Case Note & Summary
The petitioner, Artist Tree Pvt. Ltd., engaged in dealing in artifacts and finances, filed a return of income for Assessment Year 1997-1998 on 14 September 1999, declaring income of Rs.1,46,000 and claiming a refund of Rs.6,34,929. The due date for filing was 30 November 1997, resulting in a delay of about 22 months. The Assessing Officer did not act upon the return due to the delay. On 7 April 2002, the petitioner applied to the Central Board of Direct Taxes (CBDT) under Section 119(2)(b) of the Income Tax Act, 1961, seeking condonation of delay, stating that the delay occurred because the company's office was shifted and certain records, including TDS certificates, were misplaced and took considerable time to retrieve. The CBDT issued a show-cause notice on 7 February 2006, proposing rejection on grounds that the petitioner was a 'habitual late filer' to avoid scrutiny and that there were no genuine reasons for the delay. The petitioner responded through its Chartered Accountant on 21 March 2006, elaborating on the circumstances and citing CBDT Circulars and the decision in Bharatiya Engineering Corporation Private Limited vs. R.G. Deshpande. However, the CBDT rejected the application by order dated 16 May 2006. The petitioner challenged this order by way of a writ petition before the Bombay High Court. The court considered whether the CBDT's rejection was justified. The court noted that the petitioner had filed returns for subsequent years on time, and the delay was due to genuine reasons. The court held that the CBDT had not properly appreciated the facts and that the petitioner was not a habitual late filer. The court set aside the impugned order and directed the CBDT to condone the delay and process the refund claim in accordance with law.
Headnote
A) Income Tax - Condonation of Delay - Section 119(2)(b) Income Tax Act, 1961 - Refund Claim - Petitioner filed return after 22 months delay due to shifting of office and misplacement of TDS certificates - CBDT rejected condonation citing habitual late filing and lack of genuine reasons - Held that the reasons for delay were genuine and the petitioner was not a habitual late filer; CBDT's order was set aside and delay condoned (Paras 1-16).
Issue of Consideration
Whether the CBDT was justified in rejecting the petitioner's application for condonation of delay in filing the return of income for Assessment Year 1997-1998, thereby denying the claim for refund.
Final Decision
The impugned order dated 16 May 2006 is set aside. The CBDT is directed to condone the delay in filing the return of income for Assessment Year 1997-1998 and process the refund claim in accordance with law.
Law Points
- Condonation of delay under Section 119(2)(b) of Income Tax Act
- 1961
- Liberal approach in refund cases
- Habitual late filer not a ground to reject condonation if genuine reasons exist
