Shri Sumit Pendharkar vs Commissioner Of Income Tax

Gujarat High Court

Shri Sumit Pendharkar vs Commissioner Of Income Tax on 23 June, 2025

Author: Bhargav D. Karia

Bench: Bhargav D. Karia

                                                                                                       NEUTRAL CITATION




                              C/SCA/6501/2024                           ORDER DATED: 23/06/2025

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                                     IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                       R/SPECIAL CIVIL APPLICATION NO. 6501 of 2024

                       ==================================================
                                             SHRI SUMIT PENDHARKAR
                                                        Versus
                                          COMMISSIONER OF INCOME TAX
                       ==================================================
                       Appearance:
                       MR ASHISH GOYAL for JAYVIR N GADHAVI(9098) for the Petitioner(s) No. 1
                       MR.VARUN K.PATEL(3802) for the Respondent(s) No. 1
                       ==================================================

                          CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
                                             and
                                HONOURABLE MR. JUSTICE PRANAV TRIVEDI

                       Date : 23/06/2025

                       ORAL ORDER

(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI) Heard learned advocate Mr. Ashish Goyal for Mr. Jayvir Gadhavi for the petitioner and learned Senior Standing Counsel Mr. Varun K. Patel for the respondent.

2. By this petition under Article 226/227 of the Constitution of India, the petitioner has challenged the order dated 02.11.2023 passed by the respondent - Commissioner of Income Tax, (IT & PT), Ahmedabad under Section 119(2)

(b) of the Income Tax Act, 1961 (for short Page 1 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined "the Act") whereby the application filed by the petitioner for condonation of delay in filing the Return of Income for the Assessment Year 2022-23 is rejected.

3. The brief facts which has led to filing of the present are as under :

3.1. The petitioner is a non-resident of India residing in United State of America (USA) . He has not filed any return under the provisions of the Act since last 22 years. However during the Assessment Year 2022-23, the petitioner sold the residential flat jointly owned with his spouse for Rs.29,50,000/-. As per the provisions of Section 195 of the Act, the Tax was Deducted at Source(TDS) at Rs.6,88,911/-.

The Tax Deducted at Source was at gross value, being sale consideration and the expenses and cost of acquisition were ignored.

NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined 3.2. It is the case of the petitioner that when he computed his tax liability, it amounted to 'NIL'. Therefore, there was refund of Rs.6,88,911/-. The petitioner being a non-resident was under the impression that no Return of Income was required to be filed as per the provisions of the Act as there was no tax liability. When the legitimate refund was not received by the petitioner, he thought it fit to file return claiming return at the time of his visit to India. However, the petitioner was not aware that Section 139(4) of the Act as amended, restricted the filing of belated returns upto three months prior to the end of the relevant Assessment Year.

Therefore, as per the provisions of Section 139(4)of the Act, the petitioner was required to file his return of Assessment Year till Page 3 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined 31.12.2022. When the petitioner came to India in September, 2023, it was brought to his notice by the Tax Consultant that he would not be in a position to file return for the Assessment Year, 2022-23 in September, 2023 since the same has become invalid as per the provisions of Section 139(4) of the Act.

3.3. In such circumstances and with a view to file return and claim refund of excess Tax Deducted at Source, the petitioner filed an application under Section 119(2)(b) of the Act before the Commissioner of Income Tax (IT & TP), Ahmedabad on 21.06.2023. It is the case of the petitioner that along with the application, he had also annexed Form 26AS, computation of income, passport etc. On 11.10.2023, notice was sent electronically by the respondent directing the petitioner to Page 4 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined furnish written submissions till 19.12.2023.

3.4. It is the case of the petitioner that he was in USA at the time of issuance of notice and was suffering from Covid-19.

Therefore he was not in a position to give reply to the notice. To show his bona fide of suffering from Covid-19 during that interregnum period, the petitioner has annexed his medical report of USA. However, without affording any opportunity, the respondent by way of an ex-parte order dismissed the application preferred by the petitioner. In such circumstances, the petitioner preferred review/rectification application before the respondent on 29.11.2023 which was accompanied by the affidavit and medical certificates.

However, the respondent dismissed the application preferred by the petitioner vide order dated 14.12.2023 stating that there is Page 5 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined no provisions with regard to the review/rectification of the order rejecting the application under Section 119(2)(b) of the Act. In view of such circumstance, the petitioner has preferred the present petition challenging the order dated 02.11.2023 vis-a-

vis the order rejecting the application under Section 119(2)(b) of the Act.

4. Learned advocate Mr. Ashish Goyal for the petitioner submitted that the respondent failed to provide fair and reasonable opportunity to the petitioner, though he was suffering from Covid-19 and had also attached his medical certificates to show that there was genuine hardship attributed to the circumstances of the petitioner. The respondent has failed to consider that the petitioner being non-resident was not aware about the amendment in the Act. When the Page 6 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined petitioner came to know about the amendment under Section 139(4) of the Act restricting to file belated return, the petitioner visited India again to file belated return. However, without looking to the medical condition of the petitioner, the respondent has rejected the application under Section 119 (2)(b)of the Act, which is unjust, unfair in every manner.

4.1. It was, therefore, submitted that there was no liability of tax on the petitioner. Once the claim of the petitioner was not found to be unacceptable, the refund ought to have been granted and ought not to have been denied on the technical grounds. It was further submitted that in the facts of the present case, tax has been collected in excess by the exchequer. Such collection is not as per the law. When the factum of Rs.6,88,911/-

being excessively collected is not Page 7 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined controverted by the exchequer, then the petitioner was eligible for refund and ought not to have been denied the refund on technical ground.

5. In support of his submissions, reliance was placed on the following decisions :-

(1) In the case of R. Seshammal's v. Income Tax Officer reported in [1999] 237 ITR 185 (Mad.) [Madras High Court].

(2) In the case of M/s. Motilal Padampat Sugar Mills. Co. v. State of Uttar Pradesh & Ors., reported in 118 ITR 326 (SC).

(3)In the case of Nirmala R. Mehta v.

Commissioner of Income-Tax reported in [2024] 139 taxman 394 (Bombay).

(4) In the case of Sanchit Software & Solutions (P) Ltd., v. Commissioner of Income Tax reported in [2012] 349 ITR 404 (Bombay).

NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined (5) In the case of A. Balakrishnan v. General Manager, Hindustan Machine Tools Ltd., reported in [2007] 161 taxman 379 (Karnataka).

(6) In the case of Pankaj Kailash Agarwal v.

Assistant Commissioner of Income-Tax reported in [2024] 161 taxmann.com 383 (Bombay).

6. On the other hand, learned Senior Standing Counsel Mr. Varun K. Patel for the respondent submitted that the petitioner failed to show any genuine cause which has resulted into any hardship to the petitioner which may have led to belatedly filing of income tax return. The petitioner has not pointed out any other cause except the fact that he was residing in USA and therefore, there was a genuine difficulty in filing the income tax return. The petitioner was duty bound to file the income tax return by 30.12.2022 as per the provisions Page 9 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined of Section 139(4) of the Act. Ignorance of law cannot be a ground to claim the benefit of refund. Therefore, according to learned Senior Standing Counsel Mr. Patel, the petitioner is not entitled to any benefit of refund after filing of income tax return for the Assessment Year 2022-23.

7. Having heard the learned advocates for the respective parties and considering the facts of the case, it is not in dispute that the petitioner is subjected to Tax Deducted at Source for Rs.6,88,911/- despite the fact that there was no other taxable income qua the petitioner. The petitioner has categorically placed medical certificate before the authorities showing the fact and reasons for not giving reply to the notice of the petitioner pursuant to the application under Page 10 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined Section 119(2)(b) of the Act. This genuine hardship is totally ignored by the respondent authority. However, it is not in dispute that the petitioner has not filed his return of income for the last 22 years and he was staying far away from India. Therefore, coming to the facts of the case when the petitioner was not aware of the procedural aspect of the income tax law as well as the fact that he was medically unfit during the pendency of the application under Section 119(2)(b) of the Act, the respondent authority could not have rejected the application as filing of return for claiming benefit under the provisions of the Act is procedural and the benefit accrued to the assessee cannot be taken away on account of technicalities when there is a genuine hardship. This can be drawn from the case of Sitaldas K. Motwani v. Director Page 11 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined General of Income Tax (International Taxation) reported in [2010] 187 Taxman 44 {=323 ITR 223 (Bombay)} as well as the case of Bombay Mercantile Co-op. Bank Ltd., v. CBDT reported in [2010] 195 Taxman 106 {=332 ITR 87(Bombay)}. Similarly in case of Pankaj Kailash Agarwal v. Assistant Commissioner of Income Tax reported in [2024] 464 ITR 65 (Bombay), the Hon'ble Bombay High Court has held as under :-

"10. On the issue of genuine hardship, relying on R. K. Madhani Prakash Engineers (Supra), Mr. Sarda submitted that while considering this aspect of genuine hardship, the authorities are expected to bear in mind that ordinarily applicant applying for condonation of delay does not stand to benefit by lodging its claim late. Moreso, when applicant is claiming the deductions under Section 80IC of the Act. Mr. Sarda submitted that CBDT has failed 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 and the approach of the CBDT should be justice oriented so as to advance cause of justice.

11. In the affidavit in reply, respondents have only reiterated what was stated in the impugned order and Mr. Rattesar resubmitted the same.

NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined

12. We would agree with Mr. Sarda that no assessee would stand to benefit by lodging its claim late. Moreso, in case of the nature at hand, where assessee would get tax advantage/benefit by way of deductions under Section 80IC of the Act. Of course, there cannot be a straight jacket formula to determine what is 'genuine hardship'. In our view, certainly the fact that an assessee feels that he would be paying more tax if he does not get the advantage of deduction under Section 80IC of the Act, that will be certainly a 'genuine hardship'. It would be apposite to reproduce paragraph 4 of judgment in K. S. Bilawala & Ors. Vs. PCIT & Ors. (2024) 158 taxmann.com 658 (Bombay), which reads as under:

"4. There cannot be a straight jacket formula to determine what is genuine hardship. In our view, certainly the fact that an assessee feels he has paid more tax than what he was liable to pay will certainly cause hardship and that will be certainly a 'genuine hardship'. This Court in Optra Health Pvt. Ltd. v. Additional Commissioner of Income Tax (HQ), Pune & Ors. (Writ Petition No.15544 of 2023 dtd.

and 10 held as under:

9. While considering the genuine hardship, the PCCIT was not expected to consider a solitary ground as to whether the assessee was prevented by any substantial cause from filing the corrections within a due time. Other factors also ought to have been taken into account. The phrase "genuine hardship" used in Section 119(2)(b) of the Act should have been construed liberally. The Legislature has conferred the power to condone the delay to enable Page 13 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined the authorities to do substantial justice to the parties by disposing the matters on merits. The expression 'genuine' has received a liberal meaning in view of the law laid down by the Apex Court and while considering this aspect, the authorities are expected to bear in mind that ordinarily the applicant, applying for condonation of delay, does not stand to benefit by lodging erroneous returns. Refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate action. There is no presumption that a delay in correcting an error or responding to a notice of invalid return received under Section 139(9) of the Act is occasioned deliberately or on account of culpable negligence or on account of mala-fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. The approach of authority should be justice-oriented so as to advance cause of justice. If the case of an applicant is genuine, mere delay should not defeat the claim. We find support for this view in Sitaldas K. Motwani v. Director General of Income- tax (International Taxation), New Delhi, relied upon by Mr. Walve, where paragraph nos. 13 to 17 read as under :

NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined "13. Having heard both the parties, we must observe that while considering the genuine hardship, Respondent No. 1 was not expected to consider a solitary ground so as to whether the petitioner was prevented by any substantial cause from filing return within due time. Other factors detailed hereinbelow ought to have been taken into account.

14. The Apex Court, in the case of B.M. Malani v. CIT [2008] 10 SCC 617, has explained the term "genuine" in following words:

"16. The term 'genuine' as per the New Collins Concise English Dictionary is defined as under :

'Genuine' means not fake or counterfeit, real, not pretending (not bogus or merely a ruse)'.

17. ******

18. The ingredients of genuine hardship must be determined keeping in view the dictionary meaning thereof and the legal conspectus attending thereto. For the said purpose, another well-known principle, namely, a person cannot take advantage of his own wrong, may also have to be borne in mind....."

(p. 624).

The Gujarat High Court in the case of Gujarat Electric Co. Ltd. (supra) was pleased to hold as under:

"... The Board was not justified in rejecting the claim for refund on the ground that a case of genuine hardship was not made out by the petitioner and delay in claiming Page 15 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined the relief was not satisfactorily explained, more particularly when the returns could not be filed in time due to the ill health of the officer who was looking after the taxation matters of the petitioner...." (p. 737).

The Madras High Court in the case of R. Seshammal (P.) Ltd. (supra), was pleased to observe as under:

"This is hardly the manner in which the State is expected to deal with the citizens, who in their anxiety to comply with all the requirements of the Act pay monies as advance tax to the State, even though the monies were not actually required to be paid by them and thereafter, seek refund of the monies so paid by mistake after the proceedings under the Act are dropped by the authorities concerned. The State is not entitled to plead the hyper technical plea of limitation in such a situation to avoid return of the amounts. Section 119 of the Act vests ample power in the Board to render justice in such a situation. The Board has acted arbitrarily in rejecting the petitioner's request for refund." (p.187)

15. The phrase "genuine hardship"

used in section 119(2)(b) should have been construed liberally even when the petitioner has complied with all the conditions mentioned in Circular dated 12-10-1993. The Legislature has conferred the power to condone delay to enable the authorities to do substantive justice to the parties by disposing of the matters on merit. The Page 16 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined expression "genuine" has received a liberal meaning in view of the law laid down by the Apex Court referred to herein-above and while considering this aspect, the authorities are expected to bare in mind that ordinarily the applicant, applying for condonation of delay does not stand to benefit by lodging its claim late. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. The approach of the authorities should be justice- oriented so as to advance cause of justice. If refund is legitimately due to the applicant, mere delay should not defeat the claim for refund.

16. Whether the refund claim is correct and genuine, the authority must satisfy itself that the applicant has a prima facie correct and genuine claim, does not mean Page 17 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined that the authority should examine the merits of the refund claim closely and come to a conclusion that the applicant's claim is bound to succeed. This would amount to prejudging the case on merits. All that the authority has to see is that on the face of it the person applying for refund after condonation of delay has a case which needs consideration and which is not bound to fail by virtue of some apparent defect. At this stage, the authority is not expected to go deep into the niceties of law. While determining whether refund claim is correct and genuine, the relevant consideration is whether on the evidence led, it was possible to arrive at the conclusion in question and not whether that was the only conclusion which could be arrived at on that evidence.

17. Having said so, turning to the facts of the matter giving rise to the present petition, we are satisfied that respondent No. 1 did not consider the prayer for condonation of delay in its proper perspective. As such, it needs consideration afresh."

10. This was followed by this Court in Artist Tree (P.) Ltd. v. Central Board of Direct Taxes, (2014) 52 taxmann.com 152 (Bombay) relied upon by Mr. Walve, where paragraph nos. 19, 21 and 23 read as under :

"19. The circumstance that the accounts were duly audited way back on 14 September 1997, is not a circumstance that can be held against the petitioner. This circumstance, on Page 18 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined the contrary adds force to the explanation furnished by the petitioner that the delay in filing of returns was only on account of misplacement or the TDS Certificates, which the petitioner was advised, has to be necessarily filed alongwith the Return of Income in view of the provisions contained in Section 139 of the said Act read alongwith Income Tax Rules, 1962 and in particular the report in the prescribed Forms of Return of Income then in vogue which required an assessee to attach the TDS Certificates for the refund being claimed. The explanation furnished is that on account of shifting of registered office, it is possible that TDS Certificates which may have been addressed to the earlier office, got misplaced. There is nothing counterfeit or bogus in the explanation offered. It cannot be said that the petitioner has obtained any undue advantage out of delay in filing of Income Tax Returns. As observed in case of Sitaldas K. Motwani (supra), there is no presumption that delay is occasioned deliberately or on account of culpable negligence or on account of mala fides. It cannot be said that in this case the petitioner has benefited by resorting to delay. In any case when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to prevail without in any manner doing violence to the language of the Act.

21. We find that the impugned order dated 16 May 2006 of the CBDT also seeks to reject the application for Page 19 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined condonation of delay on account of delay from the date of filing the Return of Income, i.e., 14 September 1999 upto 30 April 2002. This was not the ground mentioned in notice dated 7 February 2006 given to the petitioner by the CBDT for rejecting the application for condonation of delay. Thus the petitioner had no occasion to meet the same. It appears to be an afterthought. However, as pointed out in paragraph 20 hereinabove, the delay in filing of an application if not coupled with some rights being created in favour of others, should not by itself lead to rejection of the application. This is ofcourse upon the Court being satisfied that there were good and sufficient reasons for the delay on the part of the applicant.

23. In light of the aforesaid discussion, we are of the opinion that an acceptable explanation was offered by the petitioner and a case of genuine hardship was made out. The refusal by the CBDT to condone the delay was a result of adoption of an unduly restrictive approach. The CBDT appears to have proceeded on the basis that the delay was deliberate, when from explanation offered by the petitioner, it is clear that the delay was neither deliberate, nor on account of culpable negligence or any mala fides. Therefore, the impugned order dated 16 May 2006 made by the CBDT refusing to condone the delay in filing the Return of Income for the Assessment Year 1997-98 is liable to be set aside. Consistent with the provisions of Section 119(2)(b) of the said Act, the concerned I.T.O. or Page 20 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined the Assessing Officer would have to consider the Return of Income and deal with the same on merits and in accordance with law."

The Court has held that the phrase 'genuine hardship' used in Section 119(2)

(b) of the Act should be considered liberally. CBDT should keep in mind, while considering an application of this nature, that the power to condone the delay has been conferred is to enable the authorities to do substantial justice to the parties by disposing the matters on merits and while considering these aspects, the authorities are expected to bear in mind that no applicant would stand to benefit by lodging delayed returns. The court also held that refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when the delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. Similar issue came to be considered in R. K. Madhani Prakash Engineers (Supra), where paragraph 8 reads as under :

"8 Further it is recorded in the impugned order that petitioner has failed in proving the genuine hardship. In this regard, we would refer to the judgment of a Division Bench of this court in the case of Sitaldas K. Motwani Vs. Director General of Income Tax (International Taxation) & Ors., (2009 Scc Online Bom 2195) where the court has discussed the phrase "genuine hardship" used in Section 119(2)(b) of the Act. The court has held that the phrase "genuine hardship" should be construed liberally particularly when Page 21 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined the legislature had conferred the power to condone the delay to enable the authorities to do substantive justice to the parties by disposing the matter on merits. While considering this aspect of genuine hardship, the authorities are expected to bear in mind that ordinarily applicant applying for condonation of delay does not stand to benefit by lodging its claim late. More so, in the case at hand where applicant was seeking 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 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. In our view, the approach of the authority should be justice oriented so as to advance cause of justice. If refund is legitimately due to applicant, mere delay should not defeat the claim for refund.

Paragraphs 13 to 16 of Sitaldas K. Motwani (Supra) read as under:

13. Having heard both the parties, we must observe that while considering the genuine hardship, respondent No. 1 was not expected to consider a solitary ground as to whether the petitioner was prevented by any substantial cause from filing return within due time. Other factors detailed herein below ought to have been taken into account.

14. The Apex Court, in the case of B.M. Malani v. CIT and Anr.

MANU/SC/4268/2008 : (2008) 10 SCC Page 22 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined 617, has explained the term "genuine" in following words:

16. The term "genuine" as per the New Collins concise English Dictionary is defined as under: 'Genuine' means not fake or counterfeit, real, not pretending (not bogus or merely a ruse).

18. The ingredients of genuine hardship must be determined keeping in view the dictionary meaning thereof and the legal conspectus attending thereto. For the said purpose, another well known principle, namely a person cannot take advantage of his own wrong, may also have to be borne in mind.

The Gujarat High Court in the case of Gujarat Electric Co. Ltd. V. CIT MANU/G1/0407/2001: 255 ITR 396, was pleased to hold as under:

The Board was not justified in rejecting the claim for refund on the ground that a case of genuine hardship was not made out by the petitioner and delay in claiming the relief was not satisfactorily explained, more particularly when the returns could not be filed in time due to the ill health of the officer was looking after the taxation matters of the petitioner.

The Madras High Court in the case of Seshammal (R) v. ITO MANU/ TN/ 0879/ 1998: (1999) 237 ITR 185 (Madras), was pleased to observe as under:

This is hardly the manner in which the State is expected to deal with the citizens, who in their anxiety to Page 23 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined comply with all the requirements of the Act pay monies as advance tax to the State, even though the monies were not actually required to be paid by them and thereafter seek refund of the monies so paid by mistake after the proceedings under the Act are dropped by the plea of limitation in such a situation to avoid return of the amounts. Section sit of the Act vests ample power in the Board to render justice in such a situation. The Board has acted arbitrarily in rejecting the petitioner's request for refund.

15. The phrase "genuine hardship"

used in Section 119(2)(b) should have been construed liberally even when the petitioner has complied with all the conditions mentioned in Circular dated 12th October, 1993. The Legislature has conferred the power to condone delay to enable the authorities to do substantive justice to the parties by disposing of the matters on merit. The expression "genuine" has received a liberal meaning in view of the law laid down by the Apex Court referred to hereinabove and while considering this aspect, the authorities are expected to bare in mind that ordinarily the applicant, applying for condonation of delay does not stand to benefit by lodging its claim late. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. When Page 24 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of malafides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. The approach of the authorities should be justice oriented so as to advance cause of justice. If refund is legitimately due to the applicant, mere delay should not defeat the claim for refund.

16. Whether the refund claim is correct and genuine, the authority must satisfy itself that the applicant has a prima facie correct and genuine claim, does not mean that the authority should examine the merits of the refund claim closely and come to a conclusion that the applicant's claim is bound to succeed. This would amount to prejudging the case on merits. All that the authority has to see is that on the face of it the person applying for refund after condonation of delay has a case which needs consideration and which is not bound to fail by virtue of some apparent defect. At this stage, the authority is not expected to go deep into the niceties of law. While determining whether refund claim is correct and genuine, the relevant consideration is whether on the evidence led, it was possible to arrive at the conclusion in Page 25 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined question and not whether that was the only conclusion which could be arrived at on that evidence."

(emphasis supplied) This court in R.K. Madhani Prakash Engineers (Supra) had quashed and set aside the impugned order on the ground that the impugned order is not passed by the CBDT but only with the approval of the Member (IT & R), CBDT. So also in the case of TATA Autocomp (supra) wherein paragraphs 11, 12 and 13 read as under:

"11. Moreover, the order says, "This issues with the approval of Member (IT&R), Central Board of Direct Taxes" and is signed by one Virender Singh, Additional Commissioner of Income Tax (ITA Cell), CBDT, New Delhi. If a personal hearing has been granted by the Member (IT&R), the order should have been passed by him. Mr. Sharma states there could be file notings. If that is so, that has not been made available to Petitioner.

12. In the circumstances, on these two grounds alone, we quash and set aside the impugned order dated 5th December 2023 and remand the matter to CBDT. The Member/Members shall within three weeks from the date this order is uploaded make available to Petitioner all Field Reports/ documents/ instructions received by the CBDT from the Field Authorities and within two weeks of receiving the same, Petitioner shall file, if advised, further submissions in support of their application for condonation of delay.

NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined

13. Thereafter, an order shall be written, passed and that order shall be authored and signed by the Member of CBDT, who has given a personal hearing and when we say this, it is not the Member holding the same designation. The same individual who gave a personal hearing, shall write and sign the order. All rights and contentions of Petitioner are kept open. Before passing any order which shall be a reasoned order dealing with all submissions of Petitioner, a personal hearing shall be given to Petitioner, notice whereof shall be communicated at least seven working days in advance."

13. In our view, legislature has conferred power on respondent no.3 to condone the delay to enable the authorities to do substantive justice to the parties by disposing the matter on merits. Routinely passing the order without appreciating the reasons why the provisions for condonation of delay has been provided in the act, defeats the cause of justice."

8. This Court in the case of Surat Smart City Development Ltd. (supra) has also considered the decision of the Hon'ble Apex Court in the case of Principal Commissioner of Income Tax v. Wipro Limited reported in 446 ITR 1 (SC) and observed as under :-

NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined "17. On perusal of the above observation of the Hon'ble Apex Court, it is also apparent that the Hon'ble Apex Court has considered the significance of filing declaration under Section 10B(8) of the Act considering the provisions of Section 10B(5) of the Act being a check to verify the correctness of the claim of deduction at the time of filing of return so that if an assessee claims an exemption under the Act by virtue of Section 10B of the Act, then the correctness of the claim has already been verified under Sub-section (5) of Section 10B and therefore, if the claim is withdrawn post the date of filing of return, the report of the Accountant filed under Section 10B(5) of the Act would become falsified and would stand to be nullified.

However, the provisions of Section 115BAA of the Act are in a way granting relief to the assessee- Companies to enable them to pay the reduced rate of tax at rate of 22% on exercise of the option on the various conditions mentioned therein.

18. In such circumstances, the respondent No.1 was required to consider the facts of the case by permitting the petitioner to file a fresh Form 10IC and condoning the delay in filing such Form by molding the prayer made by the petitioner to treat the Form 10IC filed by the petitioner for Assessment Year 2021-2022 to be treated as that of for Assessment Year 2021. The provisions of Section 119(2)(b) of the Act are meant for redressal of the grievance and hardships caused to the petitioner as held by the Hon'ble Madras High Court in case of R.Seshammal (Supra) as under :

"This is hardly the manner in which the State is expected to deal with the citizens, who under anxiety to comply with all the requirements of the Act pay monies as advance tax to the State, even though the monies were not actually required to be paid by them and thereafter seek refund of the monies so paid by mistake after the proceedings under the Act are dropped by the authorities concerned. The State is not entitled to plead the hypertechnical plea of limitation in such a situation to avoid return of the amounts. Section 119 of the Act vests ample power in Page 28 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025 NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined the Board to render justice in such a situation. The Board has acted arbitrarily in rejecting the petitioner's request for refund."

9. Considering the facts of the case as well as the settled legal position, the petition succeeds and is accordingly allowed. The impugned order dated 02.11.2023 is hereby quashed and set aside and the matter is remanded to the respondent to pass a fresh order to condone the delay in filing the income tax return so as to enable the petitioner to get the refund as per the provisions of the Act.

9.1. The respondent shall also pass appropriate order directing the Assessing Officer to pass a fresh order qua refund in assessment by the petitioner in accordance with law and pass a fresh intimation under Section 143(1) of the Act.

NEUTRAL CITATION C/SCA/6501/2024 ORDER DATED: 23/06/2025 undefined 9.2. Such exercise shall be completed within twelve (12) weeks from the date of receipt of a copy of this order.

10. The petition is accordingly disposed of.

Notice is discharged.

(BHARGAV D. KARIA, J) (PRANAV TRIVEDI,J) phalguni Page 30 of 30 Uploaded by PHALGUNI PATEL(HC00175) on Tue Jul 01 2025 Downloaded on : Sat Jul 05 00:42:19 IST 2025