Lodhi Property Company Limted vs Under Secretary (Ita-Ii)
2010 Latest Caselaw 1976 Del

             THE HIGH COURT OF DELHI AT NEW DELHI

%                                     Judgment delivered on: 16.04.2010

+            WP(C) 437/2010

LODHI PROPERTY COMPANY LIMTED                                     ... Petitioner

                                     - versus -

UNDER SECRETARY (ITA-II)
DEPARTMENT OF REVENUE                                            ... Respondent

Advocates who appeared in this case:-

For the Appellant       : Mr Salil Kapoor with Mr Sanat Kapoor
For the Respondent      : Ms Suruchi Aggarwal

CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE V.K. JAIN

1. Whether Reporters of local papers may be allowed to see the judgment ?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in Digest ?

BADAR DURREZ AHMED, J (ORAL)

1. In this writ petition, the petitioner sought the quashing of the

order dated 29.10.2009 passed by the Central Board of Direct Taxes

(hereinafter referred to as „CBDT‟), rejecting the application of the

petitioner under Section 119 of the Income-tax Act, 1961 (hereinafter

referred to as „the said Act‟), whereby a prayer had been made for

condoning the delay of one day in filing the return of income in respect of

the assessment year 2004-05.

2. It is an admitted position that the due date for filing of the return

was 01.11.2004. The return was, in fact, filed on 02.11.2004. According to

the petitioner, the petitioner‟s representative reached the Central Revenue

Building, I.P. Estate around 5.15 p.m. on 01.11.2004 for the purposes of

filing the said return of income. However, he was sent from one room to the

other and by the time he reached room No.398-F, where his return was said

to be accepted, it was already 6.00 p.m. and he was told that the return

would not be accepted because the counter had been closed. These

circumstances are recorded in the letter dated 01.11.2004, which was

delivered in the office of the Deputy Commissioner of Income-Tax, Circle

12(1), New Delhi on the very next day, i.e., on 02.11.2004 alongwith the

return of income. A copy of the said letter has been placed as Annexure P-3

to this petition. On 03.11.2004, the petitioner‟s representative met the

Commissioner of Income-tax-IV, Central Revenue Building, New Delhi and

informed him that the return for the assessment year 2004-05 alongwith the

covering letter dated 01.11.2004 was filed on 02.11.2004. A letter dated

03.11.2004 was also sent to the said Commissioner of Income-tax for

information and record. A copy of the same was marked to the Additional

Commissioner of Income-tax, Range XII, Central Revenue Building, New

Delhi. We may point out that in the return of income, the petitioner had

declared a loss of Rs 2,74, 83,730/-. This fact is recorded in the assessment

order. The assessment order passed on 01.12.2006, wherein it has been

noted in the very first line that the assessee had filed his return of income

declaring a loss of Rs 2,74,83,730/- on 02/11/2004. The assessment was

completed and by virtue of the same, the petitioner was allowed to carry

forward the loss amounting to Rs 2,66,97,383/-.

3. Thereafter, the Commissioner of Income-tax-IV passed an order

under Section 263 of the said Act and held that the assessment order was

erroneous and prejudicial to the interest of the revenue on the ground that

the return had been filed late and there was no order under Section 119 of

the said Act by the CBDT condoning the delay. The Commissioner of

Income-tax observed that, although the assessee had contended that an

application had been filed before the CBDT for condonation of the delay, no

order under Section 119 of the said Act had been received till date.

Subsequently, on 29.10.2009, the order of the CBDT on the petitioner‟s

application under Section 119 for condonation of delay in filing of the

return under Section 139(1)/139(3) of the said Act in respect of the

assessment year 2004-05 was communicated to the petitioner. The order is

a non-speaking one and it merely states as under:-

"After careful examination of the petition, as well as other related documents, your request for condonation of delay u/s 119 of the I.T. Act, 1961 is rejected."

4. It is against this order that the petitioner has come up before this

court by way of a petition under Article 226 of the Constitution of India

seeking quashing of the same. It was contended by the learned counsel for

the respondent that since this was a case of a loss return, there was no

provision under law for condoning the delay in filing the return. The

learned counsel for the respondent drew our attention to the provisions of

Section 139(3), Section 80, Section 119 and, in particular, to Section

119(2)(b). She contended that there was no specific provision contained in

Section 119 (2)(b) which permitted the board to condone the delay in filing

a return and that the said provision only applied to applications or claims for

exemption, deduction, refund or any other relief under the said Act.

5. We find that the very same contention was raised before the

Karnataka High Court in the case of Associated Electro Ceramics v.

Chairman Central Board of Direct Taxes and Another: 201 ITR 501

(Kar). In that case, the board had disposed of the application under Section

119 (2) of the said Act taking the view that Section 119 (2)(b) did not cover

the case of a belated return on the basis of which loss, for the purposes of

carrying forward the loss, had to be determined and that the matter was

regulated by Sections 139, 72, 74 and 157. The view taken by the board

was that Section 119 (2)(b) speaks of an „application‟ or a „claim‟ and not a

„return‟ to be filed beyond time. Consequently, the board did not accede to

the request of the petitioner for condoning the delay. The Karnataka High

Court in the case of Associated Electro Ceramics (supra) examined the

matter in detail and came to the conclusion that though the claim of carry

forward of loss in the case of a loss return was not a claim regarding

exemption, determination or refund referred to in Section 119 (2)(b), it was

definitely relatable to a claim arising under the category of any other relief

available under the Act, as indicated in the said provision itself. The court

also held that the contention of the department that if no power had been

granted to an Income-tax officer or any other officer to condone the delay in

making such a claim, the Board could also not extend time, was not correct.

It also held that the provision expressly provided that where any time limit

had been fixed, such time limit could be extended and the delay could be

condoned by the Board. It rejected the finding of the Board that the

application of claim referred to in Section 119 (2)(b) did not cover a loss

claim made in a return.

6. The learned counsel for the petitioner has also drawn our

attention to Circular No.8/2001 dated 16.05.2001 which was with reference

to the Board‟s order under Section 119 (2)(b) dated 12.10.1993 and Circular

No.670 dated 26.10.1993 which laid down the procedure for condonation of

delay in the case of belated claims of refund. In paragraph 3 of the said

Circular dated 16.05.2001, the decision of the Karnataka High Court in the

case of Associated Electro Ceramics (supra) has been specifically noted.

The said circular also notes the fact that as per the said decision, the Board

had the power to condone the delay in cases having claims of carry forward

of losses. It also notes that the department did not file any Special Leave

Petition against the said order of the Karnataka High Court and

subsequently the matter was taken up with the Ministry of Law which also

agreed with the view that the Board had the power to condone the delay in

filing the return under Section 119 (2)(b) of the said Act in a case having a

claim of carry forward of losses. The said circular dated 16.05.2001 further

clarified that the delay in making a refund claim as well as a claim of carry

forward of losses, both could be condoned in cases where the returned

income is a loss provided the other conditions are satisfied.

7. In view of the foregoing, it is absolutely clear that the

submissions sought to be raised before us by the learned counsel for the

respondent have specifically and categorically been rejected by the

Karnataka High Court and the same have been accepted not only by the

Board, but also by the Ministry of Law. We notice that a similar view has

also been taken by the Bombay High Court in the case of Sitaldas K.

Motwani v. Director General of Income-tax (International Taxation): 187

Taxman 44 (Bom). Consequently, agreeing with the Karnataka High

Court, we are of the view that the Board has the power under Section 119

(2) to condone the delay in the case of a return which is filed late and where

a claim for carry forward of losses is made.

8. Coming back to the facts of the present case, we find that the

impugned order under Section 119 passed by the Board is a non-speaking

one. Normally, we would have remanded the matter to the Board to

consider the application of the petitioner afresh. However, we find that in

the present case, the delay is only of one day and the circumstances have

been explained and have not been controverted by the respondents. The fact

of the matter is that the petitioner did reach the Central Revenue Building

before the closure of the counter on 01.11.2004. It is only because he was

sent from one room to the other and had to wait in long queues that he could

not present the return at the counter which was receiving the returns prior to

6.00 p.m. on that date. We feel that sufficient cause has been shown by the

petitioner for the delay of one day in filing the return. If the delay is not

condoned, it would cause genuine hardship to the petitioner. Thus, in the

circumstances of this case, instead of remanding the matter back to the

CBDT, we direct that the delay of one day in filing of the return be

condoned.

The writ petition is allowed. There shall be no order as to costs.

BADAR DURREZ AHMED, J

V.K. JAIN, J APRIL 16, 2010 dutt