Case Note & Summary
The petitioner, the widow of the deceased assessee, sought condonation of delay in filing the income tax return for the assessment year 2022-23. Her husband had received compensation from the National Highways Authority for land acquisition, and tax was deducted at source. The assessee passed away before filing the return. The petitioner filed an application under Section 119(2)(b) of the Income Tax Act, 1961, seeking condonation of delay and claiming that the compensation was exempt from income tax under Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act). The Chief Commissioner of Income Tax initially rejected the application on 16.01.2024. The petitioner challenged that rejection in W.P.No.3447/2024. The High Court, by order dated 12.03.2024, set aside the rejection and remitted the matter, directing reconsideration in light of Section 105(3) of the RFCTLARR Act, the Fourth Schedule thereto, and the judgment of the Division Bench in Bangalore Metro Rail Corporation Ltd. v. M/s Sri Balaji Corporate Services. On remand, the Chief Commissioner once again rejected the application, reproducing the same reasons and failing to consider the High Court's directions and the exemption under the RFCTLARR Act. The petitioner then filed the present writ petition, contending that the rejection was illegal and contrary to law. The High Court, after hearing both sides, found that the impugned order had not complied with the earlier directions and had ignored the established legal position regarding the tax exemption. Accordingly, the court set aside the order dated 28.06.2024 and remitted the matter for fresh reconsideration, directing the Chief Commissioner to take into account the provisions of the RFCTLARR Act, the CBDT Circular, and the earlier High Court order. The court kept all contentions open.
Headnote
A) Income Tax - Condonation of Delay - Section 119(2)(b) Income Tax Act, 1961 - Application for condonation of delay in filing income tax returns for Assessment Year 2022-23 by legal heir of deceased assessee - Delay occurred due to death of assessee and bonafide belief in tax exemption on compensation - Chief Commissioner rejected the application without considering the exemption under Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and the CBDT Circular No. 36/2016, and in disregard of the High Court's earlier remand directions - Held that the impugned order is vitiated by non-application of mind and is set aside; matter remitted for fresh reconsideration in accordance with law (Paras 1-3). B) Land Acquisition - Exemption from Income Tax - Section 96, Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - Compensation received under the National Highways Act, 1956 for compulsory acquisition - CBDT Circular No. 36/2016 clarified that compensation exempt under Section 96 of RFCTLARR Act is not taxable under the Income Tax Act even if no specific exemption under the Income Tax Act - Failure to consider this exemption when dealing with condonation of delay application renders the order unsustainable (Paras 2, 7).
Issue of Consideration
Whether the Chief Commissioner of Income Tax erred in rejecting the application under Section 119(2)(b) of the Income Tax Act, 1961 for condonation of delay in filing return of income, without considering the exemption under Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and the earlier High Court order.
Final Decision
The writ petition is allowed. The impugned order at Annexure-C dated 28.06.2024 is set aside. Matter is remitted back to the respondent for reconsideration afresh in accordance with law, bearing in mind the observations in the order dated 12.03.2024 and this order. All rival contentions kept open.
Law Points
- Condonation of delay under Section 119(2)(b) of Income Tax Act
- 1961 must be considered liberally where sufficient cause is shown
- Compensation for land acquisition exempt under Section 96 of RFCTLARR Act is not taxable under Income Tax Act
- as per CBDT Circular No. 36/2016
- Administrative orders must comply with directions of higher courts on remand.
