Petitioner's request for condonation of delay in filing Form 10-IC for AY 2020-21 denied; Court cites strict adherence to CBDT timelines.
In a significant judgment delivered by the Delhi High Court, the bench comprising Justices Dinesh Mehta and Vinod Kumar dismissed the writ petition filed by Mentaura Technologies Pvt. Ltd., challenging the rejection of its application for condonation of delay in filing Form 10-IC under Section 119(2)(b) of the Income Tax Act, 1961. The court emphasized the importance of adhering to the timelines prescribed by the Central Board of Direct Taxes (CBDT) Circulars.
The petitioner-company sought condonation of delay in filing Form 10-IC for the Assessment Year (AY) 2020-21, citing the COVID-19 infection of its directors as a reason for the delay. However, the company's application was filed on January 20, 2025, well beyond the stipulated deadline of March 31, 2024, as prescribed by the CBDT's Circular dated November 18, 2024.
Despite the petitioner's argument that the directors' health issues constituted a genuine hardship, the court ruled that the inability of one director due to health issues does not justify prolonged non-compliance, especially when the company had another director and managed to file the income tax return on time. The court noted that the company could have sought professional help to facilitate the filing process.
The judgment further highlighted that beneficial circulars should be interpreted liberally, but such interpretation cannot extend to cases where the petitioner fails to comply with the clear timelines prescribed. The CBDT Circulars dated March 17, 2022, October 23, 2023, and November 18, 2024, provide a clear time limit of three years from the end of the relevant assessment year for filing applications for condonation of delay.
In its defense, Mentaura Technologies referenced a recent judgment in the case of Vrg Electronics Pvt Ltd v. Principal Commissioner Of Income Tax Delhi, hoping for a similar outcome. However, the court maintained that the petitioner had not demonstrated sufficient cause for the delay and had failed to meet the requirements set forth in the Circulars.
The judgment underscores the necessity for assessees to act within the specified timelines to avail benefits under the Income Tax Act, 1961. It serves as a cautionary tale for companies regarding the importance of compliance and timely action in tax-related matters.
Bottom line:-
Application for condonation of delay in filing Form 10-IC under Section 119(2)(b) of the Income Tax Act, 1961 must be filed within the stipulated time limit of three years from the end of the relevant assessment year, as per CBDT Circulars. Failure to adhere to this timeline, even citing genuine hardships, cannot override the clear language and conditions of the Circulars.
Statutory provision(s): Income Tax Act, 1961 Section 119(2)(b), Section 115BAA
