System Failure due to Heavy Rainfall: Karnataka HC condones 36 days delay in filing ITR [Read Order]

The Karnataka High Court has held that the 36-day delay in filing income tax returns for the Assessment Year 2017-18 warranted condonation, as that system failure caused by heavy rainfall constituted a valid and sufficient ground for relief under the Income Tax Act, 1961.

The Petitioner, R N Shetty Trust, registered under the Bombay Public Trusts Act, 1950, filed its income tax returns for the Assessment Year 2017-18 after the prescribed due date. The delay of 36 days occurred due to system failure arising from heavy rainfall, which the Trust contended constituted a genuine and unavoidable hardship. Along with the delayed return, the Trust submitted an application under Section 119(2)(b) of the Income Tax Act, 1961 seeking condonation of the delay.

The Principal Commissioner of Income Tax (Central), Bengaluru, rejected the Trust’s application through an order, and later issued a corrigendum, declining to condone the delay. This led to the filing of the present writ petition challenging both orders.

The Trust, represented by Advocate Annamalai S., submitted that the inability to file the return on time was caused by circumstances beyond its control, including a system breakdown due to heavy rainfall. It was argued that the delay fell squarely within the expression “genuine hardship” contemplated in Circular No. 9/2015 dated 09.06.2015 issued under the Income Tax Act, 1961. Thus, the authority failed to appreciate that the reasons for the delay were bona fide, unavoidable, and supported by sufficient cause, and that a technical approach to the issue resulted in an unjust rejection.

The single bench of Justice S. R. Krishna Kumar observed that the authority had adopted a hyper-technical view in refusing condonation of a short delay of 36 days, despite the petitioner having demonstrated bona fide reasons and unavoidable circumstances. The Court held that failure to appreciate the effect of system failure due to heavy rainfall, along with the genuine hardship according to Circular No. 9/2015, rendered the rejection legally unsustainable.

Applying a justice-oriented approach, the Court set aside both the orders and allowed the Trust’s application under Section 119(2)(b) of the Income Tax Act, 1961. The respondents were therefore directed to accept the income tax returns filed for the Assessment Year 2017-18, with liberty to verify the claims and proceed in accordance with law.

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