Rajbir Singh Vs PCIT (Punjab and Haryana High Court)
Condonation of delay under section 119(2)(b) cannot be rejected mechanically; the competent authority must independently examine whether the refund claim is correct and genuine and whether genuine hardship exists, and cannot substitute the “sufficient cause” test under the Limitation Act for the statutory requirements of section 119(2)(b).
Core Issue Whether the Principal Commissioner of Income Tax was justified in rejecting an application under section 119(2)(b) seeking condonation of delay for filing a revised return claiming refund, merely on the basis that a favourable order in the case of a similarly situated employee had not been accepted by the Department on merits, no order had been passed in the assessee’s own case, and no genuine hardship was established, without independently examining the correctness and genuineness of the claim and the existence of genuine hardship as required by CBDT Circular No. 9/2015.
Facts The petitioner was a former employee of HMT Limited’s Tractor Division at Pinjore, which was proposed to be closed following financial difficulties. The petitioner had opted for VRS in 2016 and received Rs. 29,14,500/- under the scheme. In Form-16, HMT treated Rs. 5 lakh as exempt under section 10(10C) and the balance of Rs. 24,14,500/- as taxable. Relying on Form-16, the petitioner filed his return for AY 2017-18 on 3 August 2017 and the return was processed and accepted. Subsequently, in the case of similarly situated HMT employees, the CIT(A) granted exemption under section 10(10B), instead of section 10(10C), and the ITAT subsequently allowed appeals in favour of other similarly situated employees. Those decisions attained finality.
On coming to know of the favourable decision in the case of a similarly situated employee, the petitioner filed an application dated 10 August 2020 before the PCIT seeking condonation of delay under section 119(2)(b) so that he could file a revised return for AY 2017-18 and claim exemption under section 10(10B), resulting in a refund of Rs. 7,19,819/-. The PCIT rejected the application by order dated 19 January 2022.
PCIT Finding The PCIT rejected the application primarily on the ground that the case was not covered by CBDT Circular No. 9/2015 because the favourable CIT(A) order relied upon by the petitioner had not been accepted by the Department on merits, though no further appeal had been filed because of the low tax effect. The PCIT also concluded that no case of genuine hardship had been made out. The High Court found that the impugned order did not contain any independent finding as to whether the petitioner’s claim under section 10(10B) was correct or genuine.
High Court Finding The High Court examined section 119(2)(b) and CBDT Circular No. 9/2015 dated 9 June 2015. The Court noted that section 119(2)(b) empowers the CBDT to authorise the competent income-tax authorities to admit a belated claim for refund or other relief where such relaxation is considered desirable or expedient to avoid genuine hardship. Under paragraph 5(i) of Circular No. 9/2015, the authority is required to ensure that the income, loss or refund claimed is correct and genuine and that the case involves genuine hardship on merits.
The Court held that these requirements required an application of mind to the individual case. The PCIT had merely relied upon reports of subordinate authorities and the fact that the favourable CIT(A) order in another employee’s case had not been accepted on merits. Such considerations did not amount to an independent determination of the correctness or genuineness of the petitioner’s claim. Likewise, the PCIT’s conclusion on genuine hardship consisted merely of the statement that “no case is made out for hardship”, without considering the petitioner’s loss of employment, the circumstances surrounding the closure of the Tractor Division and the significance of the refund claimed.
Explanation of Delay The Department subsequently contended before the High Court that the petitioner had failed to explain the delay. The Court rejected this contention. It observed that the impugned PCIT order had not rejected the application on the ground of unexplained delay. The validity of an administrative or statutory order must be tested on the reasons actually recorded in that order, and the Department could not supplement those reasons subsequently during judicial proceedings. Relying upon Mohinder Singh Gill v. Chief Election Commissioner, the Court reiterated that an order must stand or fall on the reasons contained in it and cannot be supported subsequently by fresh reasons.
The Court further held that the test of “sufficient cause” under section 5 of the Limitation Act, 1963 could not simply be imported into proceedings under section 119(2)(b). Section 5 proceedings principally concern limitation and sufficient cause for delay, whereas section 119(2)(b), read with Circular No. 9/2015, focuses on the correctness and genuineness of the claim and genuine hardship. The circular prescribes a six-year outer limit, but a detailed explanation of delay is not an independent stand-alone precondition in the manner applicable under section 5 of the Limitation Act.
The Court also found that, in any event, the petitioner had explained why the claim was not made earlier. He had filed the original return on the basis of Form-16 issued by HMT, which had granted exemption under section 10(10C). The subsequent favourable decisions in the cases of similarly situated employees provided the basis for the later claim under section 10(10B). Thus, the Department’s assertion that no explanation for the delay had been furnished was not borne out by the record.
Cases Relied Upon The High Court relied upon Mohinder Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405, for the principle that the validity of an order must be judged by the reasons recorded in the order and cannot subsequently be supplemented by fresh reasons. It also considered Hindustan Photo Film Workers Welfare Centre (CITU) v. Government of India, which had been relied upon in the earlier proceedings concerning similarly situated HMT employees.
Outcome The High Court allowed the writ petition and quashed the PCIT’s order dated 19 January 2022 rejecting the application for condonation of delay. The matter was remitted to the PCIT for fresh consideration of the application under section 119(2)(b) after giving the petitioner an opportunity of hearing and considering the material on record. The PCIT was directed to pass a reasoned order within three months from receipt of the High Court’s order.
The Court expressly left the merits of the petitioner’s underlying exemption claim open and directed that the fresh decision be taken independently in accordance with law.
Cases Discussed
- Hindustan Photo Film Workers Welfare Centre Vs. Government of India, (2018) 400 ITR 299 (Madras High Court) — The favourable appellate decision in the case of similarly situated HMT employees was stated to have relied principally upon this ruling while considering exemption under Section 10(10B); the Supreme Court had dismissed the Revenue’s SLP against the Madras High Court decision.
- Union of India Vs. Hindustan Photo Film Workers Welfare Centre and Others, Special Leave Petition (Civil) Diary No. 37247/2017 (Supreme Court) — Referred to in connection with the dismissal of the Revenue’s challenge to the Madras High Court ruling concerning Section 10(10B).
- Mohinder Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405 (Supreme Court) — Relied upon for the settled principle that the validity of a statutory authority’s order must be judged by the reasons stated in that order and cannot be sustained subsequently by adding fresh grounds.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
(1) These are 21 petitions through which former employeThese are 21 petitions through which former employeThese are 21 petitions through which former employees of es of es of HMT LimitedHMT Limited’s Tractor division at Pinjore’s Tractor division at Pinjore, Haryana have challenged the have challenged the order dated 19.01.2022order dated 19.01.2022, passed by the Principal Commissioner of Income passed by the Principal Commissioner of Income passed by the Principal Commissioner of Income Tax, Panchkula (for short Tax, Panchkula (for short – the ‘PCIT’), rejecting the petitioners’ prayer for the ‘PCIT’), rejecting the petitioners’ prayer for the ‘PCIT’), rejecting the petitioners’ prayer for condoning the delay condoning the delay in the filing of revised returns of their incomerevised returns of their income, for the for the assessment year 2017ment year 2017-18, enabling them,, enabling them, through their revised returns, to their revised returns, to seek refund of excess income tax paid by them.refund of excess income tax paid by them.refund of excess income tax paid by them.
(2) For the sake of convenience, facts are being extracFor the sake of convenience, facts are being extracFor the sake of convenience, facts are being extracted from ted from ted from CWP No.18800 of 2023 CWP No.18800 of 2023 – Rajbir Singh Vs. Principal Commissioner of Rajbir Singh Vs. Principal Commissioner of Rajbir Singh Vs. Principal Commissioner of Income Tax, PIncome Tax, Panchkula and others.
(3) In the year 1953, HMT Limited was set up as a CentrIn the year 1953, HMT Limited was set up as a CentrIn the year 1953, HMT Limited was set up as a Central Public al Public al Public Sector Enterprise under the Ministry of Heavy IndusSector Enterprise under the Ministry of Heavy IndusSector Enterprise under the Ministry of Heavy IndusSector Enterprise under the Ministry of Heavy Industries and Public tries and Public tries and Public tries and Public Enterprises, Government of India. The main objectivEnterprises, Government of India. The main objectivEnterprises, Government of India. The main objectivEnterprises, Government of India. The main objective behind setting up e behind setting up e behind setting up e behind setting up HMT Limited was to produce machinHMT Limited was to produce machinHMT Limited was to produce machine tools required for building an e tools required for building an industrial edifice for our country. industrial edifice for our country. Keeping in view the afore objective, in the Keeping in view the afore objective, in the Keeping in view the afore objective, in the year 1971, HMT Limited established its Tractor Diviyear 1971, HMT Limited established its Tractor Diviyear 1971, HMT Limited established its Tractor Diviyear 1971, HMT Limited established its Tractor Division at Pinjore, sion at Pinjore, sion at Pinjore, sion at Pinjore, Haryana. The petitioner was employed by HMT LimitedHaryana. The petitioner was employed by HMT LimitedHaryana. The petitioner was employed by HMT LimitedHaryana. The petitioner was employed by HMT Limited and posted in its and posted in its and posted in its and posted in its Tractor Division at Pinjore, Haryana. tor Division at Pinjore, Haryana.
(4) Due to several factors, in the 1990s, the performanDue to several factors, in the 1990s, the performanDue to several factors, in the 1990s, the performance of HMT ce of HMT ce of HMT Limited started to decline. Several efforts were maLimited started to decline. Several efforts were maLimited started to decline. Several efforts were maLimited started to decline. Several efforts were made to arrest the declining de to arrest the declining de to arrest the declining de to arrest the declining trend but to no avail. The Tractor Division set up trend but to no avail. The Tractor Division set up trend but to no avail. The Tractor Division set up trend but to no avail. The Tractor Division set up at Pinjore became at Pinjore became at Pinjore became at Pinjore became financiallyfinancially inviable. Its employees including the petitioner, winviable. Its employees including the petitioner, winviable. Its employees including the petitioner, were not paid ere not paid ere not paid salaries since July, 2014. Thesalaries since July, 2014. Their other statutory dues were also pending since statutory dues were also pending since statutory dues were also pending since NovemberNovember, 2013. On 27.10.2016, the Union Cabinet decided to close HMn 27.10.2016, the Union Cabinet decided to close HMn 27.10.2016, the Union Cabinet decided to close HMT Limited’s Tractor Division at Pinjore and also granLimited’s Tractor Division at Pinjore and also granLimited’s Tractor Division at Pinjore and also granLimited’s Tractor Division at Pinjore and also granted approval to the ted approval to the ted approval to the ted approval to the proposal for budgetary support to HMT Limited for pproposal for budgetary support to HMT Limited for pproposal for budgetary support to HMT Limited for pproposal for budgetary support to HMT Limited for payment of outstanding ayment of outstanding ayment of outstanding ayment of outstanding salaries and wages etc. to employees of the salaries and wages etc. to employees of the salaries and wages etc. to employees of the HMT Ltd.’s Tractor Division at Tractor Division at Pinjore by offering payment under thePinjore by offering payment under the Voluntary Retirement Scheme (VRS) Voluntary Retirement Scheme (VRS) Voluntary Retirement Scheme (VRS) /Voluntary Separation Scheme (VSS)./Voluntary Separation Scheme (VSS).
(5) In terms of the decision of the Union Cabinet datedIn terms of the decision of the Union Cabinet datedIn terms of the decision of the Union Cabinet dated 27.10.2016, 27.10.2016, 27.10.2016, an office order dated 04.11.2016 was issued by HMT an office order dated 04.11.2016 was issued by HMT an office order dated 04.11.2016 was issued by HMT an office order dated 04.11.2016 was issued by HMT Limited as per which Limited as per which Limited as per which Limited as per which the employees of its Tractor Division at Pinjorthe employees of its Tractor Division at Pinjorthe employees of its Tractor Division at Pinjore were put to notice that e were put to notice that VRS/VSS was being offered as a oneVRS/VSS was being offered as a one-time benefit to permanent employees time benefit to permanent employees time benefit to permanent employees and that in case the employees did not opt for VRS,and that in case the employees did not opt for VRS,and that in case the employees did not opt for VRS,and that in case the employees did not opt for VRS, they would be they would be they would be they would be retrenched under retrenched under applicable provisions of applicable provisions of the Industrial Disputes Act, 1947 the Industrial Disputes Act, 1947 because the Tractthe Tractor Division was proposed to be shut down. proposed to be shut down.
(6) In the afore circumstances, the petitionerIn the afore circumstances, the petitioner, who in the year 2016who in the year 2016, was serving in the Tractor Division of HMT Limited was serving in the Tractor Division of HMT Limited was serving in the Tractor Division of HMT Limited was serving in the Tractor Division of HMT Limited at Pinjore as a Senior at Pinjore as a Senior at Pinjore as a Senior at Pinjore as a Senior Office Assistant and had not received Office Assistant and had not received his his salary since July, 2014, opted for d for VRS like many otherVRS like many other similarly situated employees. However, some of ome of his colleagues colleagues did not opt for VRS and preferred to be retrenched.did not opt for VRS and preferred to be retrenched.
(7) After having opted for VRS, the petitioner receivedAfter having opted for VRS, the petitioner receivedAfter having opted for VRS, the petitioner received the amount the amount the amount payable thereunder. Along with the said amount, payable thereunder. Along with the said amount, payable thereunder. Along with the said amount, the petitioner also was in the petitioner also was in receipt of Formreceipt of Form-16, issued in terms of Section 203 of the Income Ta16, issued in terms of Section 203 of the Income Ta16, issued in terms of Section 203 of the Income Tax Act, x Act, x Act, 1961 (for short 1961 (for short – the Act) read with Rule 31(1A) of the Income Tax Ruthe Act) read with Rule 31(1A) of the Income Tax Ruthe Act) read with Rule 31(1A) of the Income Tax Rules, les, les, 1962. Formorm-16 was issued by HMT Limited as per which, the amou16 was issued by HMT Limited as per which, the amou16 was issued by HMT Limited as per which, the amount nt nt received by the received by the petitioner under the VRS was Rs.29,14,500/VRS was Rs.29,14,500/-, out of which,, out of which, Rs.24,14,500/Rs.24,14,500/- was computed as taxable after granting to the petitwas computed as taxable after granting to the petitwas computed as taxable after granting to the petitioner ioner ioner exemption of Rs.5 lakhs in terms of Section 10(10C)exemption of Rs.5 lakhs in terms of Section 10(10C)exemption of Rs.5 lakhs in terms of Section 10(10C) of the Act. of the Act. of the Act.
(8) Relying on the figures mentioned in FormRelying on the figures mentioned in Form-16, on 03.08.2017,16, on 03.08.2017, the petitioner filed his income tax return for the the petitioner filed his income tax return for the the petitioner filed his income tax return for the the petitioner filed his income tax return for the assessment year 2017assessment year 2017assessment year 2017assessment year 2017-18 which was processed and accepted. which was processed and accepted.
(9) In the meanwhile, another similarly placed employeeIn the meanwhile, another similarly placed employeeIn the meanwhile, another similarly placed employee like the like the like the petitionerpetitioner, namely Prempal, who was also in receipt of VRS amounamely Prempal, who was also in receipt of VRS amounamely Prempal, who was also in receipt of VRS amount like the nt like the nt like the petitioner, filed its income tax return, also for the assener, filed its income tax return, also for the assener, filed its income tax return, also for the assessment year 2017ssment year 2017ssment year 2017–18, claiming exemption claiming exemption under Section 10(10C) of the Act and after being under Section 10(10C) of the Act and after being under Section 10(10C) of the Act and after being assessed, he filed a revised income tax return now assessed, he filed a revised income tax return now assessed, he filed a revised income tax return now assessed, he filed a revised income tax return now seeking therein exemption seeking therein exemption seeking therein exemption seeking therein exemption under Section 10(10B) instead of Sectiounder Section 10(10B) instead of Section 10(10C) of the Act. The Assessing n 10(10C) of the Act. The Assessing n 10(10C) of the Act. The Assessing Officer denied the exemption sought by Prempal. TheOfficer denied the exemption sought by Prempal. TheOfficer denied the exemption sought by Prempal. TheOfficer denied the exemption sought by Prempal. The assessment order assessment order assessment order assessment order passed in Prempal’s case was challenged by him thropassed in Prempal’s case was challenged by him thropassed in Prempal’s case was challenged by him thropassed in Prempal’s case was challenged by him through filing of an appeal ugh filing of an appeal ugh filing of an appeal ugh filing of an appeal under Section 246(A) of the Act which was accepted under Section 246(A) of the Act which was accepted under Section 246(A) of the Act which was accepted under Section 246(A) of the Act which was accepted through order dated through order dated through order dated through order dated 30.01.2020 passed by CIT(A), Panchkula. Prempal’s appeal.2020 passed by CIT(A), Panchkula. Prempal’s appeal.2020 passed by CIT(A), Panchkula. Prempal’s appeal.2020 passed by CIT(A), Panchkula. Prempal’s appeal was allowed by was allowed by was allowed by was allowed by CIT(A) primarily relying on a judgment of the MadraCIT(A) primarily relying on a judgment of the MadraCIT(A) primarily relying on a judgment of the MadraCIT(A) primarily relying on a judgment of the Madras High Court in s High Court in s High Court in s High Court in Hindustan Photo Film Workers’ Welfare Centre (CITU)Hindustan Photo Film Workers’ Welfare Centre (CITU)Hindustan Photo Film Workers’ Welfare Centre (CITU)Hindustan Photo Film Workers’ Welfare Centre (CITU) Vs. Government of Vs. Government of Vs. Government of Vs. Government of India, New Delhi, (2018) 400 ITR 299 (Madras), agaiIndia, New Delhi, (2018) 400 ITR 299 (Madras), agaiIndia, New Delhi, (2018) 400 ITR 299 (Madras), againnnst which decision, the st which decision, the Supreme Court had also dismissed the SLP filed by tSupreme Court had also dismissed the SLP filed by tSupreme Court had also dismissed the SLP filed by the revenue.he revenue.he revenue.
(10) Though in Prempal’s case, CIT(A) decided in favour Though in Prempal’s case, CIT(A) decided in favour Though in Prempal’s case, CIT(A) decided in favour of the of the of the assessee but in the case of many other employees, wassessee but in the case of many other employees, wassessee but in the case of many other employees, wassessee but in the case of many other employees, who were similarly ho were similarly ho were similarly ho were similarly situated as Prempal and the petitioner, Csituated as Prempal and the petitioner, CIT(A), through several orders dated IT(A), through several orders dated IT(A), through several orders dated 12.07.2022, 19.07.2022, 30.11.2022, 06.12.2022 and 12.07.2022, 19.07.2022, 30.11.2022, 06.12.2022 and 12.07.2022, 19.07.2022, 30.11.2022, 06.12.2022 and 12.07.2022, 19.07.2022, 30.11.2022, 06.12.2022 and 30.12.2022 decided in 30.12.2022 decided in 30.12.2022 decided in 30.12.2022 decided in the revenue’s favour which orders were challenged bthe revenue’s favour which orders were challenged bthe revenue’s favour which orders were challenged by those emy those emy those employees ployees before the ITAT. All thobefore the ITAT. All those appeals were clubbed and allowed in the se appeals were clubbed and allowed in the se appeals were clubbed and allowed in the assessees’’ favour by the ITAT through its order dated 20.09.20favour by the ITAT through its order dated 20.09.2023. 23.
(11) The order of CIT(A) dated 30.01.2020 in the case ofThe order of CIT(A) dated 30.01.2020 in the case ofThe order of CIT(A) dated 30.01.2020 in the case of Prempal Prempal Prempal and the order of the ITAT dated 20.09.2023and the order of the ITAT dated 20.09.2023and the order of the ITAT dated 20.09.2023, in the case of other similarly in the case of other similarly situated employees like the petitioner situated employees like the petitioner attainattained finality.
(12) In the meanwhile, the petitioner, on having come to knthe meanwhile, the petitioner, on having come to knthe meanwhile, the petitioner, on having come to know of the ow of the ow of the decision by the CIT(A) dated 30.01.2020decision by the CIT(A) dated 30.01.2020decision by the CIT(A) dated 30.01.2020, in the case of Prempal, filed an filed an application dated 10.08.2020 before the PCIT, Panchapplication dated 10.08.2020 before the PCIT, Panchapplication dated 10.08.2020 before the PCIT, Panchapplication dated 10.08.2020 before the PCIT, Panchkula seeking therein kula seeking therein kula seeking therein kula seeking therein condonation of delay to file a revised income taxcondonation of delay to file a revised income taxcondonation of delay to file a revised income tax return for the assessment return for the assessment year 2017year 2017-18 to enable him to seek exemption under Section 10(10to enable him to seek exemption under Section 10(10to enable him to seek exemption under Section 10(10B) B) B) instead of Section 10(10C) of the Act because such instead of Section 10(10C) of the Act because such instead of Section 10(10C) of the Act because such instead of Section 10(10C) of the Act because such claim would entitle him claim would entitle him claim would entitle him claim would entitle him to a refund of Rs.7,19,819/to a refund of Rs.7,19,819/-. Through an order dated 19.01.2022, PCIT. Through an order dated 19.01.2022, PCIT. Through an order dated 19.01.2022, PCIT rejected the petirejected the petitioner’s application on the ground that the petitiotioner’s application on the ground that the petitiotioner’s application on the ground that the petitioner’s case ner’s case ner’s case was not covered by the circular issued by the Centrwas not covered by the circular issued by the Centrwas not covered by the circular issued by the Centrwas not covered by the circular issued by the Central Board of Direct Taxes al Board of Direct Taxes al Board of Direct Taxes al Board of Direct Taxes (for short (for short – ‘CBDT’) bearing No.9/2015 dated 09.06.2015 because ‘CBDT’) bearing No.9/2015 dated 09.06.2015 because ‘CBDT’) bearing No.9/2015 dated 09.06.2015 because the the the petitioner sought to rely on the order of CIT(A) dpetitioner sought to rely on the order of CIT(A) dpetitioner sought to rely on the order of CIT(A) dated 30.01.2020 which had ated 30.01.2020 which had not been accepted by the Income Tax Department but had not baccepted by the Income Tax Department but had not baccepted by the Income Tax Department but had not baccepted by the Income Tax Department but had not been appealed een appealed een appealed een appealed against only on account of low tax effect. The PCITagainst only on account of low tax effect. The PCITagainst only on account of low tax effect. The PCIT also did not find the did not find the petitioner’s case to be that of genuine hardship fopetitioner’s case to be that of genuine hardship fopetitioner’s case to be that of genuine hardship fopetitioner’s case to be that of genuine hardship for being eligible to ber being eligible to ber being eligible to ber being eligible to be considered for the grant of benefit of CBDTbenefit of CBDT’s circular No.9/2025 dated circular No.9/2025 dated 09.06.2015. The order of the PCIT dated 19.01.2022 09.06.2015. The order of the PCIT dated 19.01.2022 09.06.2015. The order of the PCIT dated 19.01.2022 09.06.2015. The order of the PCIT dated 19.01.2022 is the subject matter of is the subject matter of is the subject matter of is the subject matter of challenge through the instant petition at the petitchallenge through the instant petition at the petitchallenge through the instant petition at the petitioner’s behest.ioner’s behest.ioner’s behest.
SUBMISSIONSSUBMISSIONS
(13) Learned counsel for the petitioner submitted that tLearned counsel for the petitioner submitted that tLearned counsel for the petitioner submitted that the he he petitioner’s case for condonation of delay petitioner’s case for condonation of delay petitioner’s case for condonation of delay for filing of his revised income taxincome tax return for the assessment year 2017return for the assessment year 2017-18 should have been accepted by the 18 should have been accepted by the 18 should have been accepted by the PCIT because not only was the petitioner’s case PCIT because not only was the petitioner’s case PCIT because not only was the petitioner’s case is correct and genuine but genuine but also of “genuine hardshipgenuine hardship”; thus, the petitioner’s case wasthe petitioner’s case was fully covered by fully covered by the CBDT’s circular No.9/2015 dated 09.06.2015; thethe CBDT’s circular No.9/2015 dated 09.06.2015; thethe CBDT’s circular No.9/2015 dated 09.06.2015; the petitioner petitioner petitioner, being, being identically situated,identically situated, is entitled to the same relief as has been granted is entitled to the same relief as has been granted is entitled to the same relief as has been granted through through through order of the CIT(A) dated 30.11.2020, passed in the caer of the CIT(A) dated 30.11.2020, passed in the caer of the CIT(A) dated 30.11.2020, passed in the caer of the CIT(A) dated 30.11.2020, passed in the case of Prempal and the se of Prempal and the se of Prempal and the se of Prempal and the order of the ITAT dated 20.09.2023 and that the petorder of the ITAT dated 20.09.2023 and that the petorder of the ITAT dated 20.09.2023 and that the petorder of the ITAT dated 20.09.2023 and that the petitioner’s case is also of itioner’s case is also of itioner’s case is also of itioner’s case is also of genuine hardship because the petitioner is out of jgenuine hardship because the petitioner is out of jgenuine hardship because the petitioner is out of jgenuine hardship because the petitioner is out of job since the year 2016 and ob since the year 2016 and ob since the year 2016 and ob since the year 2016 and is someone who accepted VRS is someone who accepted VRS in the year 2016.in the year 2016.
(14) Per contra, learned counsel for the revenue submittPer contra, learned counsel for the revenue submittPer contra, learned counsel for the revenue submitted that the ed that the ed that the petitioner’s case waspetitioner’s case was not covered under the CBDT’s circular No.9/2025 not covered under the CBDT’s circular No.9/2025 not covered under the CBDT’s circular No.9/2025 dated 09.06.2015 as it wasdated 09.06.2015 as it was not genuine because because the petitioner had voluntarily voluntarily accepted paymentsaccepted payments of huge amounts under under the VRS; he is not entitled to the is not entitled to the benefit of exemption under Section 10(10B) of the Abenefit of exemption under Section 10(10B) of the Abenefit of exemption under Section 10(10B) of the Abenefit of exemption under Section 10(10B) of the Act and that he has ct and that he has ct and that he has ct and that he has rightly been assessed for rightly been assessed for the grant of exemption under Section 10(10C) of grant of exemption under Section 10(10C) of grant of exemption under Section 10(10C) of the Act; the petitioner having filed its income taxthe Act; the petitioner having filed its income taxthe Act; the petitioner having filed its income taxthe Act; the petitioner having filed its income tax return claiming therein return claiming therein return claiming therein return claiming therein exemption under Section 10(10C) of the Act without exemption under Section 10(10C) of the Act without exemption under Section 10(10C) of the Act without exemption under Section 10(10C) of the Act without any protest, cannot any protest, cannot any protest, cannot any protest, cannot now be allowed to revise now be allowed to revise his return simply because in the case ofreturn simply because in the case of other other vigilant employees, some orders have been passed invigilant employees, some orders have been passed invigilant employees, some orders have been passed invigilant employees, some orders have been passed in their favour; there are their favour; there are their favour; there are their favour; there are no reasons forthcoming no reasons forthcoming in the petitioner’s applicationthe petitioner’s application, filed before the PCITfiled before the PCIT, explaining therein the delay on the petitioner’s paexplaining therein the delay on the petitioner’s paexplaining therein the delay on the petitioner’s paexplaining therein the delay on the petitioner’s part in claiming exemption rt in claiming exemption rt in claiming exemption rt in claiming exemption under Section 10(1under Section 10(10B) of the Act and that in the absence of any reaso0B) of the Act and that in the absence of any reaso0B) of the Act and that in the absence of any reasons, the ns, the ns, the PCIT has rightly rejected the petitioner’s applicatPCIT has rightly rejected the petitioner’s applicatPCIT has rightly rejected the petitioner’s applicatPCIT has rightly rejected the petitioner’s application for condonation of ion for condonation of ion for condonation of ion for condonation of delay for filing a revised income tax return.delay for filing a revised income tax return.delay for filing a revised income tax return.
(15) Learned counsel for the parties have been heard. Learned counsel for the parties have been heard.
ANALYSIS AND CONCLUSION ANALYSIS AND CONCLUSION
(16) As per Section 237 of the Act, if any person satisfAs per Section 237 of the Act, if any person satisfAs per Section 237 of the Act, if any person satisfies the ies the ies the Assessing Officer that the amount of Assessing Officer that the amount of incomeincome tax paid by him or on his by him or on his behalf or treated as paid by him or on his behalf fbehalf or treated as paid by him or on his behalf fbehalf or treated as paid by him or on his behalf fbehalf or treated as paid by him or on his behalf for any assessment year or any assessment year or any assessment year or any assessment year exceeds the amount with exceeds the amount with which he is properly chargeable under the Act for which he is properly chargeable under the Act for which he is properly chargeable under the Act for that year, he shall be entitled to refund of the exthat year, he shall be entitled to refund of the exthat year, he shall be entitled to refund of the excess.cess.cess. Under Section 239 of Under Section 239 of the Act every claim for refund is required to be mathe Act every claim for refund is required to be mathe Act every claim for refund is required to be mathe Act every claim for refund is required to be made through furnishing of de through furnishing of de through furnishing of de through furnishing of a return in accordance with Section 139.a return in accordance with Section 139.a return in accordance with Section 139. Income Tax Returns are filed Returns are filed before the due date bybefore the due date by an assessee under Section 139(1) of the Act. Revised assessee under Section 139(1) of the Act. Revised assessee under Section 139(1) of the Act. Revised Income Tax Returns can be filed under Section 139(5Income Tax Returns can be filed under Section 139(5Income Tax Returns can be filed under Section 139(5Income Tax Returns can be filed under Section 139(5) of the Act but such) of the Act but such) of the Act but such) of the Act but such returns are required to be furnished before three mreturns are required to be furnished before three mreturns are required to be furnished before three mreturns are required to be furnished before three months prior to the end of onths prior to the end of onths prior to the end of onths prior to the end of the relevanthe relevant assessment year or before completion of the assest assessment year or before completion of the assest assessment year or before completion of the assessment, sment, sment, whichever is earlier. whichever is earlier.
(17) For condoning delay in the filing of revised returnFor condoning delay in the filing of revised returnFor condoning delay in the filing of revised returns claiming s claiming s claiming therein refund and returns claiming carry forward of loss arefund and returns claiming carry forward of loss arefund and returns claiming carry forward of loss arefund and returns claiming carry forward of loss and set off thereof, nd set off thereof, nd set off thereof, nd set off thereof, in exercise ofin exercise of powers conferred under Section 119(2)(b) of the Actunder Section 119(2)(b) of the Act, t, the CBDT has issued circular No.09/2015 dated 09.06.201CBDT has issued circular No.09/2015 dated 09.06.201CBDT has issued circular No.09/2015 dated 09.06.2015.5.5. At this stage reference is required to be made to Section reference is required to be made to Section reference is required to be made to Section 119(2)(b) of the Act and to the CBDT119(2)(b) of the Act and to the CBDT’s circular issued thereunder bearing circular issued thereunder bearing No.9/2015 dated 09.06.2015. The No.9/2015 dated 09.06.2015. The said provision and the circular are said provision and the circular are said provision and the circular are reproduced belowuced below:-
Instructions to subordinate authoritiesInstructions to subordinate authorities Section 119.
“(2)(b) the Board may, if it considers it desirable or expethe Board may, if it considers it desirable or expethe Board may, if it considers it desirable or expedient so to do dient so to do dient so to do for avoiding genuine hardship in any case or class for avoiding genuine hardship in any case or class for avoiding genuine hardship in any case or class of cases, by general of cases, by general of cases, by general or special order, authorise any incomeor special order, authorise any income-tax authority, not being a Joint tax authority, not being a Joint Commissioner (Appeals) or a Commissioner (AppeCommissioner (Appeals) or a Commissioner (Appeals) to admit an als) to admit an application or claim for any exemption, deduction, application or claim for any exemption, deduction, application or claim for any exemption, deduction, refund or any other refund or any other refund or any other relief under this Act after the expiry of the periorelief under this Act after the expiry of the periorelief under this Act after the expiry of the period specified by or under d specified by or under d specified by or under this Act for making such application or claim and dthis Act for making such application or claim and dthis Act for making such application or claim and deal with the same on eal with the same on eal with the same on merits in accordance with law;”with law;”
Circular No.09/2015 dated 09.06.2015Circular No.09/2015 dated 09.06.2015
“SECTION 119 OF THE INCOME“SECTION 119 OF THE INCOME-TAX ACT, 1961 – INCOME-TAX TAX AUTHORITIES – INSTRUCTIONS TO SUBORDINATE AUTHORITIES INSTRUCTIONS TO SUBORDINATE AUTHORITIES INSTRUCTIONS TO SUBORDINATE AUTHORITIES – CONDONATION OF DELAY IN FILING REFUND CLAIM AND CLACONDONATION OF DELAY IN FILING REFUND CLAIM AND CLACONDONATION OF DELAY IN FILING REFUND CLAIM AND CLAIM IM IM OF CARRY FORWARD LOSSES UNDER SECTION 119(2OF CARRY FORWARD LOSSES UNDER SECTION 119(2)(b)
CIRCULAR 9/2015 [F.NO.312/22/2015CIRCULAR 9/2015 [F.NO.312/22/2015-OT], DATED 9-6-2015
In supersession of all earlier Instructions/CirculaIn supersession of all earlier Instructions/CirculaIn supersession of all earlier Instructions/Circulars/Guidelines issued by the rs/Guidelines issued by the rs/Guidelines issued by the Central Board of Direct Taxes (the Board) from timeCentral Board of Direct Taxes (the Board) from timeCentral Board of Direct Taxes (the Board) from time to time to deal with the to time to deal with the to time to deal with the applications for condonation of delay applications for condonation of delay in filing returns claiming refund and in filing returns claiming refund and returns claiming carry forward of loss and setreturns claiming carry forward of loss and set-off thereof under section off thereof under section 119(2)(b) of the Income-tax Act, (the Act) the present Circular is being tax Act, (the Act) the present Circular is being tax Act, (the Act) the present Circular is being issued containing comprehensive guidelines on the cissued containing comprehensive guidelines on the cissued containing comprehensive guidelines on the conditions for onditions for onditions for condonation and the procedure to be followed for deciding tion and the procedure to be followed for deciding such matterssuch matters.
2. The Principal Commissioners of IncomeThe Principal Commissioners of Income-tax/Commissioners of Incometax/Commissioners of Income- tax (Pr.CsIT/CsIT) shall be vested with the powers tax (Pr.CsIT/CsIT) shall be vested with the powers tax (Pr.CsIT/CsIT) shall be vested with the powers of acceptance/rejection of of acceptance/rejection of of acceptance/rejection of such applications/claims if the amount of susuch applications/claims if the amount of such claims is not more than Rs.10 ch claims is not more than Rs.10 lakhs for any one assessment year. The Principal Chlakhs for any one assessment year. The Principal Chlakhs for any one assessment year. The Principal Chief Commissioners of ief Commissioners of ief Commissioners of Income-tax/Chief Commissioners of Incometax/Chief Commissioners of Income-tax (Pr.CCsIT/CCsIT) shall be tax (Pr.CCsIT/CCsIT) shall be vested with the powers of acceptance/rejection of svested with the powers of acceptance/rejection of svested with the powers of acceptance/rejection of such applications/claims if uch applications/claims if uch applications/claims if the amount of such claims exceeds Rs.10 lakhs but is e amount of such claims exceeds Rs.10 lakhs but is e amount of such claims exceeds Rs.10 lakhs but is not more than Rs. 50 not more than Rs. 50 not more than Rs. 50 lakhs for any one assessment year. The applicationslakhs for any one assessment year. The applicationslakhs for any one assessment year. The applications/claims for amount /claims for amount /claims for amount exceeding Rs.50 lakhs shall be considered by the Boexceeding Rs.50 lakhs shall be considered by the Board.ard.
3. No condonation application for claim of refund/lossNo condonation application for claim of refund/loss sh shall be entertained all be entertained beyond six years from the end of the assessment yeabeyond six years from the end of the assessment yeabeyond six years from the end of the assessment year for which such r for which such r for which such application/claim is made. This limit of six years application/claim is made. This limit of six years application/claim is made. This limit of six years shall be applicable to all shall be applicable to all shall be applicable to all authorities having powers to condone the delay as pauthorities having powers to condone the delay as pauthorities having powers to condone the delay as per the above prescribed er the above prescribed er the above prescribed monetary limits, including the Board. A condonation application shouincluding the Board. A condonation application shouincluding the Board. A condonation application should be ld be ld be disposed of within six months from the end of the mdisposed of within six months from the end of the mdisposed of within six months from the end of the month in which the onth in which the onth in which the application is received by the competent authority,application is received by the competent authority, as far as possible. as far as possible.
4. In a case where refund claim has arisen consequent In a case where refund claim has arisen consequent toto a Court order, the a Court order, the period for which any such proceedings were pending period for which any such proceedings were pending period for which any such proceedings were pending before any Court of before any Court of before any Court of Law shall be ignored while calculating the said perLaw shall be ignored while calculating the said perLaw shall be ignored while calculating the said period of six years, provided iod of six years, provided iod of six years, provided such condonation application is filed within six mosuch condonation application is filed within six mosuch condonation application is filed within six months from the end of the nths from the end of the nths from the end of the month in which the Court order was issued or the end of financich the Court order was issued or the end of financich the Court order was issued or the end of financial year ial year ial year whichever is later.
5. The powers of acceptance/rejection of the applicatiThe powers of acceptance/rejection of the applicatiThe powers of acceptance/rejection of the application within the monetary on within the monetary on within the monetary limits delegated to the Pr.CCsIT/CCsIT/Pr.CsIT/CsITlimits delegated to the Pr.CCsIT/CCsIT/Pr.CsIT/CsITlimits delegated to the Pr.CCsIT/CCsIT/Pr.CsIT/CsIT in case of such claims in case of such claims in case of such claims will be subject to Following conditions:owing conditions:
i. At the time of considering the case under Section 1At the time of considering the case under Section 1At the time of considering the case under Section 119(2)(b), it shall 19(2)(b), it shall 19(2)(b), it shall be ensured that the income/loss declared and/or refbe ensured that the income/loss declared and/or refbe ensured that the income/loss declared and/or refund claimed is und claimed is und claimed is correct and genuine and also that the case is of gecorrect and genuine and also that the case is of gecorrect and genuine and also that the case is of genuine hardship on nuine hardship on nuine hardship on merits.
ii The Pr.CCIT/CCIT/Pr.CIT/CIT dealing with the case shall be T/Pr.CIT/CIT dealing with the case shall be empowered to direct the jurisdictional assessing ofempowered to direct the jurisdictional assessing officer to make ficer to make necessary inquiries or scrutinize the case in accornecessary inquiries or scrutinize the case in accordance with the dance with the provisions of the Act to ascertain the correctness provisions of the Act to ascertain the correctness of the claim.of the claim.
6. A belated application for supplementary claim of refund (claim plication for supplementary claim of refund (claim plication for supplementary claim of refund (claim of of of additional amount of refund after completion of assadditional amount of refund after completion of assadditional amount of refund after completion of assessment for the same essment for the same essment for the same year) can be admitted for condonation provided otheyear) can be admitted for condonation provided otheyear) can be admitted for condonation provided other conditions as referred r conditions as referred conditions as referred above are fulfilled. The powers of acceptance/rejecabove are fulfilled. The powers of acceptance/rejectiotion within the monetary n within the monetary limits delegated to the Pr.CCsIT/CCsIT/Pr.CsJT/CsITlimits delegated to the Pr.CCsIT/CCsIT/Pr.CsJT/CsITlimits delegated to the Pr.CCsIT/CCsIT/Pr.CsJT/CsIT in case of returns in case of returns in case of returns claiming refund and supplementary claim of refund wclaiming refund and supplementary claim of refund wclaiming refund and supplementary claim of refund would be subject to the ould be subject to the ould be subject to the following further conditions:
i. The income of the assessee is not assessable in i. The income of the assessee is not assessable in the hanthe hands of any other ds of any other person under any of the provisions of the Act.person under any of the provisions of the Act. ii. No interest will be admissible on belated claiii. No interest will be admissible on belated claim of refunds.m of refunds. iii. The refund has arisen as a result of excess taiii. The refund has arisen as a result of excess taiii. The refund has arisen as a result of excess tax deducted/collected at x deducted/collected at x deducted/collected at source and/or excess advance tax payment and/or source and/or excess advance tax payment and/or excess payment of selfexcess payment of self- assessment tax as per the provisions of the Act.assessment tax as per the provisions of the Act.
7. In the case of an applicant who has made investmentIn the case of an applicant who has made investmentIn the case of an applicant who has made investment in 8% Savings in 8% Savings in 8% Savings (Taxable) Bonds, 2003 issued by Government of India(Taxable) Bonds, 2003 issued by Government of India(Taxable) Bonds, 2003 issued by Government of India opting for scheme of opting for scheme of opting for scheme of cumulative interest on maturity but has acumulative interest on maturity but has accounted interest earned on ccounted interest earned on mercantile basis and the intermediary bank at the tmercantile basis and the intermediary bank at the tmercantile basis and the intermediary bank at the time of maturity has ime of maturity has ime of maturity has deducted tax at source on the entire amount of intededucted tax at source on the entire amount of intededucted tax at source on the entire amount of interest paid without rest paid without rest paid without apportioning the accrued interest/TDS, over variousapportioning the accrued interest/TDS, over variousapportioning the accrued interest/TDS, over various financial years involved, financial years involved, financial years involved, the time limit of six years for making such refund claims wilimit of six years for making such refund claims wilimit of six years for making such refund claims will not be l not be l not be applicable.
8. This circular will cover all such applications/claiThis circular will cover all such applications/claiThis circular will cover all such applications/claims for condonation of ms for condonation of ms for condonation of delay under section 119(2xb) which are pending as odelay under section 119(2xb) which are pending as odelay under section 119(2xb) which are pending as on the date of issue of the n the date of issue of the n the date of issue of the Circular.
9. The Board reserves the power to examine any grievance arising out ves the power to examine any grievance arising out ves the power to examine any grievance arising out of an of an of an order passed or not passed by the authorities mentiorder passed or not passed by the authorities mentiorder passed or not passed by the authorities mentioned in para 2 above and oned in para 2 above and oned in para 2 above and issue suitable directions to them for proper implemissue suitable directions to them for proper implemissue suitable directions to them for proper implementation of this Circular. entation of this Circular. entation of this Circular. However, no review of or appeal against the oHowever, no review of or appeal against the orders of such authorities would rders of such authorities would be entertained by the Board.”
(18) Section 119(2)(b) of the Act empowers the CBDT to iSection 119(2)(b) of the Act empowers the CBDT to iSection 119(2)(b) of the Act empowers the CBDT to issue ssue ssue instructions or orders to authorize income tax authinstructions or orders to authorize income tax authinstructions or orders to authorize income tax authoritiesoritiesorities referred thereintherein to admit and decideadmit and decide applications for claims for exemptions,or claims for exemptions, deduction or refund refund made by the assessees after the expiry of the periomade by the assessees after the expiry of the periomade by the assessees after the expiry of the periomade by the assessees after the expiry of the period specified by or under the d specified by or under the d specified by or under the d specified by or under the Act. The underlining Act. The underlining purpose behind issuance of circulars or ordersissuance of circulars or orders by the by the CBDT, under Section 119(2)(b)under Section 119(2)(b) of the Act,of the Act, is for avoidance of “genuine is for avoidance of “genuine hardship”hardship” in a particular case or in a classin a particular case or in a class of cases.
(19) Circular No.9/2015 dated 09.06.2015 has been issuedCircular No.9/2015 dated 09.06.2015 has been issuedCircular No.9/2015 dated 09.06.2015 has been issued by the by the by the CBDT in exercise of powers conferred upon it under CBDT in exercise of powers conferred upon it under CBDT in exercise of powers conferred upon it under CBDT in exercise of powers conferred upon it under Section 119(2)(b) of Section 119(2)(b) of Section 119(2)(b) of Section 119(2)(b) of the Act. The circular the Act. The circular applies to applicationapplications made by assessees seekings seeking therein condonation of delay in condonation of delay in the filing of income tax returns claiming filing of income tax returns claiming filing of income tax returns claiming therein refund and returns claiming carry forward otherein refund and returns claiming carry forward otherein refund and returns claiming carry forward of lossf lossf loss and set off thereof. set off thereof. As per thethe circular no application beyond the period of six yecircular no application beyond the period of six yecircular no application beyond the period of six years from the ars from the ars from the end of the assessment year end of the assessment year in question can be entertained and that while in question can be entertained and that while in question can be entertained and that while considering an application made under theconsidering an application made under theconsidering an application made under the said circular the competent competent income tax authority is to ensure thatincome tax authority is to ensure that only that claim is only that claim is entertained which entertained which is “correct and correct and genuine” and which is based on is based on “genuine hardship”. Thus, the Thus, the competent income tax authority is required to examicompetent income tax authority is required to examicompetent income tax authority is required to examinenene as to whether the as to whether the applicant’s claim is applicant’s claim is bona fide, genuine and worthy of consideration and worthy of consideration as also as also if the claimant/ assessee would undergo avoidable suffthe claimant/ assessee would undergo avoidable suffthe claimant/ assessee would undergo avoidable suffthe claimant/ assessee would undergo avoidable suffering if not allowed ering if not allowed ering if not allowed ering if not allowed to file a a revised return claiming therein therein a refund or for claiming carry a refund or for claiming carry forward of losses and set off forward of losses and set off thereof. No order under the circular is to be. No order under the circular is to be. No order under the circular is to be passed in a routine manner because grant of extensipassed in a routine manner because grant of extensipassed in a routine manner because grant of extensipassed in a routine manner because grant of extension in the period of on in the period of on in the period of on in the period of limitation provided under the Act tinkers witlimitation provided under the Act tinkers witlimitation provided under the Act tinkers with the timelines of processing of h the timelines of processing of assessment and consequent recovery/ refund. Ordersassessment and consequent recovery/ refund. Ordersassessment and consequent recovery/ refund. Ordersassessment and consequent recovery/ refund. Orders under the circular under the circular under the circular under the circular should be passed after considering desirability andshould be passed after considering desirability andshould be passed after considering desirability andshould be passed after considering desirability and expedience to avoid expedience to avoid expedience to avoid expedience to avoid “genuine hardship” and only after carefully conside“genuine hardship” and only after carefully conside“genuine hardship” and only after carefully conside“genuine hardship” and only after carefully considering the facts of each ring the facts of each ring the facts of each ring the facts of each case.
(20) A perusal of the impugned order does not show application of he impugned order does not show application of he impugned order does not show application of mind by its author whichby its author which Circular No.9/2015 requires. Circular No.9/2015 requires. With regard to With regard to examining ofexamining of the correctness and genuineness of the claim, the Pthe correctness and genuineness of the claim, the Pthe correctness and genuineness of the claim, the PCIT relied CIT relied CIT relied wholly on the reports of the Additional CIT and thewholly on the reports of the Additional CIT and thewholly on the reports of the Additional CIT and thewholly on the reports of the Additional CIT and the Assessing Officer. Assessing Officer. Assessing Officer. Assessing Officer. Those reports only said that the application Those reports only said that the application Those reports only said that the application “does not fulfill any of the any of the conditions conditions laid down in the Income Tax Act”laid down in the Income Tax Act” and that order of the CIT(A)the CIT(A) passed in favourpassed in favour of Prempal had not been accepted by the Revenue on merits had not been accepted by the Revenue on merits had not been accepted by the Revenue on merits and that such order had not beenthat such order had not been appealedappealed against only because of low tax only because of low tax effect. A reading of the impugned order does not reveal anyA reading of the impugned order does not reveal anyA reading of the impugned order does not reveal anyA reading of the impugned order does not reveal any independent independent independent independent finding byfinding by the PCIT as to whether the petitioner’s claim under Section whether the petitioner’s claim under Section whether the petitioner’s claim under Section 10(10B) was correct or genuine. Non-acceptance of an order on merits, acceptance of an order on merits, acceptance of an order on merits, coupled with noncoupled with non-filing of an appeal owing to the appeal owing to the prescribed monetary limit,monetary limit, are not the reasons on which correctness or genuare not the reasons on which correctness or genuare not the reasons on which correctness or genuineness of the petitioner’spetitioner’s claim waswas required to be considered.
(21) Even the finding returned by the PCIT on “genuine hardship”returned by the PCIT on “genuine hardship”returned by the PCIT on “genuine hardship” is through a single unreasoned sentencea single unreasoned sentence – ““no case is made out for hardshipno case is made out for hardship”. The PCITThe PCIT does not deal with the fact that the petitioner losdoes not deal with the fact that the petitioner losdoes not deal with the fact that the petitioner lost his employment t his employment t his employment on the closure of the Tractor Divisionon the closure of the Tractor Division; that the refund claimed is substantial that the refund claimed is substantial that the refund claimed is substantial and is of fundamental importance to and is of fundamental importance to the petitioner’sthe petitioner’s sustenance. Nor does it sustenance. Nor does it consider the fact that the appeconsider the fact that the appellate authorities had, in a large number of llate authorities had, in a large number of llate authorities had, in a large number of similar cases, taken the viewsimilar cases, taken the view, which view had attained finality,, which view had attained finality, that VRS was was a special packaga special package on closure of the undertaking offered in lieu of e on closure of the undertaking offered in lieu of e on closure of the undertaking offered in lieu of retrenchmentretrenchment attracting thereto applicability of exemption underattracting thereto applicability of exemption under Se Section ction 10(10B) instead of Section 10(10C) of the Act. 10(10B) instead of Section 10(10C) of the Act. 10(10B) instead of Section 10(10C) of the Act.
(22) The impugned order also observes that The impugned order also observes that “no order has been no order has been passed by the passed by the CIT (A) in the case of the assessee”A) in the case of the assessee” and treats this as a reason and treats this as a reason for rejection. for rejection. Such an observation was irrelevant. The petitioner’s claim was s irrelevant. The petitioner’s claim was s irrelevant. The petitioner’s claim was that the CIT(A) had decided that the CIT(A) had decided an identical issue in favour of similarly situated identical issue in favour of similarly situated identical issue in favour of similarly situated employees. He never said that any order had been paemployees. He never said that any order had been paemployees. He never said that any order had been paemployees. He never said that any order had been passed in his own case. ssed in his own case. ssed in his own case. ssed in his own case. Rejecting the application on this ground shows thatRejecting the application on this ground shows thatRejecting the application on this ground shows that the applica the applica the application was nottion was not even read properly and that the order was passed mechaniread properly and that the order was passed mechaniread properly and that the order was passed mechanically.cally.cally.
(23) The argument raised by learned counsel for the respThe argument raised by learned counsel for the respThe argument raised by learned counsel for the respondentondentondent- department that the writ petition deserves to be didepartment that the writ petition deserves to be didepartment that the writ petition deserves to be didepartment that the writ petition deserves to be dismissed because the smissed because the smissed because the smissed because the petitioner did not explain the delay or show petitioner did not explain the delay or show petitioner did not explain the delay or show sufficient cause for it in his sufficient cause for it in his application dated 10.08.2020 cannot be accepted forapplication dated 10.08.2020 cannot be accepted forapplication dated 10.08.2020 cannot be accepted forapplication dated 10.08.2020 cannot be accepted for the following reasons:
the following reasons: the following reasons: the following reasons:- FirstlyFirstly, the impugned order of the PCITof the PCIT dated 19.01.2022 does not dated 19.01.2022 does not reject the application on this ground. The PCITreject the application on this ground. The PCITreject the application on this ground. The PCIT, after recording the after recording the facts and thefacts and the report of the Additional CIT, which was based on threport of the Additional CIT, which was based on threport of the Additional CIT, which was based on the e e report of the jurisdictional Assessing Officer, conreport of the jurisdictional Assessing Officer, conreport of the jurisdictional Assessing Officer, considered the case sidered the case sidered the case with with regard toregard to the Board’s Circular No. 09/2015he Board’s Circular No. 09/2015 and rejected the application and rejected the application on three groundson three grounds:
(a) the CIT(A) order relied upon by the assessee had nothe CIT(A) order relied upon by the assessee had nothe CIT(A) order relied upon by the assessee had not been t been t been “found acceptable on meritsfound acceptable on merits” and no appeal was filed against and no appeal was filed against such order only because of low tax effect; such order only because of low tax effect;
(b) no order had been passed by the CIT(A) in the assesno order had been passed by the CIT(A) in the assesno order had been passed by the CIT(A) in the assessee’s own see’s own see’s own case; and
(c) “no case is made out for hardshipfor hardship”. Nowhere does the Nowhere does the impugned order say that the assessee failed to order say that the assessee failed to order say that the assessee failed to explain the delay or show sufficient cause for it. explain the delay or show sufficient cause for it. explain the delay or show sufficient cause for it. explain the delay or show sufficient cause for it. It is well settled that an It is well settled that an It is well settled that an It is well settled that an order must be judged on the reasons it records. Theorder must be judged on the reasons it records. Theorder must be judged on the reasons it records. Theorder must be judged on the reasons it records. The department cannot department cannot department cannot department cannot support it in court with a gsupport it in court with a ground the authority never invoked. In this round the authority never invoked. In this round the authority never invoked. In this regard reliance can usefully be made to the followiregard reliance can usefully be made to the followiregard reliance can usefully be made to the followiregard reliance can usefully be made to the following observations of ng observations of ng observations of ng observations of the Supreme Court inthe Supreme Court in Mohinder Singh Gill v. Chief Election Mohinder Singh Gill v. Chief Election Mohinder Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405Commissioner, (1978) 1 SCC 405:- “8. The second equally relevant matter is that whe8. The second equally relevant matter is that when a statutory functionary n a statutory functionary makes an order based on certain grounds, its validimakes an order based on certain grounds, its validimakes an order based on certain grounds, its validity must be judged by the ty must be judged by the ty must be judged by the reasons so mentioned and cannot be supplemented by reasons so mentioned and cannot be supplemented by reasons so mentioned and cannot be supplemented by fresh reasons in the fresh reasons in the fresh reasons in the shape of affidavit or otherwise. Otherwise, an ordeshape of affidavit or otherwise. Otherwise, an ordeshape of affidavit or otherwise. Otherwise, an order bad in the beginning r bad in the beginning r bad in the beginning may, by the time it comes to court on account of a challengthe time it comes to court on account of a challengthe time it comes to court on account of a challenge, get validated by e, get validated by e, get validated by additional grounds later brought out.additional grounds later brought out.”
SecondlySecondly, the objection taken by the department before this, the objection taken by the department before this, the objection taken by the department before this court court court wrongly imports the test of Section 5 of the Limitawrongly imports the test of Section 5 of the Limitawrongly imports the test of Section 5 of the Limitation Acttion Acttion Act, 1963 into into proceedings underproceedings under Circulars issued underCirculars issued under Section 119(2)(b) of the ActAct.
The two provisions serve different purposes and calThe two provisions serve different purposes and calThe two provisions serve different purposes and calThe two provisions serve different purposes and call for different l for different l for different l for different inquiries. Section 5 inquiries. Section 5 of the Limitation Actof the Limitation Act, 1963 governs belated appeals governs belated appeals and applications. It has a limitationand applications. It has a limitationand applications. It has a limitation-oriented focus. The court asks riented focus. The court asks whether the applicant was prevented by whether the applicant was prevented by whether the applicant was prevented by “sufficient cause” from filing from filing in timein time and explanation for the delay, day by dayand explanation for the delay, day by day, if needed, is central if needed, is central to that inquiry.to that inquiry. On the other hand, On the other hand, Section 119(2)(b) is a power of Section 119(2)(b) is a power of relaxation giverelaxation given to the Board and its delegates. It allows a claimn to the Board and its delegates. It allows a claimn to the Board and its delegates. It allows a claim for for for refund, made after the statutory period, to be admirefund, made after the statutory period, to be admirefund, made after the statutory period, to be admirefund, made after the statutory period, to be admitted and dealt with on tted and dealt with on tted and dealt with on tted and dealt with on merits where this is considered desirable merits where this is considered desirable merits where this is considered desirable “to avoid genuine hardship”“to avoid genuine hardship”. Para 5 of Circular No. 9/2015 dated 09.06.2015, on Para 5 of Circular No. 9/2015 dated 09.06.2015, on Para 5 of Circular No. 9/2015 dated 09.06.2015, on whicwhicwhich the h the department itself relies, prescribes what the authodepartment itself relies, prescribes what the authodepartment itself relies, prescribes what the authodepartment itself relies, prescribes what the authority must examine. rity must examine. rity must examine. rity must examine. Under para 5(i) it must ensure that (a) the income Under para 5(i) it must ensure that (a) the income Under para 5(i) it must ensure that (a) the income Under para 5(i) it must ensure that (a) the income or loss declared or or loss declared or or loss declared or or loss declared or refund claimed is correct and genuine and (b) the crefund claimed is correct and genuine and (b) the crefund claimed is correct and genuine and (b) the crefund claimed is correct and genuine and (b) the case is one of genuine ase is one of genuine ase is one of genuine ase is one of genuine hardship on merits. Under para 5(ii)hardship on merits. Under para 5(ii) it may also direct the jurisdictional direct the jurisdictional Assessing Officer to make inquiries or scrutinise tAssessing Officer to make inquiries or scrutinise tAssessing Officer to make inquiries or scrutinise tAssessing Officer to make inquiries or scrutinise the claim to ascertain he claim to ascertain he claim to ascertain he claim to ascertain its correctness.its correctness.
The controlling questions under Section 119(2)(b) aThe controlling questions under Section 119(2)(b) aThe controlling questions under Section 119(2)(b) are thereforere thereforere therefore, the correctness and genuineness of the claim and ththe correctness and genuineness of the claim and ththe correctness and genuineness of the claim and the existee existee existence of nce of genuine hardship. genuine hardship. The other mandateother mandate under this circular is that the under this circular is that the application for condonation of delay should be application for condonation of delay should be application for condonation of delay should be within 6 years from the 6 years from the end of the assessment year for which such applicatiend of the assessment year for which such applicatiend of the assessment year for which such applicatiend of the assessment year for which such application is made. on is made. on is made. on is made. A detailed explanation of detailed explanation of the delay is not the test. The delay is relevant as delay is not the test. The delay is relevant as delay is not the test. The delay is relevant as part of the circumstances, but it is not a standpart of the circumstances, but it is not a standpart of the circumstances, but it is not a stand-alone precondition in the alone precondition in the way it is way it is while considering an application filed while considering an application filed under Section 5 of the of the Limitation ActLimitation Act, 1963. ThirdlyThirdly, even if an explanation for th, even if an explanation for the delay was required, the objectionrequired, the objection raised by the revenueraised by the revenue is contrary to the record. The petitioner’s is contrary to the record. The petitioner’s is contrary to the record. The petitioner’s application for condonation of delay states as follapplication for condonation of delay states as follapplication for condonation of delay states as follows: ows: ows:
(i) The petitioner was an employee of HMT Ltd., TractorThe petitioner was an employee of HMT Ltd., TractorThe petitioner was an employee of HMT Ltd., TractorThe petitioner was an employee of HMT Ltd., Tractor Division, Division, Division, Division, Pinjore and received payment under Pinjore and received payment under Pinjore and received payment under the Voluntary Retirement the Voluntary Retirement Scheme.Scheme.
(ii) The employer, in the Form 16 it issued, granted theThe employer, in the Form 16 it issued, granted theThe employer, in the Form 16 it issued, granted theThe employer, in the Form 16 it issued, granted the benefit after benefit after benefit after benefit after allowing exemption under Section 10(10C) and deductallowing exemption under Section 10(10C) and deductallowing exemption under Section 10(10C) and deductallowing exemption under Section 10(10C) and deducting tax on ing tax on ing tax on ing tax on the balance.the balance.
(iii) The return was filed on that basis, that is, claimiThe return was filed on that basis, that is, claimiThe return was filed on that basis, that is, claiming ng ng exemption under exemption under Section Section 10(10C).
(iv) Thereafter the Commissioner (Appeals) allowed exempThereafter the Commissioner (Appeals) allowed exempThereafter the Commissioner (Appeals) allowed exempThereafter the Commissioner (Appeals) allowed exemption under tion under tion under tion under Section 10(10B), instead of Section 10(10C), in theSection 10(10B), instead of Section 10(10C), in theSection 10(10B), instead of Section 10(10C), in theSection 10(10B), instead of Section 10(10C), in the cases of cases of cases of cases of similarly situated HMT employees, holding that the similarly situated HMT employees, holding that the similarly situated HMT employees, holding that the similarly situated HMT employees, holding that the VRS taken by VRS taken by VRS taken by VRS taken by them was forced VRS. Two such orders, in the cases them was forced VRS. Two such orders, in the cases them was forced VRS. Two such orders, in the cases them was forced VRS. Two such orders, in the cases of Prem Pof Prem Pof Prem Pof Prem Pal and Karam Pal, were specifically cited.and Karam Pal, were specifically cited.and Karam Pal, were specifically cited.
(v) Because of this, the petitioner “could not” claim SBecause of this, the petitioner “could not” claim SBecause of this, the petitioner “could not” claim SBecause of this, the petitioner “could not” claim Section 10(10B) ection 10(10B) ection 10(10B) ection 10(10B) when filing the return. He then sought to revise thwhen filing the return. He then sought to revise thwhen filing the return. He then sought to revise thwhen filing the return. He then sought to revise the return after e return after e return after e return after those decisions and stated that making the claim withose decisions and stated that making the claim withose decisions and stated that making the claim withose decisions and stated that making the claim within the thin the thin the thin the prescribed time was “prescribed time was “genuinely out of my control”.genuinely out of my control”.
The petitioner had thus explained that he filed his original thus explained that he filed his original thus explained that he filed his original return on the basis of the employer’s Form 16 and treturn on the basis of the employer’s Form 16 and treturn on the basis of the employer’s Form 16 and treturn on the basis of the employer’s Form 16 and that the legal position on hat the legal position on hat the legal position on hat the legal position on which the Section 10(10B) claim rests only became kwhich the Section 10(10B) claim rests only became kwhich the Section 10(10B) claim rests only became known nown nown to him through through later decisions in the cases of similarly situated employdecisions in the cases of similarly situated employdecisions in the cases of similarly situated employdecisions in the cases of similarly situated employees. That is an ees. That is an ees. That is an ees. That is an explanation of why the claim was not made earlierexplanation of why the claim was not made earlierexplanation of why the claim was not made earlier. Thus, explanation for the. Thus, explanation for the delay was offered by the petitioner. Thisdelay was offered by the petitioner. Thisdelay was offered by the petitioner. This is contrary to the department’s is contrary to the department’s assertion that no reason was givenassertion that no reason was given by by him. Whether the explanation is. Whether the explanation is ultimately accepted is a separate question. The depultimately accepted is a separate question. The depultimately accepted is a separate question. The depultimately accepted is a separate question. The department’s plea that “no artment’s plea that “no artment’s plea that “no artment’s plea that “no reasons were mentioned” is not borne out reasons were mentioned” is not borne out reasons were mentioned” is not borne out from the record.
(24) In view of the above discussion, the impugned orderIn view of the above discussion, the impugned orderIn view of the above discussion, the impugned order dated dated dated 19.01.2022 rests on considerati19.01.2022 rests on considerations that are irrelevant or unreasoned andons that are irrelevant or unreasoned andons that are irrelevant or unreasoned and while passing the same, the PCITwhile passing the same, the PCIT did not apply the tests laid down in laid down in Circular No. 9/2015. Circular No. 9/2015.
(25) Accordingly, the writ petition is allowed. The ordeAccordingly, the writ petition is allowed. The ordeAccordingly, the writ petition is allowed. The order dated r dated r dated 19.01.2022 (Annexure P19.01.2022 (Annexure P-9) is quashed and set aside. The matter9) is quashed and set aside. The matter is remitted is remitted to the PCIT, who shall consider afresh the petitionto the PCIT, who shall consider afresh the petitionto the PCIT, who shall consider afresh the petitionto the PCIT, who shall consider afresh the petitioner’s application for er’s application for er’s application for er’s application for condonation of delay condonation of delay for permission to file revised returns for the assefor permission to file revised returns for the assefor permission to file revised returns for the assessment ssment ssment year 2017year 2017-18, after affording him an opportunity of hearing and cafter affording him an opportunity of hearing and cafter affording him an opportunity of hearing and considering onsidering onsidering the material on the material on record. We express no opinion on the merits of the We express no opinion on the merits of the We express no opinion on the merits of the petitioner’s claim. That claim is required to be depetitioner’s claim. That claim is required to be depetitioner’s claim. That claim is required to be depetitioner’s claim. That claim is required to be decided by the competent cided by the competent cided by the competent cided by the competent authority in accordance with law.authority in accordance with law. The PCIT shall pass a reasoned order The PCIT shall pass a reasoned order The PCIT shall pass a reasoned order within three months from the date of receipt of a cwithin three months from the date of receipt of a cwithin three months from the date of receipt of a cwithin three months from the date of receipt of a copy of this order, opy of this order, opy of this order, opy of this order, uninfluenced by any observation uninfluenced by any observation made in the impugned orderin the impugned order.
