Sanjeev Charles V. Union of India and Central Board of Direct Taxes and Deputy Commissioner of Income Tax C-1(2) Thiruvananthapuram

WP(C)/8988/2012

AI Insights

The case revolves around the petitioner's claim for a deduction under Section 80-IB of the Income Tax Act, 1961, for the assessment year 2008-09, which was initially denied by the CBDT due to a delayed filing of the income tax return. The petitioner, Sanjeev Charles, argued that the delay was caused by a technical snag and was exacerbated by public holidays, thus constituting a genuine hardship. The CBDT's rejection was based on the grounds that the delay did not constitute a genuine hardship and that the return could have been filed electronically despite the holidays. The High Court, referencing similar cases and the principles of genuine hardship, found in favor of the petitioner, condoning the delay and allowing the deduction.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 698203 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 03-07-2023
• Assessment Year: misc
• Other Referred Cases: Lodhi Property Company Ltd. v. Under Secretary, Department of Revenue, Surendranagar District Co-operative Bank Ltd. v. The Deputy Commissioner of Income Tax, Pala Marketing Co-operative Society Ltd. v. Union of India
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: P K MENON; JOSE JOSEPH
• Assessee Lawyers: A KUMAR
• Keywords: Condonation of delay; Deduction; E-filing; Income Tax; Technical snag
• Section: 139(1); 119(2)(b); 80-IB

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL MONDAY, THE 3RD DAY OF JULY 2023 / 12TH ASHADHA, 1945 WP(C) NO. 8988 OF 2012 PETITIONER/S: SANJEEV CHARLES AGED 54 YEARS FLAT NO 7D, KOWDIAR MANOR APARTMENT, JAWHAR NAGAR, THIRUVANANTHAPURAM - 695043 BY ADV SRI.A.KUMAR RESPONDENT/S: 1 UNION OF INDIA REPRESENTED BY THE SECRETARY, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE NEW DELHI 110001. 2 THE CENTRAL BOARD OF DIRECT TAXES DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NORTH BLOCK, NEWDELHI 110001 3 THE DEPUTY COMMISSIONEROF INCOME TAX C-1(2) THIRUVANANTHAPURAM 695001 BY ADVS. SRI.P.K.RAVINDRANATHA MENON (SR.) SRI.JOSE JOSEPH, SC FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03.07.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 8988 OF 2012 2 J U D G M E N T Petitioner, an individual assessee under the Income Tax Act, 1961 ('Act', for short), had been filing returns without any demur and receiving refund of tax on account of excess remittances and claiming deductions, also, while doing so. 2. For the assessment year 2008-09, certain deductions were claimed under Section 80-IB of the Act from an eligible undertaking 'print finish equipment' amounting to Rs.32,14,241/- being 25% of the net profit (Rs.1,28,56,965/-) as per the Profit and Loss account. The said computation was annexed to the return, Ext.P1. 3. Mr.A.Kumar, learned counsel appearing on behalf of the petitioner, submitted that the said deduction was valid only if the return of income was filed before the due date, and the due date was 30.09.2008, which was further extended to 01.10.2008 by Central Board of Direct Taxes (CBDT) as per press release dated 22.12.2008. 30.09.2008 was a Bank holiday for the customers and WP(C) NO. 8988 OF 2012 3 02.10.2008 was a public holiday as Gandhi Jayanthi and therefore, petitioner could file his return only on 03.10.2008 and thus there occurred a delay of two days. The return was uploaded on 3.10.2008. However, vide impugned order, Ext.P4, dated 9.2.2012, CBDT rejected the claim of the petitioner for deduction under Section 80-IB on the ground that no issue of genuine hardship was made out for not filing the return within the period specified aforementioned. 4. In support of his contention, learned counsel for the petitioner relied upon the decision of Delhi High Court in Lodhi Property Company Ltd. v. Under Secretary, Department of Revenue [(2010) 323 ITR 441], wherein delay of two days had occurred and noticing the fact that the order impugned was a non-speaking one, condoned the delay. Decision of Gujarat High Court in the Surendranagar District Co-operative Bank Ltd. v. The Deputy Commissioner of Income Tax [(2019) 416 ITR 294 (Guj.)], was also relied wherein while considering the question of condonation of delay WP(C) NO. 8988 OF 2012 4 in filing claim of carry forward losses under Section 119(2)(b) of the Act, the Court held that if an application or claim is not made by the assessee within the period specified in the Act on account of reasons beyond the control of the assessee, in case of genuine hardship, CBDT ought to have exercised powers under Section 119(2)(b) of the Act. 5. On the other hand, learned Standing Counsel appearing for the third respondent opposed the aforementioned prayers by specifically referring to the contents of paragraph No.2 of the counter statement. He denied the contention that the period was extended to 01.10.2008 as no details of the circular was available. The claim of the petitioner that he was in fact out of station on the due date was not supported by any explanation. Even otherwise, the fact that 30.09.2008 and 2.10.2008 were holidays had no bearing on the delay occurred in filing income tax return as return could be filed via electronic means. Therefore, the CBDT rightly passed the WP(C) NO. 8988 OF 2012 5 order, Ext.P4, dated 09.02.2012, which cannot be interfered with and the writ petition is liable to be dismissed. 6. In rebuttal, Mr.A.Kumar, learned counsel appearing for the petitioner, had relied upon certificate dated 29.11.2010, Ext.P2, issued by Kumar and Biju Associates, Chartered Accountants specifying the technical snag of their computer and internet connectivity for not uploading the return within the stipulated period. This fact also had not been taken into consideration by the CBDT. On that basis, he submitted that if this was the situation, there would not be any problem for the CBDT to pass a fresh order. 7. I have heard the learned counsel for the parties and appraised the paper book. 8. The order impugned dated 9.2.2012, Ext.P4 reads as under: “A petition to condone the delay in filing returns of income for Assessment Year 2008-09 was filed by Shri Sanjeev Charles u/s 119(2)(b) of the Income Tax Act, 1961. The reasons given for the delay, by the WP(C) NO. 8988 OF 2012 6 petitioner, in the petition, were that there was a technical snag in the computer due to which the return could not be e-filed before the due date. It was also stated that the applicant was out of station on the due date. 2. The assessee has claimed deduction u/s 801B of the Income Tax Act. This deduction is subject to the satisfaction of conditions mentioned in Section 80AC which is reproduced as under: “80AC : Where in computing the total income of an assessee of the previous year relevant to the assessment year commencing on the 1st day of April, 2006 or any subsequent assessment year, any deduction is admissible under Section 80-1A or section 80-1AB or section 80-1B or section 80-IC [or section 80-ID or section 80-1E] no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139,\" 3. Since the return has not been filed before the due date, the assessee is not eligible for any deduction in Chapter VIA as the conditions required in the aforesaid Section 80AC is not satisfied. It is a mandatory requirement of the statute which is laid down as a pre-requisite for the deduction to be availed. Section 119 (2)(b) is applicable to cases of genuine hardship, where the Board can authorize an Income-tax Authority to admit application or claim after the expiry of the date specified under this Act and thereafter deal with the same on merit. WP(C) NO. 8988 OF 2012 7 4. In the present case, no issue of genuine hardship is made out by the applicant. Further the reasons stated for not filing the return and thereby not complying with the requirements of section 80AC are very flimsy and are not apparently beyond the control of the assessee. The petition for condonation of delay has therefore been rejected by the Board. 5. This issues with the approval of Member(Income Tax), CBDT, Special Secretary to the Government of India.” 9. Section 119(2)(b) of the Act dealing with condonation of delay in filing the return, reads as under: “119. Instructions to subordinate authorities:— xxx xxx xxx (2) Without prejudice to the generality of the foregoing power,— xxx xxx xxx (b) the Board may, 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, authorise any income-tax authority, not being a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period WP(C) NO. 8988 OF 2012 8 specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law;” The delay can be condoned in cases where genuine hardship has been explained. 10. The contents of the certificate dated 29.11.2010, Ext.P2, issued by the Chartered Accountants is extracted hereinbelow: “This is to Certify that our Client, Mr. K C Sanjeev residing at Flat No. 7D, Kowdiar Manor Apartment, Jawahar Nagar, Trivandrum- 695 043 (PAN:- ABWPC4379B) has entrusted us to upload the Return of Income for the year 2007- 08 relevant to A.Y. 2008-09 as was the practice followed by him and all other Clients of ours. Towards this end the Digital Signature Certificate and the Password has been handed over to us. Due date of said Return was 30/09/08, further extended to 01/10/08 by Central Board of Direct Taxes PRESS RELEASE 22nd December 2008 (No.402/92/2006-MC (53 of 2008). It may also be noted that 30/09/2008 was Bank holiday (for customers) and 02/10/2008 was a public holiday being Gandhi Jayanti. Moreover, due to technical snag of our Computer and the Internet connectivity, the said Return of Income could not be uploaded on the said due dates. This snag was rectified WP(C) NO. 8988 OF 2012 9 only on 03/10/2008 and immediately the same was uploaded causing a delay of 2 (Two) days, which happened beyond of our control. This Status Report is issued to our Client to be produced before the Hon'ble Central Board of Direct Taxes (CBDT) and the Assessing Officer having jurisdiction to prefer a Petition to condone the delay in filing the Return Of Income and thereafter to admit the deduction u/s 801B of the I.T.Act, 1961 for A.Y. 2008-09.” It is a matter of record that the certificate was also enclosed along with the return and brought to the notice of the CBDT, but from the order extracted hereinabove (Ext.P4) it is evident that the said certificate was not taken into consideration by the CBDT. 11. Though there is some force in the argument of the learned counsel for re-visiting the issue, but controversy herein is pending since 2012, I refrain myself from remitting the matter, for the reason that the delay of two days, in fact, had already been explained as evident from the contents of the certificate, Ext.P2, issued by the Chartered Accountants. When similar WP(C) NO. 8988 OF 2012 10 situation arose, Delhi High Court considered the matter and condoned the delay in the decision in Lodhi Property Company Ltd. (supra), the relevant port of paragraph No.8 thereof reads as under: “8. Coming back to the facts of the present case, we find that the impugned order under S.119 passed by the Board is a non- speaking one. Normally, we would have remanded the matter to the Board to consider the application of the petitioner afresh. However, we find that in the present case, the delay is only of one day and the circumstances have been explained and have not been controverted by the respondents. The fact of the matter is that the petitioner did reach the Central Revenue Building before the closure of the counter on 1st Nov., 2004. …......” 12. The expression 'genuine hardship' prescribed under Section 119(2)(b) of the Act has also been considered by this Court in Pala Marketing Co-operative Society Ltd. v. Union of India [(2008) 167 TAXMAN 238] and on analysis of the scope of Section 119(2)(b), this Court held that CBDT is obliged to look into the genuine hardship and should condone the delay if failure WP(C) NO. 8988 OF 2012 11 to do so causes genuine hardship to the assessee, no matter whether the delay is meticulously explained or not. 13. In my view, the delay explained herein may not be under any hardship caused, but is backed by an explanation which actually was not controverted in detail in paragraph No.2 of the counter affidavit of the third respondent, which is extracted hereinbelow: “2. With reference to paragraph 3, it is submitted that the claim that the due date for Asst. Year 2008-09 was extended to 01-10-2008 by CBDT under a Press release dated 22nd December 2008[No.402/92/2006-MC, 53 of 2008] was not found to be correct as no details of the said circular is seen available in the public domain. Also the claim that the petitioner was out of station on the due date and the day 30-09-2008 being a bank holiday and 02/10/2008 being a public holiday has no bearing on the delay occurred in filing income tax returns, as the return of income can be filed via electronic means. The delay in filing income tax return before due date was not unavoidable by the petitioner.” For the reasons aforementioned, the impugned order dated 9.2.2012, Ext.P4, is hereby set aside. WP(C) NO. 8988 OF 2012 12 The delay of two days in filing return by the petitioner for the assessment year 2008-09 is condoned. Writ petition would stand allowed. Sd/- AMIT RAWAL JUDGE jg WP(C) NO. 8988 OF 2012 13 APPENDIX PETITIONER'S EXHIBITS P1 : TRUE COPY OF RETURN OF INCOME AND THE COMPUTATION OF INCOME DATED 3.10.2008. P2 : TRUE COPY OF STATUS REPORT FROM PETITIONER'S AUDITORS REVEALING THE CONDITIONS PREVAILED DATED 29.11.2010. P3 : TRUE COPY OF PETITIONER'S APPLIATION TO CBDT TO CONDONE THE DELAY IN FILING RETURNS DATED 22.11.2010. P4 : TRUE COPY OF ORDER OF CBDT DATED 9.2.2012. "