CBDT to Reconsider Condonation Request if Refusal Results in Cause of Justice Being Defeated: HC

Case Details: R.K. Madhani Prakash Engineers J V v. Union of India - [2023] 154 taxmann.com 16 (Bombay)

Judiciary and Counsel Details

• • K.R. Shriram & Firdosh P. Pooniwalla, JJ.
  • Bharat Raichandani for the Petitioner.
  • Akhileshwar Sharma & Ms Shilpa Goel for the Respondent.

Facts of the Case

Assessee, was engaged in executing the projects launched by the Municipal Corporation of Greater Mumbai (MCGM). For the assessment year 2016-17, the assessee filed its return of income belatedly with a delay of 43 days.

Later, the assessee realized that it inadvertently filed the Return of Income as AOP instead of firm. Assessee submitted an income tax return under section 119(2)(b) and sought condonation of delay in filing the return. However, the request for condonation of delay was rejected.

Aggrieved by the order, the assessee filed a writ petition to the Bombay High Court.

High Court Held

The High Court held that the principles of natural justice would require the assessee to be provided the statement submitted by the field authorities so that the assessee could have effectively responded.

Moreover, in its petition, the assessee stated the partners were all available in India, but the key person whom the joint venture partners entrusted to advise on the filing of ROI was out of the country. These were issues which certainly the assessee could have been called upon to appear personally or through videoconferencing to explain, which had not been done.

Further, the impugned order recorded that the assessee failed to prove the genuine hardship. In the case at hand, the applicant was seeking a refund of a large amount of Rs. 82,13,340. Refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and the cause of justice being defeated.

The authorities fail to understand that when the delay is condoned, the highest that can happen is that the cause would be decided on merits after hearing the parties. It was viewed that the authority’s approach should be justice-oriented to advance the cause of justice. If the refund is legitimately due to the applicant, the mere delay should not defeat the claim for refund.

Therefore, the Board was directed to decide the question of hardship and correctness and genuineness of the refund claim in light of the observations made above.

List of Cases Referred to

• • Sitaldas K. Motwani v. DGIT (International Taxation) [2010] 187 Taxman 44/323 ITR 223 (Bom.) (para 8).