Rajgrin Infralink LLP's Application for Delay in Filing Returns Gets Judicial Relief; High Court Emphasizes Liberal Interpretation of 'Genuine Hardship'
In a significant ruling, the Gujarat High Court has set aside the order of the Principal Commissioner of Income Tax 1 Surat, which had rejected Rajgrin Infralink LLP's application seeking condonation of a 25-day delay in filing their income tax return for the Assessment Year 2020-21. The High Court, comprising Justices A.S. Supehia and Vaibhavi D. Nanavati, emphasized the need for a liberal construction of 'genuine hardship' under Section 119(2)(b) of the Income Tax Act, particularly in the context of the COVID-19 pandemic.
The petitioner, Rajgrin Infralink LLP, faced disallowance of a substantial deduction claim under Section 80IBA due to the delayed filing. The company had filed its return late due to the pandemic, which had been a period of unprecedented disruption. The Income Tax authorities had dismissed the application for condonation, leading to an appeal in the High Court.
In its oral judgment, the High Court clarified that the mere pendency of an appeal against the assessment order does not preclude judicial scrutiny of the rejection of the condonation application. The court noted that the Commissioner of Income-tax (Appeals) lacked the authority to condone delays, thus affirming the appropriateness of seeking remedy under Section 119(2)(b).
Referencing a similar earlier case involving the same petitioner for A.Y. 2021-22, where a 13-day delay was condoned, the court found the current situation analogous and deserving of similar relief. The bench underscored that refusal to condone such delays might result in meritorious matters being dismissed prematurely, contradicting the principles of justice.
The court's decision restores the application for delay condonation to its original standing and mandates the Commissioner of Income-tax (Appeals) to examine the merits of the deduction disallowance under Section 80IBA without being influenced by the delay in filing. This ruling is expected to provide a significant precedent for similar cases where procedural delays have occurred due to extraordinary circumstances like a global pandemic.
Bottom Line :
Income Tax - Delay in filing return - Rejection of application for condonation under Section 119(2)(b) set aside - Mere pendency of appeal against assessment order does not bar writ court from examining validity of order rejecting condonation - Commissioner of Income-tax (Appeals) has no power to condone delay in filing return - Genuine hardship under Section 119(2)(b) has to be construed liberally, particularly where delay occurred during COVID period.
Statutory provision(s): Section 119(2)(b), Section 80IBA, Section 139(1), Section 143(3), Section 144B of the Income Tax Act, 1961.
