Gujarat High Court
Gajanand Urban Co-Operative Credit ... vs The Principal Commissioner Of Income ... on 15 October, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 10505 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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Approved for Reporting Yes No
No
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GAJANAND URBAN CO-OPERATIVE CREDIT SOCIETY LIMITED
Versus
THE PRINCIPAL COMMISSIONER OF INCOME TAX SURAT 1
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Appearance:
JAIMIN A GANDHI(8065) for the Petitioner(s) No. 1
KARAN G SANGHANI(7945) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 15/10/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
Heard learned advocate Mr.Jaimin A.
Gandhi for the petitioner and learned
Senior Standing Counsel Mr.Karan G.Sanghani
for the respondent.
1. Having regard to the controversy
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involved in this petition in narrow
compass, with the consent of the learned
advocates for the parties, the matter is
taken up for hearing.
2. Rule, returnable forthwith. Learned
Senior Standing Counsel Mr.Karan Sanghani
waives service of notice of rule for and on
behalf of the respondent.
3. By this petition under Articles 226 and
227 of the Constitution of India, the
petitioner has challenged the order dated
26th February, 2025 passed by the
respondent-Principal Commissioner of Income
Tax, Surat-1, Surat whereby, the
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application filed by the petitioner under
Section 119(2)(b) of the Income Tax Act,
1961 (for short 'the Act') to condone the
delay occurred in filing the return of
income for the Assessment Year 2024-25 is
rejected.
4. The brief facts of the case are as
under:
4.1. The petitioner is a Co-operative
Society registered under the provisions of
the Gujarat Co-operative Societies Act,
1961.
4.2. It is a case of the petitioner that
tax audit for the Financial Year 2023-24
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pertaining to Assessment Year 2024-25 was
conducted by M/s.Nangalia Gandhi and
Company, Chartered Accountants and tax
audit report was uploaded on the Income Tax
Portal in Form-3CA and Form-3CD on 28th
September, 2024. The petitioner also
claimed the deduction under Section 80P of
the Act for Rs.26,42,135/- under the said
tax audit report.
4.3. It is the case of the petitioner that
the Chartered Accountant of the petitioner
could not file the return of income due to
various technical glitches creating a
confusion as to whether the return was
properly filed or not and every time when
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the Chartered Accountant tried to log-in,
the message "Session has Expired" appeared
on the screen which created a false belief
in the mind of the Chartered Accountant
that return was uploaded.
4.4. The petitioner thereafter received an
SMS dated 14.12.2024 from the Income Tax
Department indicating that return was not
filed. The petitioner therefore contacted
the Chartered Accountant informing about
the message received from the Income Tax
Department and thereafter, the verification
was done by the Chartered Accountant on the
Income-tax Portal and it was found that the
return of income was not filed.
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4.5. The petitioner therefore, immediately
filed an application dated 16.12.2024 under
Section 119(2)(b) of the Act on 20.12.2024
with a prayer to condone the delay occurred
in filing the return and seeking permission
to file the return. It is also the case of
the petitioner that the petitioner was
conscious that the petitioner could have
filed the return belatedly but in view of
the provisions of the Act, by filing a
belated return, the petitioner would not be
entitled to claim the deduction under
Section 80P of the Act and therefore, the
petitioner filed application under Section
119 of the Act.
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4.6. It is also the case of the petitioner
that the delay in filing the return of
income was only 35 days in view of the
extension of the time to file the return
from 31.10.2024 to 15.11.2024 as per the
Circular No.13 of 2024 dated 26.10.2024.
The respondent issued a show-cause notice
dated 07.01.2025 calling upon the
petitioner to provide various explanations
and to give concrete evidence of technical
glitches faced by the Chartered Accountant.
The petitioner filed reply dated 17.01.2025
providing the explanation to the respondent
along with an affidavit of the Chartered
Accountant mentioning about the technical
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glitch which happened while filing the
return of income.
4.7. The respondent by the impugned order
dated 26th February, 2025 rejected the
application of the petitioner and refused
to condone the delay occurred in filing the
return of income by observing as under :
"4. The application of the assessee has
been examined. It is seen that the
assessee has not filed its original
return for the year under consideration
and submitted an application u/s.119(2)
(b) of the Act seeking condonation of
delav in claiming refund on account of
TDS amounting to Rs.81,600/-. The
assessee has claimed that due to certain
technical glitches on the portal & some
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confusion arose about the ITR fillings
process in the mind of the staff of his
consultants, IT of the assessee has not
been uploaded. Later on, while logging
on the portal, "Session has Expired"
message used to appear, which created
the false belief in the mind of the
office staff that the ITR filing process
is completed and due to work pressure,
office staff of the consultant forgot to
check the date and Acknowledgment number
of the ITR filed on the portal. The
contention of the assessee is not
acceptable as the assessee failed to
submit the necessary supporting evidence
to back up the claim of technical
glitches causing the delay. According to
Section 119(2)(b) of the Act, for the
Department to exercise discretion to
condone a delay, the assessee must
present a reasonable and justifiable
cause supported by evidence. In this
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case, the claim of technical glitches
was not substantiated by any verifiable
documents or proofs, which raises
doubts about the veracity of the
explanation.
The assessee had ample time to file a
belated return till 15.01.2025 before
submitting the application for
condonation on 20.12.2024. This implies
that the delay was not due to any
genuine hardship or an unforeseen
circumstance as the assessee had the
opportunity to rectify the situation.
The fact that the return could still
have been filed during this period, yet
was not, further strengthens the
position that the delay was due to
negligence or casualness on the part of
the assessee, rather than an unavoidable
event.
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The assessee's failure to act promptly
and the absence of compelling reasons or
valid evidence indicate a lack of
genuine hardship. Condonation of delay
u/s.119(2)(b) of the Act, is intended to
assist taxpayers who face unforeseen
difficulties, not those who demonstrate
carelessness or lack of due diligence.
The assessee's casual approach to filing
the return does not qualify for relief
under the provisions of the Act,
especially when no substantive proof of
a technical glitch has been provided.
The Department has stringent timelines
for filing returns and the taxpayers are
expected to comply with these deadlines.
The purpose of these timelines is to
ensure a smooth and organized processing
of tax returns. Granting relief in this
case could set a precedent for other
taxpayers to claim delays without valid
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justifications or evidence, undermining
the integrity of the tax administration
process.
Also, the assessee has not submitted any
concrete evidences which prove genuine
hardship in filing return of income for
the year under consideration hence, the
request of the assessee is not genuine &
hence not acceptable.
4.1 The application of the assessee has
also been examined with reference to
Circular No.09/2015 F. No.312/22/2015-01
dated 09.06.2015. The Central Board of
Direct Taxes has clearly specified that
at the time of considering the case
under section 119(2)(b) of the Act, it
shall be ensured that the case is of the
genuine hardship on merits and that the
income/loss declared and/or refund
claimed is correct and genuine. Relevant
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para 5(i) of the above mentioned
Circular is reproduced hereunder:-
"5. The powers of
acceptance/rejection of the
application within the monetary
limits delegated to the Pr.
CCSIT/CSIT/Pr. CIT/CSIT in case of
such claims will be subject to
Following conditions:
i. At the time of considering the
case under Section 119(2)(b), it
shall be ensured that the
income/loss declared and/or refund
claimed is correct and genuine and
also that the case is of genuine
hardship on merits."
In the present case, the assessee has
not filed its return for A.Y. 2024-25.
The assessee had enough time up to
15.01.2025 to file its belated return
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but the assessee failed to avail this
opportunity. Further, the assessee has
not furnished any concrete
details/documents/reasons which prove
genuine hardship in filing return of
income for the year under consideration.
Hence, the request of the assessee is
not found genuine and not found
acceptable.
5. It is pertinent to mention here that
genuine challenges or unanticipated
circumstances might occasionally make it
difficult to fulfil tax-related duties
on schedule and in such circumstances,
to help taxpayers who have good grounds
for missing the deadlines; the provision
for condonation of delay has been
enacted. Section 119(2)(b) of the Act,
along with CBDT's Circular No. 09/2015
dated 09.06.2015, is the statutory
provision for condoning the delay for
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not filing of return of income due to
genuine hardship. Through Circular No.
09/2015, as per provisions of section
119(2)(b) of the Act, the CBDT had
issued orders to its subordinate
authorities to condone for delay in
filing of return of income due to
genuine hardship caused due to
circumstances beyond the control of the
assessee. Thus, while condoning the
delay, the authorities must be cautious
and only on genuine reasons for
hardship, the authorities are empowered
to condone the delay. The power of
discretion to condone the delay is to be
exercised judiciously. The reasons
furnished for condonation of delay must
be candid and convincing. However, the
reason stated by the assessee is not
found to be correct and true. Discipline
on time limits regarding filing of
returns have to be complied and
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respected, unless compelling and good
reasons are shown and established for
grant of extension of time which cannot
be claimed as a vested right on mere
asking. Routine, liberal and
overindulgent approach in condoning
delay would open floodgates of
applications, completely throwing the
tax assessment and recovery machinery
out of gear. As discussed in para 3 & 4
herein above, the case of the assessee
is beyond the scope of section 119(2)(b)
of the Act. Therefore, in absence of
genuine and satisfactory reasons, the
assessee's request to condone the delay
and allow filing Return of Income is
found to be not acceptable."
4.8. Being aggrieved, the petitioner has
preferred this petition.
5.1. Learned advocate Mr.Jaimin Gandhi for
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the petitioner submitted that the
petitioner is a Co-operative Society run by
the employees and once the task of filing
the income tax return was assigned to the
Chartered Accountant, petitioner was under
bonafied belief that the Chartered
Accountant would have filed the return of
income but only when the petitioner
received an SMS on 14.12.2024, it was known
that the return of income was not filed and
immediately, the petitioner has taken steps
by approaching the Chartered Accountant and
making an application under Section 119(2)
(b) of the Act.
5.2. Learned advocate Mr.Jaimin Gandhi for
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further submitted that the petitioner
prayed for filing the return under Section
139 (1) of the Act in view of the
provisions of Section 80AC of the Act which
prohibits the deduction under Chapter 6, if
the return is not filed within the
prescribed time limit under Section 139(1)
of the Act.
5.3. It was further pointed out that the
petitioner has also provided the affidavit
of the Chartered Accountant explaining the
reason why the return could not be filed
within the prescribed time limit under
Section 139(1) of the Act. It was therefore
submitted that the respondent ought to have
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condoned the delay occurred in filing the
return without raising technicalities, so
as to enable the petitioner to claim the
deduction under Section 80P of the Act. It
was also pointed out that it is not the
case of the respondent that the petitioner
is not entitled to any deduction, however,
the petitioner did not have any other proof
of technical glitch except the affidavit of
the Chartered Accountant. It was therefore
submitted that the respondent ought to have
condoned the delay. In support of his
submissions, reliance was placed on the
following decisions :
"(i) DCIT Versus Surendranagar
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District Co-operative Bank Ltd.
reported in [2019] 108 taxmann.com
609 (SC);
(ii) Surendranagar District Co-
operative Bank Ltd. Versus DCIT
reported in [2019] 108 taxmann.com 608
(Guj.);
(iii) Sarvodata Charitable Trust
Versus Income Tax Officer (Exemption)
reported in [2021] 125 taxmann.com 75
(Gujarat);
(iv) Bhatewara Associates Manik Versus
taxmann.com 297 (Bom);
(v) Shri Visha Oswal Tap. Shantibhuvan
Upashray and Derasar Versus CIT
taxmann.com 170 (Guj);
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(vi) ADCC Infocom Pvt Ltd Versus PCCIT
(Bom);
(vii) G.V. Infosutions Private Limited
taxmann.com 397 (Del)."
6.1. Per-contra, learned Senior Standing
Counsel Mr.Karan Sanghani for the
respondent submitted that the petitioner
has failed to provide any proof that there
were technical glitches preventing the
Chartered Accountant to file the return of
income. Learned Senior Standing Counsel
Mr.Karan Sanghani referred to and relied
upon the following averments made by the
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respondent in the affidavit-in-reply :
"5. With reference to Grounds no. A and
B, the Petitioner has contended that if
the delay in filing the return is not
condoned, then the petitioner will not
be entitled to claim deduction under
section 80P. The petitioner contends
that as per section 80AC, the
petitioner will be entitled to claim
deduction only if the return is filed
under section 139(1). Consequently, the
petitioner will be compelled to pay for
a tax liability for which it is not
supposed to pay. The petitioner has
stated that payment of tax liability,
which the petitioner is not supposed to
pay, is by itself considered as genuine
hardship.
In this regard, it is submitted that
the petitioner has not filed return of
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income for the AY 2024-25. Further, it
is necessary to mention that while
filing of application for condonation
of delay, the petitioner has failed to
submit concrete evidences of genuine
hardship in support of its claim faced
in filing of return. Further, it is
crucial to state that petitioner was
having sufficient time to file belated
return, which was available upto
15.01.2025, but the petitioner insisted
on condonation of delay, thus, the
attempt of the petitioner is a
deliberate one. On going through the
application of petitioner, it is seen
that the petitioner has mentioned the
issue of refund as the reason for
condonation. This shows that the issue
of 80P deduction is nothing but an
afterthought. Thus, it becomes clear
that the contention of the petitioner
is incorrect and totally misleading.
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6. With respect to Ground no. C, the
petitioner has contended that
compelling the petitioner to pay tax
liability, which the petitioner is not
supposed to pay, will cause genuine
hardship to the petitioner. In this
regard, it is submitted that there is
no compulsion from the side of
respondent to pay any undue tax
liability. The petitioner is a well-
established society who is well versed
with the laws since long time. Not
filing of return on the part of the
petitioner is against the law. Further,
petitioner has not substantiated any
proof which suggest that there was any
genuine hardship because of which
return of income could not be filed by
the petitioner in due time. The
contention of the petitioner lacks
merit.
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7. With respect to grounds no. D and E,
the petitioner has contended that non-
filing of the income tax return within
the time limit is completely beyond the
control of the petitioner. The
petitioner further contends that the
inadvertent clerical error on the part
of the Chartered Accountant firm was
completely beyond the control of the
petitioner and that there was no
element of negligence attributable to
the petitioner.
In this regard, it is submitted that the
petitioner had ample time to file a
belated return till 15.01.2025 before
submitting the application for
condonation on 20.12.2024. This implies
that the delay was not due to any
genuine hardship or an unforeseen
circumstance as the petitioner had the
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opportunity to rectify the situation.
The fact that the return could still
have been filed during this period, yet
was not filed, further strengthens the
position that the delay was due to
negligence or casualness on the part of
the assessee, rather than an unavoidable
event.
8. The assessee's failure to act
promptly and the absence of compelling
reasons or valid evidence indicate a
lack of genuine hardship. Condonation
of delay u/s. 119(2)(b) of the Act, is
intended to assist taxpayers who face
unforeseen difficulties, not those who
demonstrate carelessness or lack of due
diligence. The assessee's casual
approach in filing the return does not
qualify for relief under the provisions
of the Act.
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9. It is further submitted that the
Central Board of Direct Taxes (CBDT)
has unequivocally stipulated, in
paragraph 5(i) of its Circular No.
09/2015 dated June 09, 2015, that:
"At the time of considering the case
under Section 119(2)(b), it shall be
ensured that the income/loss
declared and/ or refund claimed is
correct and genuine and also that
the case is of genuine hardship on
merits."
This clearly mandates that the grounds
for condonation must demonstrate
genuine hardship. The case of not
filing return because of the clerical
mistake of Chartered Accountant cannot
be termed as genuine hardship.
10. I submit that the Honble Supreme
Court, in B.M.Malani Vs. Commissioner
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of Income Tax, 174 Taxman 363 (SC)
(2008), has held that the "ingredients
of genuine hardship must be
determined." The Court emphasized that
while Section 119(2)(b) of the Act and
CBDT Circular No. 09/2015 dated June 9,
2015, provide for condonation of late
filing due to genuine hardship,
statutory compliance with time limits
is imperative and cannot be disregarded
lightly. Condonation of delay cannot be
claimed as a vested right. A routine,
liberal, or overindulgent approach in
condoning delay would invariably lead
to a proliferation of applications,
thereby significantly disrupting the
tax assessment and recovery mechanisms.
11. Reference is made to the decision
of the Hon'ble Delhi High Court in the
case of Lava International Limited Vs.
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(Delhi). The relevant paragraphs
underscore the necessity of statutory
compliance with prescribed time frames:
"9. It should be noted that the
legislature has provided time limits
for certain obligations under the Act
and these time limits have to be
observed to be able to claim those
deductions, allowance and avoid
interest and penalty. This cannot be
termed as hardship but it is
compliance requirements imposed by
law in the interest of proper
regulation of the Act. If these time
limits were to be relaxed in a
particular case on mere fact that a
default occurred due to some
inadvertence then there will be no
sanctity of limitation prescribed by
the legislature. Therefore, power of
condonation u/s 119(2) can be
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exercised to deal with the
extraordinary circumstances only
which would have led to delay in
statutory compliance and the same
cannot be exercised routinely.""
6.2. Referring to the above averments, it
was submitted that no interference may be
made in the impugned order passed by the
respondent while exercising the
jurisdiction and powers under Section
119(2)(b) of the Act.
7. Having heard the learned advocates for
the respective parties and considering the
facts of the case, it appears that similar
facts were subject to the challenge for
rejecting the order under Section 119(2)(b)
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of the Act before this Court in case of
Surendranagar District Co-operative Bank
Ltd. (Supra) wherein, this Court after
considering the similar submissions made on
behalf of both the sides held as under :
"20. Having regard to the conditions
laid down in the above Circular, this
court is of the view that the
contention raised by the learned
counsel for the respondent that there
is no provision for revenue to
ascertain genuineness of such loss is
misconceived and contrary to the
circular.
21. Insofar as the question of genuine
hardship as contemplated under clause
(b) of sub-section (2) of section 119
of the Act is concerned, the Supreme
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Court in B.M.Malani v. Commissioner of
Income Tax (supra) has held that
compulsion to pay any unjust dues per
se would cause hardship. But a
question, however, would further arise
as to whether the default in payment of
the amount was due to circumstances
beyond the control of the assessee.
22. Thus, the contention advanced by
the learned counsel for the petitioner
that the section does not contemplate
circumstances beyond his control, does
not merit acceptance. Thus, a case of
genuine hardship would apart from the
fact that the assessee is likely to
suffer hardship if the claim is not
admitted beyond the period specified
under the Act for making such claim, be
a case where the assessee was prevented
by circumstances beyond his control
from making such claim within the
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specified period.
23. In the present case, the petitioner
has produced contemporaneous evidence on
record to show that it had in fact
incurred the loss claimed by it in the
year under consideration. Not being able
to carry forward such loss, therefore,
per se would cause hardship to the
petitioner. The mere fact that the
petitioner is now making a profit and
may be in a position to bear the loss
does not mean that the petitioner would
not suffer hardship. Evidently
therefore, if the time limit for filing
revised return of income is not extended
the petitioner would have to suffer from
hardship as otherwise the entire loss of
Rs.7,91,66,338/- would not be permitted
to be carried forward for being set off
against the profits of the subsequent
assessment years.
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24. Insofar as the question as to
whether the claim could not be made
within the specified time for
circumstances beyond the control of the
petitioner is concerned, the petitioner
is a bank which is run by various
employees who are engaged in the banking
business. The officers of the bank may
not have any knowledge about the
intricacies of the Income Tax Act or the
manner in which a return of income has
to be filed. It is for this reason that
the petitioner avails of the services of
an expert, viz. a Chartered Accountant,
for filing its returns of income and
handling other matters under the Act.
While it is true that the return of
income would be based upon the books of
account maintained by the petitioner, in
this case the concerned Chartered
Accountant failed to claim the loss
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which was duly reflected in the record
of the relevant assessment year in the
return of income filed for that year.
While it is true that the authorised
signatory and CEO of the Bank had signed
the return of income, it cannot be
gainsaid that the concerned officer
would have relied upon the Chartered
Accountant to have prepared a correct
return of income. It is only after the
income tax matters were handed over to
another firm of Chartered Accountants,
and the authorised representative called
for the old records so as ascertain and
substantiate the amount of brought
forward losses available for set-off
that it could be detected that though
there was a book loss of
Rs.8,56,85,868/- for assessment year
2009-10, the return of income was filed
declaring income at Nil in ITR-7 without
claiming carry forward loss of
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Rs.7,91,66,338/-. Besides, though the
original return was defective inasmuch
as it was filed in ITR-7 instead of ITR-
5, the Assessing Officer did not declare
such return to be invalid. Moreover, as
the return was merely processed under
section 143(1) of the Act the error went
unnoticed. Hence, upon being properly
advised, the petitioner filed the
correct return of income in ITR-5 for
the assessment year 2009-10 on 24.3.2015
declaring loss of Rs.7,91,66,338/-.
25. Thus, it was because of
circumstances beyond its control that
the petitioner could not file the return
of income under section 139(9) of the
Act within the specified time, inasmuch
as the error committed while filing of
the return of income did not come to its
notice till the Chartered Accountants
were changed and the authorised
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representative called for the old
records so as ascertain and substantiate
the amount of brought forward losses
available for set-off. Therefore, the
petitioner has made out a case of
genuine hardship for admitting the claim
after the expiry of the period specified
under the Act.
26. In the opinion of this court, if one
considers the reasoning adopted by the
Board for rejecting the application, in
no case would a bank or a company be in
a position to avail of the benefit of
section 119(2)(b) of the Act as all
banks and companies would have employees
who maintain the daily accounts and
prepare or assist in preparation of
Profit and Loss account as well as
balance sheet; such books of account are
subject to audit by regular auditors as
well as tax auditors. It is in cases
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like the present one, wherein despite
the aforesaid position, in case of
genuine hardship, if on account of
reasons beyond the control of the
assessee, an application or claim is not
made by the assessee within the period
specified in the Act, that powers under
section 119(2)(b) of the Act are
required to be exercised.
27. In PDS Logistics International (P.)
Ltd. v. Chief Commissioner of Income
Tax, [2018] 256 Taxman 167 (Karnataka),
the Karnataka High Court has held thus:-
"7. It is trite law that rendering
substantial justice shall be
paramount consideration of the
Courts as well as the Authorities
rather than deciding on hyper-
technicalities. It is obvious that
there is some lapse on the part of
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the petitioner, that itself would
not be a factor to turn out the plea
for filing of the return, when the
explanation offered was acceptable
and genuine hardship is established.
It was with a fond hope of getting
justice at the hands of the Chief
Commissioner of Income Tax, petition
was filed on 11-06-2010. However, no
years. Finally on 11-03-2016, the
said petition has been dismissed
which has to be viewed seriously
while rendering substantial justice
to the parties."
28. Thus, rendering substantial justice
is the paramount consideration of the
courts as well as the authorities
rather than deciding on hyper-
technicalities.
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29. Insofar as the decisions on which
reliance has been placed by the learned
counsel for the respondents are
concerned, in Deep Narayan Gupta v.
Central Board of Direct Taxes (supra),
the Patna High Court had noted that the
reason for rejecting the application
was that though the due dates for
filing the returns were before March
31, 1995 and March 31, 1996, they were
filed only on October 9, 1998. It was
also noticed that the assessee had
deliberately filed his returns much
after the due date only to escape
scrutiny assessment. For example, for
the assessment year 1993-94, the net
profit shown by the assessee was very
low. No audit report was enclosed with
the return. In the balance-sheet, the
assessee had shown unsecured loans and
other finance as liabilities. It was
found that the late filing of return
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apparently indicated that the assessee
had manipulated his accounts and had
prevented scrutiny assessment by the
Department. It is in such circumstances
that the court dismissed the writ
applications. In the facts of the
present case, the original return on
income was filed within time. It is the
subsequent return in Form ITR-5 which
was beyond the specified period for the
reasons discussed hereinabove. The
above decision would therefore not be
applicable to the facts of the present
case.
30. Insofar as the decision of the
Delhi High Court in B U Bhandari
Nandgude Patil Associates v. CBDT,
(supra) is concerned, in that case the
assessee had not filed return of income
within the prescribed period of
limitation on the ground that the audit
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was not completed by the auditors in
time. It was the case of the assessee
that the statutory audit could not be
completed as the Chartered Accountant
who had conducted the audit of the
assessee had suffered from some
illness. However, no record of such
illness was produced. Moreover, the
Chartered Accountant had completed
audits of other assessees within time
limit. There was a delay of five months
in filing the return of income and this
was the only explanation put forth. The
CBDT took note of the fact that the
assessee had not been able to show that
it had pursued the matter diligently as
the responsibility of filing the return
in time is of the assessee and he is
expected to be more diligent if a large
claim of deduction is involved. It was
further found that there was nothing to
show that the assessee pursued the
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matter with the auditor to get audit
done. The fact that all other audits
were done timely by the auditor except
for the said audit also did not help
the assessee's case as any medical
exigency of the magnitude being claimed
would have delayed at least a few more
audits. The court found the findings
recorded by the CBDT were primarily
factual and also lucid and cogent and
that the application under section
119(2)(b) was made only at the stage
when the assessment order reached the
stage of the Tribunal. The above
decision would also, therefore, not be
applicable to the facts of the present
case."
8. The aforesaid decision of this Court was
challenged before the Hon'ble Apex Court,
however, the Hon'ble Apex Court by order
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dated July 12, 2019 has dismissed the
Special Leave Petition.
9. Similarly, while considering the scope
and powers to be exercised under Section
119(2)(b) of the Act, this Court in case of
Sarvodaya Cheritable Trust (Supra) has
analysed the entire law on the subject of
exercise of powers by the respondent for
the benefit of the assessed at large as
under :
"27. We should look into the position of
law as regards the subject matter of
this writ-application :
(i) In Artist Tree Pvt. Ltd. vs.
Central Board of Direct Taxes and
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others, (2014) 369 ITR 691 (Bombay).
The relevant paragraphs 11 to 14 and
23 of the said judgment are quoted
below for ready reference:
"11. The expression 'genuine
hardship' came up for consideration
of the Supreme Court in the case of
B.M.Malani (supra), wherein, by
reference to New Collins Concise
English Dictionary, the Supreme Court
accepted the position that "genuine"
means not fake or counterfeit, real,
not pretending (not bogus or merely a
ruse). Further, a genuine hardship
would, inter alia, mean a genuine
difficulty. The ingredients of
genuine hardship, must be determined
keeping in view the dictionary
meaning thereof and legal conspectus
attending thereto. For the said
purpose, another well known
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principle, namely, that a person
cannot take advantage of his own
wrong, may also have to be borne in
mind. Compulsion to pay any unjust
dues per se would cause hardship. But
a question as to whether the default
in payment of the amount was due to
circumstances beyond the control of
the assessee, also bears
consideration."
12. In the case of R. Seshammal
(supra), the Madras High Court was
pleased to observe as under (page 187
of 237 ITR):
"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
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were not actually required to be paid
by them and there after 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."
13. In the case of Sitaldas Motwani
(supra), this court has held that the
expression "genuine hardship" used in
section 119(2)(b) of the said Act
should be construed liberally,
particularly in matters of
entertaining of applications seeking
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condonation of delay. This court was
pleased to observe as under (page 228
of 323 ITR):
"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 October 12, 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 the merits. The 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 bear in mind that ordinarily the
applicant, applying for condonation
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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 an 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 the merits
after hearing the parties. When
substantial justice and technical
considerations are pitted against
each other, the cause of substantial
justice deserves to be preferred for
the other side cannot claim to have a
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
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resorting to delay. In fact he runs a
serious risk. The approach of the
authorities should be justice
oriented so as to advance the cause
of justice. If refund is legitimately
due to the applicant, mere delay
should not defeat the claim for
refund."
14. In the case of Bombay Mercantile
Co-operative Bank Ltd. (supra), this
court again observed that it is well
settled that in matters of
condonation of delay highly pedantic
approach should be eschewed and a
justice-oriented should be adopted.
It also observed that a party should
not be made to suffer on account of
technicalities.
23. In the light of the aforesaid
discussion, we are of the opinion
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that an acceptable explanation was
offered by the petitioner and a case
of genuine hardship was made out. The
refusal by the Central Board of
Direct Taxes to condone the delay was
a result of adoption of an unduly
restrictive approach. The Central
Board of Direct Taxes appears to have
proceeded on the basis that the delay
was deliberate, when from the
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 May 16, 2006, made by the
Central Board of Direct Taxes
refusing to condone the delay in
filing the return of income for the
assessment year 1997-98 is liable to
be set aside."
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(ii) In Jay Vijay Express Carriers
vs. Commissioner of Income Tax-III,
(2013) 34 taxmann.com.61 (Gujarat),
in relevant paragraph 16 of the said
judgment, this Court held as under :
"16. In our opinion, in the present
case, there would be genuine
hardship, if the time limit is not
extended as otherwise, the entire
claim of Rs.17,84,323/- would be
destroyed. The petitioner would
neither get deduction in the
assessment year 2005-06 nor in the
year 2008- 09 as per then prevailing
Section 40(a)(ia) of the Act. In our
opinion, the petitioner was neither
lethargic nor lacking in bona fides
in making the claim beyond the period
of limitation, which should have a
relevance to the desirability and
expedience for exercising such power.
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Before proceeding further we may
caution that undoubtedly such powers
are not to be exercised in routine
manner to extend limitation provided
by the Act for various stages. We are
conscious that such routine exercise
of powers would neither be expedient
nor desirable, since the entire
machinery of tax calculation,
processing of assessment and further
recoveries or refunds, would get
thrown out of gear, if such powers
are routinely exercised without
considering its desirability and
expedience to do so for avoiding
genuine hardship. In the present
case, however, considering special
facts, we are of the opinion that the
Commissioner ought to have exercised
such powers. It is true that the
Appellate Commissioner recorded that
the petitioner did not remain present
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in the appellate proceedings. However
that by itself would not take away
the petitioner's case for genuine
hardship nor contrary to what is
vehemently contended before us by the
counsel for the Revenue, convince us
to hold that filing of revised return
beyond limitation lacked bona fides."
(iii) In the case of State of
Jharkhand and others vs. Ambay
Cements and another, (2005 Sales Tax
Cases Vol.129). The relevant extract
of the said judgment is quoted from
the Head Note below for ready
reference :
"An exception or an exempting
provision in a taxing statute should
be construed strictly. If the
condition under which an exemption is
granted stands changed on account of
any subsequent event the exemption
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would not operate. (see paras 23 and
24).
Whenever the statute prescribes that
a particular act is to be done in a
particular manner and also lays down
that failure to comply with the said
requirement leads to severe
consequences, such requirement would
be mandatory. If the statute provide
that a particular thing should be
done, it should be done in the manner
prescribed and not in any other way
(see para 26)."
(iv) In the case of B.M.Malani vs.
Commissioner of Income Tax and
another, (2008) 219 CTR 313), the
Court observed :
"8. The term 'genuine' as per the New
Collins Concise English Dictionary is
defined as under :
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"'Genuine' means not fake or
counterfeit, real, not pretending
(not bogus or merely a ruse)."
For interpretation of the
aforementioned provision, the
principle of purposive construction
should be resorted to. Levy of
interest although is statutory in
nature, inter alia for recompensating
the Revenue from loss suffered by
non-deposit of tax by the assessee
within the time specified therefor.
The said principle should also be
applied for the purpose of
determining as to whether any
hardship had been caused or not. A
genuine hardship would, inter
alia,mean a genuine difficulty. That
per se would not lead to a conclusion
that a person having large assets
would never be in difficulty as he
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can sell those assets and pay the
amount of interest levied.
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 said principle, it is
conceded, has not been applied by the
Courts below in this case, but we may
take note of a few precedents
operating in the field to highlight
the aforementioned proposition of
law. (See Priyanka Overseas (P) Ltd.
& Anr. Vs. Union of India & Ors.1991
Suppl.(1)SCC 102, para 39, Union of
India & Ors. Vs. Maj.Gen.(Retd.)
Madan Lal Yadav (1996)4 SCC 127 at
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142, paras 28 and 29, Ashok Kapil Vs.
Sana Ullah (dead) & Ors. (1996) 6 SCC
342 at 345, para 7, Sushil Kumar vs.
Rakesh Kumar (2003) 8 SCC 673 at 692,
para 65, first sentence, Kusheshwar
Prasad Singh vs. State of Bihar &
Ors. (2007) 11 SCC 447, paras 13, 14
and 16)."
28. Section 119 of the Act is couched in
very wide terms. The same is quoted
below for ready reference :
Instructions to subordinate
authorities:
"119. (1) the Board may, from time to
time, issue such orders, instructions
and directions to other income- tax
authorities as it may deem fit for
the proper administration of this
Act, and such authorities and all
other persons employed in the
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execution of this Act shall observe
and follow such orders, instructions
and directions of the Board:
xxx xxx xxx
(2) Without prejudice to the
generality of the foregoing power:-
(a) xxx xxx xxx
(b) the Board may, if it considers it
desirable or expedient so to do for
avoiding genuine hardship in any case
or class of cases, by general or
special order, authorize any income-
tax authority, not being a
Commissioner (Appeals) to admit an
application or claim for any
exemption, deduction, refund or any
other relief under this Act after the
expiry of the period specified by or
under this Act for making such
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application or claim and deal with
the same on merits in accordance with
law:"
29. We may also refer to a decision of
the Karnataka High Court in the case of
Dr. (Smt.) Sujatha Ramesh vs. Central
Board of Direct Taxes, New Delhi,
(2017)87 taxmann.com 228 (Karnataka),
wherein the Court has observed as
under :
"12. It is true that the so called
reasons assigned by the respondent
Central Board of Direct Taxes (CBDT)
in the impugned order, on the face
of it, do not appear to be whimsical
or arbitrary reasons and it is
equally true that such investment
could be made by assessee very well
before the cut off date also when
she was physically present in India
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or even when she had gone back to
USA on 20th February 2013.
Nonetheless, the delay of six months
in the circumstances in which it
occurred, especially, in view of the
fact that the investment condition
was undisputably met by the assessee
could have been condoned taking a
judicious and holistic view of the
facts. The wide powers of the
Central Board of Direct Taxes or
other higher authorities of the
Department to whom such powers can
be delegated under Section 119 of
the Act, need not always take only a
pro revenue approach in such
matters. Their approach in such
cases should be equitious, balancing
and judicious which should reflect
the application of mind to the facts
of the case and before denying the
genuine claim of the assessee on the
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grounds of mere delay in making such
claim, something more than the user
of innocuous terms as employed in
the present case, should be
forthcoming. Technically, strictly
and literally speaking, the Board
might be justified in denying the
exemption from capital gains tax by
rejecting such condonation
application, but an assessee, who
substantially satisfies the
condition for availing such
exemption should not be denied the
same, merely on the bar of
limitation, especially, when the
legislature has conferred wide
discretionary powers to condone such
delay on the highest executive
authority of the Central Board of
Direct Taxes under the Act.
13. The general and wide powers
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given to the Board in this regard,
"if it considers it desirable or
expedient so to do for avoiding
genuine hardship in any case.....",
not only gives wide powers to the
Board, but confers upon it a
obligation to consider facts
relevant for condonation of delay as
well as the merit of the claim
simultaneously. If the claim of
exemption or other claim on merits
is eminently a fit case for making
such claim, it should not normally
be defeated on the bar of
limitation, particularly, when the
delay or the time period for which
condonation is sought is not
abnormally large. It will of course
depend upon the facts of the each
case, where such a time period or
the merit of the claim deserves such
exercise of discretion in favour of
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the assessee under Section 119(2)(b)
of the Act or not and therefore, no
straight jacket formula or
guidelines can be laid down in this
regard. However, such orders passed
by the Central Board of Direct Taxes
being a quasi-judicial order is
always open to judicial review by
the higher constitutional courts. If
the good conscience of the Courts is
pricked, even though such orders
rejecting the claims on the bar of
limitation may appear to be prima
facie tenable, the Courts may
exercise their jurisdiction to set
aside such orders and allow the
claims on merits, setting aside the
bar of limitation.
14. The present case is one of such
nature, where the Court finds that
the substantial conditions for
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claiming the exemption from capital
gain tax stood satisfied and the
prescribed investment was made by
the assessee in the Bonds of the
National Highways Authority, for the
minimum lock-in period of three
years also is an undisputed fact,
and therefore, the delay in making
such investment of six months
deserved to be condoned, in view of
the fact that, the assessee-
petitioner, a Doctor by profession
was traveling from India to USA a
long distance country where she
normally resided and came to India
not only to meet her family members,
but to sell the immoveable property
belonging to her and sought to avail
the genuine exemption from such tax
liability upon making the investment
in the prescribed investment in the
form of Bonds of Infrastructure
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which she did make in the National
Highways Authority."
30. We may also refer to and rely upon a
decision of the Delhi High Court in the
case of G.V.Infosutions Pvt. Ltd. vs.
Deputy Commissioner of Income Tax,
Circle 10(2) and others, reported in
(2019) 261 taxmann.com 482 (Delhi). We
may quote the relevant observations
thus:
"8. The rejection of the petitioner's
application under Section 119(2)(b)
is only on the ground that according
to the Chief Commissioner's opinion
the plea of omission by the auditor
was not substantiated. This court
has difficulty to understand what
more plea or proof any assessee
could have brought on record, to
substantiate the inadvertence of its
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advisor. The net result of the
impugned order is in effect that the
petitioner's claim of inadvertent
mistake is sought to be
characterised as not bonafide. The
court is of the opinion that an
assessee has to take leave of its
senses if it deliberately wishes to
forego a substantial amount as the
assessee is ascribed to have in the
circumstances of this case.
"Bonafide" is to be understood in
the context of the circumstance of
any case. Beyond a plea of the sort
the petitioner raises (concededly
belatedly), there can not
necessarily be independent proof or
material to establish that the
auditor in fact acted without
diligence. The petitioner did not
urge any other grounds such as
illness of someone etc., which could
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reasonably have been substantiated
by independent material. In the
circumstances of the case, the
petitioner, in our opinion, was able
to show bonafide reasons why the
refund claim could not be made in
time.
9. The statute or period of
limitation prescribed in provisions
of law meant to attach finality, and
in that sense are statutes of
repose; however, wherever the
legislature intends relief against
hardship in cases where such
statutes lead to hardships, the
concerned authorities - including
Revenue Authorities have to construe
them in a reasonable manner. That
was the effect and purport of this
court's decision in Indglonal
Investment & Finance Ltd. (supra).
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This court is of the opinion that a
similar approach is to be adopted in
the circumstances of the case."
31. Having given our due consideration
to all the relevant aspects of the
matter, we are of the view that the
approach in the cases of the present
type should be equitious, balancing and
judicious. Technically, strictly and
liberally speaking, the respondent no.2
might be justified in denying the
exemption under Section 12 of the Act by
rejecting such condonation application,
but an assessee, a public charitable
trust past 30 years who substantially
satisfies the condition for availing
such exemption, should not be denied the
same merely on the bar of limitation
especially when the legislature has
conferred wide discretionary powers to
condone such delay on the authorities
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concerned.
32. We may also refer to the decision of
this Court in CIT v. Gujarat Oil and
ITR 325 (Gujarat), wherein it is held
that the provision regarding furnishing
of audit report with the return has to
be treated as a procedural proviso. It
is directory in nature and its
substantial compliance would suffice. In
that case, the assessee had not produced
the audit report along with the return
of income but produced the same before
the completion of the assessment. This
Court took the view that the benefit of
exemption should not be denied merely on
account of delay in furnishing the same
and it is permissible for the assessee
to produce the audit report at a later
stage either before the Income Tax
Officer or before the appellate
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authority by assigning sufficient
cause."
10. Similarly the Bombay High Court in case
of Bhatewara Associates (Supra) and Delhi
High Court in case of Infosutions Private
Limited (Supra) have also permitted the
condonation of delay occurred in filing the
return of income under the provisions of
Section 119(2)(b) of the Act.
11. In view of the above dictum of law and
considering the facts of the case, more
particularly, when the petitioner has filed
the affidavit of the Chartered Accountant
explaining the cause for non-filing of the
return in the prescribed period of
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limitation, as held by this Court in case
of Surendranagar District Co-operative Bank
Ltd. (Supra) that "rendering substantial
justice shall be paramount consideration of
the Courts as well as the Authorities rather
than deciding on hyper-technicalities", we are
of the considered view that the respondent
ought to have condoned the delay.
12. The petition therefore succeeds and is
accordingly allowed. The impugned order
dated 26th February, 2025 passed by the
respondent under Section 119(2)(b) of the
Act is hereby quashed and set aside. The
respondent is remanded to pass an order to
condone the delay occurred in filing the
NEUTRAL CITATION
C/SCA/10505/2025 JUDGMENT DATED: 15/10/2025
undefined
return by the petitioner, so as to enable
the petitioner to file the return of income
for Assessment Year 2024-25 to claim the
deduction under Section 80P of the Act.
Such exercise shall be completed within a
period of twelve weeks from the date of
receipt of the copy of this order.
13. Rule is made absolute to the aforesaid
extent. No orders as to cost.
(BHARGAV D. KARIA, J)
(PRANAV TRIVEDI,J)
PALAK
