INCOME TAX: Where assessee-trust had inadvertently erred in claiming past years’ deficit against current year’s income and, as a result, it was saddled with a demand, application filed by assessee for condonation of delay in filing revised return was to be allowed.
[2024] 161 taxmann.com 544 (Orissa)
HIGH COURT OF ORISSA
Oneness Educational and Charitable Trust
v.
Commissioner of Income-tax (Exemption)*
DR. B.R. SARANGI AND G. SATAPATHY, JJ.
W.P.(C) NO. 2440 OF 2024
APRIL 9, 2024
Section 119, read with Section 11 of the Income-Tax Act, 1961 – Central Board of Direct Taxes – Instructions to sub-ordinate authorities (Condonation of delay) – Assessment year 2021-22 – Assessee, an educational and charitable trust, filed its return claiming exemption/deduction as available under section 11 – While processing return, Assessing Officer disallowed exemption claimed by assessee on ground that audit report in Form 10B was not filed within due date – On appeal, assessee claimed that it had inadvertently failed to claim accumulated deficit for adjustment against audited income and expenditure account, which resulted in excess of income over expenditure in original return of income – Commissioner (Appeals) rejected claim of assessee holding that said claim could only be considered if assessee would file revised return claiming such set off and as time limit for filing revised return had lapsed, only remedy available was to make application under Section 119(2)(b) – Assessee filed application for condonation of delay in filing revised return but said application was rejected stating that in spite of enough time, no revised return of income having been filed, genuine hardship for non-filing of revised return of income was not established – Whether since assessee had clearly stated in its application that at time of filing of its return it had inadvertently erred in claiming past years’ deficit against current year’s income under section 11 and unless time limit was extended for filing revised return, assessee would be liable to pay a sum of Rs. 3.29 crores instead of getting refund of Rs. 21,350, which would cause genuine hardship to assessee, rejection of application filed under section 119(2)(b) for condonation of delay was unjustified –Held, yes [Paras 14, 16 and 22] [In favour of assessee]
Circular and Notifications : Circular No. 9, dated 9-6-2015
In a significant judgment, the High Court quashed an order that had rejected an application for condonation of delay in filing a revised income tax return (ITR). The court’s decision came as a relief to the assessee who had sought to file a revised ITR after the stipulated deadline due to genuine reasons. The court recognized that the rejection of the condonation application was unjust and not in line with principles of natural justice, which necessitate a fair hearing and reasonable consideration of all pertinent circumstances including the reasons for delay.
This ruling underscores the judiciary’s readiness to intervene in administrative decisions that may overlook essential elements like bona fide errors and genuine difficulties faced by taxpayers. It reinforces the legal framework supporting taxpayers’ rights to rectify mistakes in their tax filings, provided their reasons are justifiable. This decision will likely influence future cases, encouraging a more flexible approach in administrative proceedings related to tax matters, thereby promoting fairness and justice in fiscal laws – JSPCO
