Gujarat High Court Quashes IT Department's Rejection of Delay Condonation Due to COVID-19 Hardships

Court orders reconsideration of Rajgreen Infralink LLP's application for delay condonation in light of pandemic-induced challenges.

In a significant ruling, the Gujarat High Court has quashed the order of the Income Tax Department rejecting Rajgreen Infralink LLP's plea for condonation of a 13-day delay in filing its income tax return for the assessment year 2021-22. The division bench, comprising Justices A.S. Supehia and Pranav Trivedi, directed the Principal Commissioner of Income Tax, Surat, to reconsider the application, recognizing the "genuine hardship" caused by the COVID-19 pandemic as a legitimate reason for the delay.

The court's decision came in response to a petition filed by Rajgreen Infralink LLP, a real estate development firm based in Surat, which was unable to file its income tax return on time due to several pandemic-related challenges, including nationwide lockdowns, restricted staff capacity, and limited access to necessary documents at construction sites. Despite these challenges, the firm's return was delayed by only 13 days beyond the extended deadline of March 15, 2022.

The bench emphasized the need for a liberal interpretation of the term "genuine hardship" under Section 119(2)(b) of the Income Tax Act, 1961, which allows for the condonation of delays in filing returns under certain conditions. The court noted that the refusal to condone such delays could defeat the cause of justice, especially when the delay is attributed to unavoidable circumstances like a global pandemic.

The judgment criticized the tax authorities for relying on Circular No.09/2015, which was deemed inapplicable to the petitioner's situation, as it primarily deals with belated applications for refund claims and loss carry forwards. The court highlighted that the petitioner's reasons for delay, which included government directives to provide for laborers at construction sites and limited access to financial documents, were sufficient to constitute genuine hardship.

The court's decision aligns with its previous rulings in similar cases and underscores the discretionary power vested in tax authorities to alleviate genuine hardships faced by taxpayers. It directed the income tax authorities to reassess the application within 12 weeks, considering the court's observations.

Legal experts see this ruling as a reinforcement of the judiciary's role in ensuring that statutory provisions are applied in a manner that supports justice, particularly in unprecedented situations like the COVID-19 pandemic.

Bottom Line:

Income Tax Act, 1961 - COVID-19 pandemic considered as a genuine hardship for condonation of delay in filing return of income under Section 119(2)(b) of the Act.

Statutory provision(s): Income Tax Act, 1961 - Section 119(2)(b)

Rajgreen Infralink LLP v. Principal Commissioner of Income Tax 1 Surat, (Gujarat)(DB) : Law Finder Doc Id # 2820802