Condonation of delay in filing Income Tax Return - Petitioner cannot be penalized for the negligence or inadvertence of an accountant
Delhi High Court Grants Relief to VRG Electronics Pvt Ltd. Orders Fresh Consideration of Delay Condonation. The Court emphasizes liberal interpretation of genuine hardship and mandates reasoned orders by Income Tax Authorities.
News Report:
In a significant judgment dated September 15, 2025, the Delhi High Court has set aside the Principal Commissioner of Income Tax’s order rejecting VRG Electronics Pvt Ltd's application for condonation of delay in filing the Income Tax Return and Form 10-IC. The case, presided over by Justices V. Kameswar Rao and Vinod Kumar, stresses the importance of avoiding undue hardship by liberally construing genuine hardship and mandates the need for authorities to pass reasoned orders.
VRG Electronics Pvt Ltd had sought condonation of a 60-day delay in filing its Income Tax Return for the Assessment Year 2023-24, attributing the delay to an accountant's oversight due to ill-health and heavy workload. Initially, the Principal Commissioner of Income Tax had dismissed the application, stating that the reason provided was insufficient and not a reasonable cause for non-compliance.
The Court highlighted that the Income Tax authorities should exercise discretion under Section 119(2)(b) of the Income Tax Act, 1961, liberally to prevent undue hardship. It criticized the mechanical rejection of the application by the authorities without adequate evaluation of the reasons presented by the assessee. The Court referred to several judicial precedents, including B.M. Malani v. Commissioner of Income Tax and Sitaldas K. Motwani v. Director General of Income Tax, emphasizing that genuine hardship should be construed liberally.
The judgment also underscored that the Principal Commissioner of Income Tax acts as a quasi-judicial authority and is obligated to pass reasoned orders. The lack of rationale in the initial order was deemed contrary to the legislative mandate, leading to its setting aside and remanding for fresh consideration.
The Court's decision reaffirms the notion that parties should not suffer due to the negligence of professionals they depend on. It draws parallels with previous judgments where innocent parties were not penalized for the faults of their advocates or accountants. VRG Electronics Pvt Ltd's case serves as a reminder for authorities to adopt a justice-oriented approach, ensuring that genuine claims are evaluated on merits rather than technicalities.
This judgment is expected to influence the manner in which similar cases are handled by tax authorities, advocating for a more equitable and liberal interpretation of genuine hardship.
Bottom Line:
Condonation of delay in filing Income Tax Return (ITR) and Form 10-IC - The petitioner cannot be penalized for the negligence or inadvertence of an accountant responsible for filing the returns - Authorities are obligated to pass reasoned orders while dealing with applications under Section 119(2)(b) of the Income Tax Act, 1961.
Statutory provision(s): Section 119(2)(b) of the Income Tax Act, 1961
