Genuine hardships faced by Consultant: Bombay HC reverses time-barred IT deduction claim for reconsideration u/s 119(2)(b) [Read Order]

Bombay Highcourt - time-barred IT deduction claim - IT deduction claim f - time-barred IT deduction claim for reconsideration - taxscan

The Bombay High Court has recently reversed a claim for deduction under Section 80-IB(10) of the Income Tax Act, 1961 as genuine hardships were faced by the tax consultant and returns had to be filed after lapse of the prescribed time. The Division Bench observed that the denial order is liable to be set aside as there was sufficient cause for condonation of delay under Section 119(2)(b) of the Income Tax Act.

The petitioner, M/s Bhatewara Associates, being a firm engaged in the business of real estate, builders and developers since 2007, had entered into a joint venture agreement dated in 2008 with M/s Sanghvi Premise Pvt. Ltd. to jointly develop a housing project named “Sanghvi Nakshatra” situated at Nasik and the project having met the conditions under Section 80-IB(10), claimed deduction for the same from the total tax liability.

It was vehemently argued by counsel Sanket S. Bora, on behalf of the petitioner that the joint venture partner was successful in availing the deduction claim. The deduction of the petitioner for the Assessment Years 2010-11 to 2013-14 were also granted to the petitioner. However, admittedly, the returns for the AY 2010-11 remained to be filed within the time prescribed.

It was further submitted by the petitioner counsels Sanket S Bora and Vidhi K Punmiya that the inadvertent medical emergencies faced by the tax consultant led to the delay in filing. The same was admitted by the Income Tax consultant in the oath and affidavit submitted.

In response, on behalf of the respondent-revenue, Standing Counsel N N Singh submitted that, the application under Section 119(2)(b) of the Act has been filed only on 11th October, 2019 after a delay of more than 5 years just to avail of the deduction under Section 80-IB(10) and the same was inane and bad in law.

It was further argued by the Standing Counsel that no man can take advantage of his own wrong and the ground of income tax consultant’s omission.

Observing that, “We do not find that the omission to file petitioner’s return by the income tax consultant to be an act of negligence”, the Division Bench of Justice Abhay Ahuja and Justice Dhiraj Singh Thakur opined that, “The authorities should refrain from over analysis which leads to paralysis of justice.”

As a result of the observations made in light of the facts of the case and provisions of law under Section 119(2)(b) of the Income Tax Act, 1961, the impugned order was set aside and the matter was reverted to consider the claim for deduction under Section 80-IB(10) for AY 2011-12 made by the petitioner in accordance with law.

It was also clarified that no observation in the claim for deduction is made by the bench.

The authorities under the Direct Tax Vivad Se Vishwas Act (DTVSV) Act were also directed to act in accordance with the said findings and amend Form 3 in respect of the amounts to be paid by the petitioner, in the benefit alternatively opted by the petitioner, as provided under the Direct Tax Vivad Se Vishwas Act, 2020.

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