12 days delay in filing ITR: Delhi HC Quashes order passed in Mechanical Manner [Read Order]

In a recent case, the Delhi High Court has quashed the order passed in a mechanical manner for a 12-day delay in filing Income Tax return (ITR). The court set aside the impugned order dated 30.05.2023 and remand the matter back to the concerned PCIT for a de novo consideration to decide the application.

Udit Goyal, the petitioner is challenging the order dated 30.05.2023 passed by the respondent, on an application under Section 119(2)(b) of the Income Tax Act, 1961 (‘the Act’) seeking condonation of delay in filing the Income Tax Return (‘ITR’) for the Assessment Year (‘AY’) 2021-22.

The assessee filed his ITR on 12.01.2022 under Section 139(4) of the Act, declaring taxable income of Rs. 11,40,040/- while claiming loss under the head ‘long term capital gain’ amounting to Rs 41,85,770/- from the sale of securities as carried over.

The petitioner/assessee was required to file the ITR on or before 31.12.2021. So, in other words, the filing of the ITR was delayed by 12 days as the same was filed on 12.01.2022. The assessee/petitioner filed an application dated 28.02.2023 seeking condonation of delay in filing the return of income. The grounds for delay as submitted by the assessee primarily rested on COVID-19 pandemic, (‘the pandemic’). The same was rejected by the respondent in terms of the impugned order which we have already reproduced.

Master the Latest Amendments in Income Tax Act Click here

The respondent has failed to appreciate that limitation would not come as a hindrance to do substantial justice. In any case, the delay was inadvertent due to the second and third waves of the pandemic. In late December, 2021, the assessee’s office was working with limited staff while trying hard to meet the deadlines. The delay was not deliberate/wilful. It was on account of genuine hardship that the ITR could not be filed on time.

According to him, there is no dispute that the pandemic variant ‘Omicron’ was hovering till December, 2021. Restrictions followed, even after that, on various services. The respondent failed to exercise the discretionary power under Section 119 of the Act to further the cause of equity. It is his submission that the respondent has also failed to follow the mandate of Section 119(2)(b) whereby the respondent was to focus on evaluating sufficiency of reasons for delay rather that merit.

It was stated that the impugned order overlooks loss under sale of securities claimed by the assessee and return filed by him, demonstrating the assessee’s intention to comply with applicable laws. It is also his submission that the impugned order is without any rationale/reasoning and merely states that the case is not a case of genuine hardship on merits as per the Central Boardof Direct Taxes (‘CBDT’) Circular of 9/2015. The impugned order fails to consider that the assessee had already paid total taxes of Rs. 1,50,985/- against the total payable tax of Rs. 29,643/- resulting in a refund of Rs. 1,21,340/-.

It was submitted that the delay was not deliberate and corrective actions were taken i.e., ITR filed, showing bona fide conduct. On the other hand, counsel for the respondent would oppose the writ petition by stating that the Circular No. 09/2015 requires the tax payer to prove that the delay was caused by circumstances beyond his control resulting in genuine hardship.

Tax Planning For NRIs Click here

The e loss of carry forward benefits is not allowed in belated ITRs in respect of any losses from the head business/profession and capital gains and accordingly Centralised Processing Centre (‘CPC’) disallowed the carry forward of long term capital loss amounting to Rs.(-) 41,85,770/- in the petitioner’s case. He also stated merely referring to the pandemic is insufficient to justify the delay. The impugned order dated 30.05.2023 rejecting the petitioner’s condonation application under Section 119(2)(b) of the Act was passed after due application of mind and in accordance with settled law and CBDT Circular No. 09/2015.

He also stated that the due date for furnishing the return of income for the AY 2021-22 was 31.07.2021 which was extended to 30.09.2021 and thereafter till 31.12.2021 and as such the petitioner had ample time between

July 2021 to December 2021 to file the ITR but the same was not filed within the time stipulated. No exceptional circumstances were shown for the delay that had occurred in filing their ITR. In support of his contention, he also relied upon the judgment of the Supreme Court in the case of B.M Malani vs. CIT, (2008) 10 SCC 617.

It may be stated here that Section 119(2)(b) of the Act empowers the CBDT, 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 any income tax authority, not being a Joint Commissioner (Appeals) or a Commissioner (Appeals), to admit an application or claim for any 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 of claim and deal with the same on merits in accordance with law.

The exercise of power by the authority is regulated by empowering the various officers on the basis of monetary effect. The Principal Commissioner of Income Tax (‘PCIT’) had considered the application filed by the assessee seeking condonation of delay and has primarily stated that in the month of December 2021, the metro, trains and buses were running with 50% capacity and as such the assessee had enough time to file his ITR. Hence, the non-filing of the ITR does not seem to be genine.

Tax Planning For Trusts and cooperation Societies Click here

Therefore, the reasons ascribed in the counter affidavit merit no consideration as the impugned order before us does not allude to any rationale before deciding the condonation of delay application filed under Section 119(2)(b) of the Act.

The CBDT Circular No. 09/2015 highlights the fact that while considering the case under Section 119(2)(b), it is to be seen that the case is of genuine hardship on merits. The PCIT who admittedly exercises powers under Section 119(2)(b) of the Act acts as a quasi-judicial body, is under an obligation to pass a reasoned order.

Concedingly, the impugned order, except stating that there was no genuine hardship in filing the return of income, does not deal with the detailed application filed by the petitioner/assessee on 28.02.2023.

It is clear that the PCIT has not dealt with the various averments made by the petitioner/applicant and has rejected the application for condonation of delay in a mechanical manner, which, according to us, is clearly unsustainable.

A division bench of Justice V. Kameswar Rao and Justice Vinod Kumar observed that the petitioner despite signing the return on 31.07.2020 had ultimately filed the same on 30.03.2021. It was also noted that the recital of facts which appear under paragraph 7(iii) clearly demolished the assertion of financial constraints that may have befallen the assessee. Whereas in the case in hand, the return was filed with a delay of twelve days only

The bench held that the impugned order herein passed by the respondent is without considering the averments made by the petitioner in the application and to that extent, is an unreasoned order. The court set aside the impugned order dated 30.05.2023 and remand the matter back to the concerned PCIT for a de novo consideration to decide the application, keeping in view our observations made above.

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates