PCIT u/s 119(2) (b) has no power to consider Merits of Claim while Condoning Delay in Filing Return: Kerala HC dismisses Writ Petition [Read Order]

The Kerala High Court while dismissing the writ petition has held that Principal Commissioner of Income Tax (PCIT) under section 119(2) (b) of the Income Tax Act, 1961 has no power to consider merits of claim while condoning delay in filing return.

Best Ready Mix Concrete , the petitioner challenged the order passed by the Principal Commissioner of Income Tax, Kozhikkode under Section 119(2)(b) of the Income Tax Act, 1961 (“Act”) rejecting theapplication of the petitioner for condonation of delay of one day in filing the income tax returnfor the assessment year 2021-22. 

The assesse M/s.Best Ready Mix Concreted has filed a petition on 03.06.2022 to condone the delay in filing of return of income for AY2021-22.

As per the instructions of CBDT circular 9/2015 [f.no.312/22/2015-ot], dated 9-6-2015, on condonation of delay in filing refund claim and claim of carry forward losses under section 119(2)(b) the powers of acceptance/rejection of the application in case of such claims will be subject to Following conditions:

I.             At the time of considering the caseunder 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 correctness of the claim should beascertained.

Since assessee failed to furnish sufficient details/evidences called for, the claims made by the assesse was rejected.

It was submitted by the petitioner that the power under Section 119(2)(b) of the Act is vested with the Central Board of Indirect Taxesand Customs and it delegates the Principal Commissioner/the Principal Chief Commissioner of Income Tax to condone the delay in filing return, on consideration given to the application filed by an assessee for not filing return on time.  She further submitted the Act does not give power to thePrincipal Chief Commissioner/the Principal Commissioner of Income Tax to consider the merits of the claim of income, loss etc. 

The impugnedorder would disclose that the Principa lCommissioner of Income Tax has not delineated the grounds for condoning the delay, but has rejected the application considering the merits of the claim of the petitioner. 

On the other hand, Sri.P.G.Jayasankar, Standing Counsel for the Department, submitted that the Principal Chief Commissioner has not considered the merits of the claim, but sincethe assessee did not produce or furnishsubstantiating evidences with regard to the claims made in the application, the Principal Commissioner of Income Tax rejected the application of thepetitioner.

On a perusal of Section 119(2)(b) of the Act, it is evident that the said Section onlyempowers the Board to admit an application or claim for exemption, deduction, refund or any other relief under the Act, after the expiry of the period specified by or under the Act for making such application or claim and deal with the same on merits, in accordance with law.  The Board has delegated such power to the Principal Chief Commissioner of Income Tax/the Principal Commissioner of Income Tax vide its circular No.9/2015 dated 9.6.2015.

A single bench of Justice Dinesh Kumar Singh set aside the impugned order. While allowing the petition, the matter is remitted back to the file of the Principal Commissioner of Income Tax to pass fresh orders on the application of the petitionerassessee for condonation of delay in filing the return.  While considering the said application for condonation of delay, the Principal Commissioner is not required to go into the merits of the claim ofthe petitioner.  

To Read the full text of the Order CLICK HERE

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BEST READY MIX CONCRETE vs THE PRINCIPAL COMMISSIONER OF INCOME TAX , 2023 TAXSCAN (HC) 1865 , HARISANKAR V. MENON, MEERA V.MENON, R.SREEJITH , P.G. JAYASANKAR