said principle, it is conceded, has not been applied by the courts below in this case, but we may take not o f a few precedents operating in the field to highlight the aforementioned proposition of law. [See Priyanka Overseas (P) Ltd. v. Union of India [1991 supp (1) SCC 102] (SCC at pp. 122-23, para 39); Union of India v. Major General Madan Lal Yadav ( Retd. ) [(1996) 4 SCC 127 : 1996 SCC (Cri) 592] (SCC at p. 142, paras 2829); Ashok Kapil v. Sana Ullah [(1996) 6 SCC 342] ( SCC at p. 345, para 7); Sushil Kumar v. Rakesh Kumar [(2003) 8 SCC 673] ( SCC at 9.692, para 65, first sentence); Kusheswar Prasad Singh v. State of Bihar [(2007) 11 SCC 447 ] (SCC at pp. 451-52, paras 13-14 and 16).]”
16. If considered from other angle, opposite party no.1 has neither in the impugned order dated 22.01.2024 nor in the counter affidavit filed on their behalf denied the entitlement of the petitioner to claim such set off of past years’ deficit. Rather, the Commissioner of Income Tax (Appeals) in its order dated 27.12.2023 has acknowledged the entitlement of the petitioner to such claim. Thereby, the petitioner has established the requirement of “genuine hardship”, as enumerated under Section 119(2)(b) of the I.T. Act. As such, the finding of opposite party no.1, that the petitioner has failed to demonstrate “genuine hardship”, is thoroughly misconceived, and the observation made to that effect cannot be sustained in the eye of law. It is revealed that as per Section 139 of the I.T. Act read with the Rules framed thereunder, the due date for filing return for the assessment year 2021-22 was 15.03.2022 and the petitioner filed its return on 15.03.2022. The time limit for filing revised return under Section 139(5) of the I.T. Act for the assessment year 2021-22 was 31.12.2022. The petitioner, after receipt of the intimation order under Section 143(1) of the I.T. Act for the assessment year 2021-22, initially filed an application under Section 154 of the I.T. Act before the Assessing Officer-opposite party no.2 for rectification on account of mistake of the total income of Rs.6,37,56,104.56 being chargeable to tax without setting off the past deficit, which is apparent from the record. But the Assessing Officer-opposite party no.2, vide order dated 21.06.2023, rejected the said application. The petitioner assailed the intimation order under Section 143(1) of the I.T. Act as well as the order passed under Section 154 of the I.T. Act before the First Appellate Authority under Section 250 of the I.T. Act, which was dismissed, vide order dated 27.12.2023, with an observation that the petitioner has the remedy of making application under Section 119(2)(b) of the I.T. Act. Thereby, finding no other alternative, the petitioner approached opposite party no.1 by filing an application under Section 119(2)(b) of the I.T. Act. But opposite party no.1, without taking into consideration “genuine hardship” of the petitioner, mechanically rejected the said application, vide impugned order dated 22.01.2024, which cannot be sustained in the eye of law.
17. In view of the provisions contained in Section 119(2)(b) of the I.T. Act read with circular dated 09.06.2015 issued by CBDT, which stipulates that application for claim of refund/loss is to be made within six years from the end of the assessment year for which such application/claim is made. The last date for filing of revised return for the assessment year 2021-22 was 31.12.2022 and the petitioner made application under Section 119(2)(b) on 16.10.2023 for condonation of delay in filing revised return. Thereby, the application filed by the petitioner is well within six years time limit, as stipulated in the circular. When the petitioner filed application indicating its “genuine hardship”, opposite party no. 1 could have considered the same in proper perspective, but, without doing so, it rejected such application vide impugned order dated 22.01.2024 which cannot be sustained in the eye of law.
18. In G.V. Infosutions Pvt. Ltd. (supra), the High Court of Delhi in paragraphs-8, 9 and 10 held as follows:-
“8. The rejection of the petitioner’s application under section 119(2) (b) I sonly on the ground that according to the Chief Commissioner’s opinion the plea of omission by the auditor was not substantiated. This court has difficulty to understand what more plea or proof any assessee could have brought on record to substantiate the inadvertence of its advisor. The net result of the impugned order is in effect that the petitioner’s claim of inadvertent mistake is sought to be characterized as not bonafide. The court is of the opinion that an assessee has to take leave of its senses if it deliberately wishes to forego a substantial amount as the assessee is ascribed to have in the circumstances of this case. “Bona fide” is to be understood in the context of the circumstance of any case. Beyond a plea of the sort the petitioner raises (concededly belated)y), there cannot necessarily be independent proof or material to establish that the auditor in fact acted without diligence. The petitioner did not urge any other grounds such as illness of someone etc., which could reasonably have been substantiated by independent material. In the circumstances of the case, the petitioner, in our opinion, was able to show bona fide reasons why the refund claim could not be made in time.
9. The statute for period of limitation prescribed in provisions of law; however, wherever the Legislature intends relief against hardship in cases where such statutes lead to hardships, the concerened authorities; including the Revenue authorities have to construe them in a reasonable manner. That was the effect and purport of this court’s decision in Indglonal Investment and Finance Ltd. (supra). This court I s of the opinion that a similar approach is to be adopted in the circumstances of the case.
10. For the above reasons, the impugned order dated march 28, 2018 rejecting the petitioner’s application under section 119(2) (b) is hereby set aside and quashed…… ”
19. In Sujatha Ramesh (supra), the High Court of Karnataka, taking note of the judgment of the apex Court in B.M. Maiani (supra), held in paragraph-12 of the said judgment as follows:-
“12. The general and wide powers given to the Board in this regard, “if it considers it desirable or expedient so to do for avoiding genuine hardship in any case…”, not only gives wide powers to the Board, but confers upon it an obligation to consider facts relevant for condonation of delay as well as the merit of the claim simultaneously. If the claim of exemption or other claim on merits is eminently a fit case for making such claim, it should not normally be defeated on the bar of limitation, particularly, when the delay or the time period for which condonation is sought is not abnormally large. It will of course depend upon the facts of the each case, where such a time period or the merit of the claim deserves such exercise of discretion in favour of the assessee under section 119(2)(b) of the Act or not and therefore, no straitjacket formula or guidelines can be laid down in this regard. However, such orders passed by the Central Board of Courts. If the good conscience of the court is pricked, even though such orders rejecting the claims on the bar of limitation may appear to be prima fade tenable, the courts may exercise their jurisdiction to set aside such orders and allow the claims on merits, setting aside the bar of limitation.”
20. In Shree Maharaja Agrasen Seva Sansthan (supra), the High Court of Gujarat, referring to the judgment of the apex Court in B.M. Maiani (supra) and taking into consideration the meaning of “genuine” and also the judgment of the High Court of Delhi in G.V. Infosutions Pvt. Ltd (supra), quashed the impugned order dated 17.06.2021 and allowed the delay condone application filed by the assessee therein.
21. In Subros Educational Society (supra), the apex Court in paragraphs 1 & 2 of the said judgment held as follows:-
“1. In this application filed by the Income-tax Department it is stated that Civil Appeal No. 5171 of 2016 arises out of Special Leave Petition (C)… . CC No. 8982/2016 was tagged with other appeals and the batch matters were decided by this court on December 13, 2017. However, the following question was also raised in the instant appeal which was not the subject matter of those appeals.
“(a) Whether any excess expenditure incurred by the trust/charitable institution in earlier assessment year could be allowed to be set off against income of subsequent years by invoking section 11 of the Income-tax Act, 1961 ?”
2. To this extent, Mr. K. Radhakrishnan, learned senior counsel appearing on behalf of the applicant/appellant is correct. Therefore, we have heard him on the aforesaid question of law as well but did not find any merit therein.”
22. Taking into consideration the fact and law, as discussed above, this Court is of the considered view that the order dated 22.01.2024 passed by opposite party no.1 in rejecting the application filed by the petitioner under Section 119(2)(b) of the I.T. Act for condonation of delay in filing the revised return under Annexure-1 for the assessment year 2021-22 cannot be sustained in the eye of law. Therefore, the said order dated 22.01.2024 is liable to be quashed and is hereby quashed. Accordingly, this Court directs the authority concerned to take follow up action in accordance with law.
23. In the result, therefore, the writ allowed. But, however, under the facts and circumstances of the case, there shall be no order as to costs.
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