Case Note & Summary
The petitioner, RAR Properties, a firm engaged in the business of developing Special Economic Zones, filed a petition under Article 226 of the Constitution of India challenging the order dated 26.11.2025 passed by the Principal Commissioner of Income Tax, Ahmedabad-3. The respondent had rejected the petitioner's application under Section 119(2)(b) of the Income Tax Act, 1961 seeking condonation of delay in filing the return of income for Assessment Year 2023-24. The due date for filing the return under Section 139(1) was 31.07.2023. The petitioner, acting on the advice of its accountant, believed that it was required to get its books of accounts audited under Section 44AB of the Act and therefore did not file the return by the due date. Subsequently, the petitioner realized that the proviso to Section 44AB(a) exempted it from the audit requirement. The petitioner then filed the return claiming a deduction of Rs.52,92,631/- under Section 80-IAB of the Act. The return was processed under Section 143(1) on 02.02.2024, wherein the deduction was disallowed and a demand of Rs.7,94,090/- was raised due to the delayed filing. The petitioner filed an application under Section 119(2)(b) on 01.03.2024 to condone the delay, which was rejected by the respondent on 26.11.2025 on the ground that no genuine hardship was demonstrated. The High Court, after hearing both sides, held that the mistaken belief regarding the audit requirement, based on professional advice, constitutes genuine hardship. The court observed that the respondent had not considered the explanation of the petitioner and had mechanically rejected the application. The court set aside the impugned order and directed the respondent to condone the delay and process the return in accordance with law. The petition was allowed.
Headnote
A) Income Tax - Delay Condonation - Section 119(2)(b) of Income Tax Act, 1961 - Genuine Hardship - The petitioner, a firm engaged in SEZ development, delayed filing its return due to mistaken belief that audit under Section 44AB was required, based on accountant's advice. The court held that such a mistaken belief constitutes genuine hardship, and the rejection by the Principal Commissioner was unsustainable. The court directed condonation of delay and processing of the return. (Paras 1-6) B) Income Tax - Audit Requirement - Section 44AB of Income Tax Act, 1961 - Proviso - The proviso to Section 44AB(a) exempts certain entities from audit. The petitioner realized it was not required to get its books audited, leading to the delayed filing. The court noted that the mistake was bona fide and based on professional advice. (Paras 3.1-3.2)
Issue of Consideration
Whether the rejection of the petitioner's application under Section 119(2)(b) of the Income Tax Act, 1961 for condonation of delay in filing the return of income on the ground of no genuine hardship was justified when the delay was caused by a mistaken belief regarding the requirement of audit under Section 44AB of the Act.
Final Decision
The High Court allowed the petition, set aside the impugned order dated 26.11.2025, and directed the respondent to condone the delay in filing the return of income for Assessment Year 2023-24 and process the return in accordance with law.
Law Points
- Genuine hardship under Section 119(2)(b) of Income Tax Act
- 1961 includes mistaken belief based on professional advice
- liberal interpretation of condonation provisions
- no requirement of strict proof of hardship
