Filing of Form 10-IC Prior to ITR Filing is Not Mandatory: Allahabad HC Condones delay considering Genuine Hardship

The Allahabad High Court has held that that filing of Form 10-IC prior to filing of return is not mandatory and if “genuine hardship” is shown then delay may be condoned.

The petitioner, Cell Com Teleservices Private Limited is challenging the order dated 30.01.2024, passed by the Principal Commissioner of Income Tax, Ghaziabad rejecting the application of condonation of delay filed by the petitioner for condoning the delay in filing Form 10-IC for assessment year 202021.

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The petition of the assessee company was forwarded to the Addl.Commissioner of Income Tax Range-2(1), Ghaziabad vide letter dated 04.01.2024 for his comments and report. Vide letter dated 17.01.2024 Addl.CIT Range-2(1), Ghaziabad has forwarded report of the JAO Concerned.

The Assessing Officer in his report stated that the assessee company has submitted that the person in charge of Income Tax matters. Sh. Anupam Sharma and his family members were suffering from COVID-19 during the year under consideration. On perusal of documents submitted by the assessee company, it appears that its claim is correct and genuine. Therefore, the application for condonation of delay in filing of Form 10-IC may be accepted.

Different view has been taken by the Range Head, Ghaziabad andstated. that the assessee company did not file Form No. 10-IC at the time of filing ITR, which is required to be filed on or before the due date of filing return of Income under section 139(1) of I.T. Act, 1961 and such option once exercised shall apply to subsequent year. But the assessee did not file the same within the specified date.

The assessee company has claimed that due to some technical problem of the I.T. Portal, it could not file the Form 10-IC within due date. However, the assessee company did not file any evidence with regard to the technical problem/glitches of I.T. Portal. The assessee company does not fulfil the 3rd condition laid down in the circular no. 6/2022 dated 17.03.2022. On perusal of records and the reports of the authorities below, it is notedthat assessee company was not in genuine hardship and therefore, the condonation application filed by the assessee company may not be considered/condoned.

The assessee company does not satisfy the conditions for condonationof delay under section 119(2)(b) as stipulated in Circular No. 9/2015 [F.No 312/22/2015-OT] dated 09.06.2015. Hence, the request for condonation of delay is hereby rejected”

Counsel for the respondent contended that the Principal Commissioner of Income Tax, Ghaziabad, correctly rejected the petitioner's application for condonation of delay under Section 119(2)(b) of the Act, due to a lack of "genuine hardship" because the responsibility for filing all statutory forms within the stipulated time lies with the assessee (petitioner) and not with its staff. The petitioner also failed to furnish documentary evidence to support claims of technical glitches.

Per contra, counsel for the petitioner submitted that relaxation has been granted by the various Courts by passing judgments under the heading of "genuine hardship", and in such a condition, the delay may be condoned and the petitioner may be directed to submit its Form 10IC even after filing its ITR. He further submitted that a further direction may be issued to the concerned respondent to inform the petitioner that the said form has been accepted.

A division bench of Justice B. Saraf and Justice Praveen Kumar Giri found that the Principal Commissioner of Income Tax, Ghaziabad, appears to have fallen into error by adopting an excessively precise and stringent approach to the application for condonation of delay under Section 119(2)(b) of the Act. The very essence of this statutory provision is to confer discretionary power upon the tax authorities to mitigate "genuine hardship" faced by assessees.

The undeniable and tragic circumstances of successive family deaths of the person handling petitionercompany’s tax matters, as submitted by the petitioner through a detailed affidavit of Anupam Sharma, unequivocally establish a case of profound personal hardship that directly impaired the petitioner's ability to ensure timely compliance.

“To dismiss such a well-substantiated cause as insufficient for condonation not only negates the remedial intent of Section 119(2)(b) but also constitutes an arbitrary exercise of discretion, particularly when the petitioner's intent to avail the beneficial provisions of Section 115BAA was evident from its original return and audit report.”, the bench observed.

The Court held that filing of Form 10-IC prior to filing of return is not mandatory and if “genuine hardship” is shown then delay may be condoned and in this respect the provision of law shall be taken as a beneficial piece of legislation. The court quashed the impugned order passed by the Principal Commissioner of Income Tax and directed to condone the delay in filing Form 10-IC and accept the said Form 10-IC.

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