Heavy Rainfall Valid Reason for Income Tax Delay: Karnataka HC Quashes Commissioner's Order [Read Order]

The High Court of Karnataka held that heavy rainfall valid reason for Income tax delay and quashed the commissioner’s order. The petition challenged an order dated 24.02.2021 passed by the Principal Commissioner of Income Tax, which had rejected an application for condonation of delay in filing income tax returns for the Assessment Year 2017-18.

The court held that the order dated 24.02.2021 and its corrigendum, which rejected the petitioner's application for condonation of a 36-day delay, were erroneous. It was held that the delay constituted "genuine hardship" as contemplated under Circular No. 9/2015, and the respondents had adopted a hyper-technical approach in refusing the condonation.

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The core issue was whether the petitioner's inability to file income tax returns within the prescribed period due to a system failure caused by heavy rainfall amounted to sufficient cause for condonation under Section 119(2)(b) of the Income Tax Act, 1961.

R N Shetty Trust, the Petitioner, represented by its trustee Sri Naveen Rama Shetty, contended that the delay was due to bona fide reasons and unavoidable circumstances beyond its control. It was argued that the failure to appreciate this genuine hardship on the part of the assessee warranted the court's intervention to set aside the impugned order.

The Respondent, the Income Tax authorities, opposed the petition, supporting the impugned order. They submitted that there was no merit in the petition and that the original order rejecting the condonation application was legally sound and should be upheld.

Justice S.R.Krishna Kumar ruled in favor of the Petitioner. The court found that the respondents had failed to appreciate that the petitioner's inability to file the returns was due to system failure and genuine hardship, which constituted sufficient cause for condonation. Adopting a "justice-oriented approach," the court deemed it just and appropriate to interfere.

The bench held that the application filed by the petitioner under Section 119(2)(b) for condonation of delay is hereby allowed. Consequently, the impugned order at Annexure-A1 and its corrigendum at Annexure-A2 were set aside. The respondents were directed to accept the returns filed by the petitioner for the Assessment Year 2017-18, with the liberty to verify the claim and proceed further in accordance with law.

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