Rajasthan HC Condones Delay in Income Tax Filing Due to Genuine Hardship

Suman Devi Vs ITO (Rajasthan High Court)

In a recent judgment, the Rajasthan High Court addressed the case of Suman Devi versus Income Tax Officer (ITO), emphasizing the powers of the Income Tax Department to condone delays in filing Income Tax Returns (ITR) under Section 119(2)(b) of the Income Tax Act, 1961. This case revolved around a small business owner seeking condonation for a minor delay in filing her returns for the assessment year 2021-2022.

Suman Devi, a widow and proprietor of a small firm trading in herbs, encountered technical difficulties that led to a delay of 15 days in filing her income tax return. Her counsel argued that the delay was due to genuine hardships, including computer malfunctions during account preparation, which required recalculations. The petitioner’s gross income fell below the taxable threshold, and all relevant TDS details were duly reported in Form 26AS.

The petitioner’s plea for condonation of delay was contested by the Income Tax Department, citing procedural timelines that weren’t adhered to. However, the petitioner’s counsel highlighted Section 119(2)(b) of the Act, which grants discretionary powers to condone delays in genuine cases of hardship.

The Rajasthan High Court examined precedents and relevant circulars, including Circular 9/2015, emphasizing the need for genuine hardship and correctness of income declarations when condoning delays. Considering the factual matrix presented, the Court concluded that the delay in filing the return was adequately justified under the circumstances.

Conclusion

In its judgment, the Rajasthan High Court allowed Suman Devi’s writ petition, overturning the earlier order that denied condonation of delay. The Court directed the Income Tax Department to accept the belated return for the assessment year 2021-2022, affirming that while assessments could be challenged on legal grounds, procedural limitations should not impede genuine cases of hardship. This case underscores the discretionary powers of tax authorities to exercise compassion and flexibility in appropriate circumstances under the Income Tax Act, ensuring fairness and justice in tax administration.

FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT

1. The petitioner in this writ petition emerges the facts that the petitioner is the proprietor of the firm, who is engaged in trading of herbs and certain plants required for Ayurved. The firm was registered under the Central Goods and Service Tax, 2017. The only point raised is that the petitioner sought condonation of delay in filing the return of the assessment year 2021-22 which is within the purview of Section 119(2)(b) of the Income Tax Act 1961 (hereinafter referred to as ‘The Act of 1961’) whereby the delay of 15 days was sought to be condoned. The petitioner claimed that after the standard deductions, the total gross income was below Rs.2,50,000/- and the petitioner had acquired a total TDS of Rs.77,220/- which was also reflected in Form 26AS.

2. Learned counsel for the petitioner has given ample reasons for the delay of 15 days in filing the return for the assessment year 2021-2022 as petitioner is a widow and is running a small business in a small town. Learned counsel for the petitioner also pointed out that the reason for the delay includes the crashing of the computer at the time of preparation of the accounts and then the same was required to be recomputed. He further submits that the respondents had ample power particularly under Section 119(2)(b) of the Act of 1961 and thus such a small delay in a peculiar matter ought to have been condoned.

3. The counsel for the respondents opposes on the ground that there is a time limit which needs to be followed and the same was not followed by the petitioner and thus, merely on the ground of sympathy the delay cannot be condoned.

4. The issue raised by the learned counsel for the petitioner before this court is trivial. This Court finds that the respondents have ample powers to condone the delay of the assessee, if sufficient reasons are found.

5. At this juncture, it is considered appropriate to reproduce the relevant portion of the Circular 9/2015 [F.No.312/22/2015-OT], Dated 09.06.2015 as hereunder: –

“SECTION 119 OF THE INCOME-TAX ACT, 1961-INCOME-TAX AUTHORITIES – INSTRUCTIONS TO SUBORDINATE AUTHORITIES – CONDONATION OF DELAY IN FILING REFUND CLAIM AND CLAIM OF CARRY FORWARD LOSSES UNDER SECTION 119(2)(b)

CIRCULAR 9/2015 [F.NO.312/22/2015-OT], DATED 9­6-2015

…..

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. ……”

6. The petitioner is a widow and is running a very small business of herbs and was at a loss in the year when she was running this business as a proprietor of the firm. As the delay in filing the return has been adequately explained by stating the complete factual matrix, this Court is inclined to allow the writ petition.

7. Accordingly, the writ petition is allowed while quashing the impugned order dated 07.11.2023 (Annexure-1). The respondents are directed to treat the return filed by the petitioner for the assessment year 2021-2022 within time. It is needless to say that the respondents shall be at a liberty to question the assessment on law but not on the limitation.

8. All pending applications stand disposed of.