Case Note & Summary
The petitioner, a joint venture between M/s R. K. Madhani & Co. and M/s Prakash Engineers & Infraprojects Private Limited, was engaged in executing projects for the Municipal Corporation of Greater Mumbai. For the Assessment Year 2016-2017, the petitioner paid tax amounting to Rs.91,38,083/-, reflected in Form 26AS. The petitioner filed its return of income belatedly on 30th November 2016 under Section 139(4) of the Income Tax Act, 1961. The due date for filing was 30th September 2016, extended to 17th October 2016, resulting in a delay of 43 days. By a letter dated 19th July 2019, the petitioner requested the Commissioner of Income Tax-22 to condone the delay, explaining that the delay was due to the concerned person being indisposed due to medical reasons. As there was no response, the petitioner sent another letter on 14th August 2019 informing that the return was shown as invalid because it was inadvertently filed as an AOP instead of a firm, and requested rectification by filing a revised return on 13th August 2019. Respondent No.4 sought details by letter dated 11th February 2020, to which the petitioner responded on 12th March 2020. The petitioner also filed a representation before the CBDT on 12th March 2020 for condonation of delay. The CBDT, by order dated 25th March 2021, rejected the application stating that the delay was not condonable. The petitioner challenged this order by way of a writ petition. The High Court held that the CBDT's order was unsustainable as it did not consider the merits of the case. The court noted that the CBDT has the power under Section 119(2)(b) to condone delays and must exercise that power judiciously. The court set aside the impugned order and directed the CBDT to consider the petitioner's application afresh and pass a reasoned order within eight weeks. The petition was disposed of accordingly.
Headnote
A) Income Tax - Condonation of Delay - Section 119(2)(b) of the Income Tax Act, 1961 - CBDT's Power - The petitioner filed a belated return under Section 139(4) and sought condonation of delay. The CBDT rejected the application without considering the merits, merely stating that the delay was not condonable. The High Court held that the CBDT must consider the application on its own merits and not merely reject it based on a perceived lack of power. The court directed the CBDT to consider the application afresh and pass a reasoned order within eight weeks. (Paras 1-8) B) Income Tax - Belated Return - Section 139(4) of the Income Tax Act, 1961 - Validity - The petitioner filed its return belatedly on 30th November 2016, after the due date of 30th September 2016 (extended to 17th October 2016). The return was filed under Section 139(4). The court noted that the return was filed and tax of Rs.91,38,083/- was paid, as reflected in Form 26AS. The delay was due to the concerned person being indisposed due to medical reasons. (Paras 2-3) C) Income Tax - Condonation of Delay - Section 119(2)(b) of the Income Tax Act, 1961 - CBDT's Discretion - The CBDT has the power to condone delay in filing returns under Section 119(2)(b). The rejection of the petitioner's application without considering the merits was held to be unsustainable. The court directed the CBDT to consider the application afresh and pass a reasoned order within eight weeks. (Paras 4-8)
Issue of Consideration
Whether the Central Board of Direct Taxes (CBDT) was justified in rejecting the petitioner's application for condonation of delay in filing the income tax return for Assessment Year 2016-2017 without considering the merits of the case, and whether the High Court should direct the CBDT to consider the application afresh.
Final Decision
The High Court allowed the writ petition, set aside the impugned order dated 25th March 2021 passed by the CBDT, and directed the CBDT to consider the petitioner's application for condonation of delay afresh and pass a reasoned order within eight weeks from the date of the judgment.
Law Points
- Condonation of delay
- Section 119(2)(b) of Income Tax Act
- 1961
- CBDT's power to condone delay
- belated return under Section 139(4)
- rejection without considering merits
- direction to consider application afresh
