Application for condonation of delay in filing Income Tax Return - Mechanical rejection held unsustainable.
Delhi High Court Orders Fresh Review on Condonation of Delay in Income Tax Filing Due to COVID-19 Hardships. Judgment Emphasizes Need for Reasoned Decisions by PCIT under Section 119(2)(b) of the Income Tax Act
News Report:
In a significant decision, the Delhi High Court has set aside the Principal Commissioner of Income Tax's (PCIT) rejection of Udit Goyal's application for condonation of delay in filing his Income Tax Return (ITR) for Assessment Year 2021-22. The court has remanded the matter for fresh consideration, highlighting the need for a reasoned order reflecting the genuine hardships caused by the COVID-19 pandemic.
The case revolved around Goyal's delayed ITR submission, filed 12 days past the extended deadline due to pandemic-induced challenges. The PCIT had initially dismissed the application, citing insufficient reasons for delay despite the pandemic and subsequent restrictions affecting Goyal's ability to file timely.
Justice V. Kameswar Rao and Justice Vinod Kumar underscored the quasi-judicial responsibility of the PCIT to issue a reasoned order, noting that the mechanical rejection of Goyal's application without addressing his detailed explanations was unsustainable. The court emphasized that the term "genuine hardship" should be interpreted liberally to ensure substantive justice.
The judgment extensively referenced previous rulings, including the Supreme Court's interpretation of "genuine hardship" in B.M. Malani v. CIT and the Bombay High Court's stance in Sitaldas K. Motwani v. Director General of Income Tax, advocating for a liberal construction to facilitate justice.
The court also acknowledged the extraordinary circumstances posed by the COVID-19 pandemic, urging tax authorities to consider these challenges in their decisions. The decision mandates the PCIT to revisit Goyal's application, duly considering the pandemic's impact and the applicant's intent to comply with tax laws.
This ruling sets a precedent for interpreting genuine hardship liberally and ensuring that tax authorities exercise their discretionary powers judiciously, especially in the backdrop of unprecedented global challenges like the pandemic.
Bottom Line:
Application for condonation of delay in filing Income Tax Return (ITR) - Power of Principal Commissioner of Income Tax (PCIT) under Section 119(2)(b) of the Income Tax Act, 1961 - Mechanical rejection of application without considering detailed averments held unsustainable.
Statutory provision(s): Income Tax Act, 1961 Section 119(2)(b), CBDT Circular No. 09/2015, Section 143(1) of the Income Tax Act
