Case Note & Summary
The petitioner, CG Power and Industrial Solutions Ltd., a company, filed a writ petition under Article 226 of the Constitution of India before the Bombay High Court challenging an order dated 29 February 2024 passed by the Central Board of Direct Taxes (CBDT). The CBDT had rejected the petitioner's application under Section 119 of the Income Tax Act, 1961 seeking condonation of delay in filing revised returns of income for Assessment Years 2015-16 to 2020-21. The petitioner had originally filed its returns within the prescribed time but inadvertently failed to file revised returns within the time allowed under Section 139(5) of the Act. The petitioner applied to the CBDT for condonation of the delay, explaining the reasons for the delay. The CBDT, without granting a personal hearing or considering the merits of the explanation, passed a brief order rejecting the application. The High Court, after hearing the parties, observed that the CBDT's order was non-speaking and did not disclose any application of mind to the facts of the case. The court held that the CBDT, being a quasi-judicial authority, was bound to pass a reasoned order after affording the petitioner an opportunity of being heard. The impugned order was set aside, and the matter was remanded back to the CBDT with a direction to pass a fresh order after giving the petitioner a hearing and considering the explanation on merits. The court also directed the CBDT to decide the application within eight weeks from the date of the order. The petition was allowed in these terms.
Headnote
A) Income Tax - Delay Condonation - Section 119 of Income Tax Act, 1961 - CBDT's Power - The petitioner sought condonation of delay in filing revised returns for six assessment years. The CBDT rejected the application without considering the merits and without granting a personal hearing. The High Court held that the order was non-speaking and violated principles of natural justice, and set it aside with directions to pass a fresh order after hearing the petitioner. (Paras 1-10) B) Income Tax - Revised Return - Section 139(5) of Income Tax Act, 1961 - Time Limit - The petitioner had filed original returns but failed to file revised returns within the prescribed time due to inadvertence. The court noted that the CBDT has power under Section 119 to condone delay in such cases, and the rejection without considering the explanation was arbitrary. (Paras 3-8) C) Administrative Law - Natural Justice - Right to Hearing - The CBDT's order was passed without affording the petitioner an opportunity of being heard. The High Court emphasized that quasi-judicial authorities must pass reasoned orders after considering submissions, and failure to do so renders the order unsustainable. (Paras 9-10)
Issue of Consideration
Whether the CBDT's order rejecting the petitioner's application under Section 119 of the Income Tax Act, 1961 for condonation of delay in filing revised returns for A.Y. 2015-16 to 2020-21 was valid and sustainable in law.
Final Decision
The High Court allowed the petition, set aside the impugned order dated 29 February 2024, and directed the CBDT to pass a fresh order after giving the petitioner an opportunity of hearing and considering the explanation on merits, within eight weeks from the date of the order.
Law Points
- Section 119 of Income Tax Act
- 1961
- CBDT's power to condone delay
- non-speaking order
- principles of natural justice
- right to be heard
