High Court Remands Condonation of Delay Plea to PCIT for Fresh Consideration

The petitioner filed its return of income for AY 2023-24 on December 30, 2023, declaring a taxable income of Rs. 19.76 lakh and a refund of Rs. 4,190. It opted for concessional tax under Section 115BAA, which required filing Form 10-IC by October 31, 2023. However, the form was belatedly filed on 29.12.2023. The petitioner applied for condonation of delay under Section 119(2)(b), attributing the lapse to oversight by its accountant due to ill health and workload.

The Principal Commissioner of Income Tax, Delhi-7, rejected the plea on 21.06.2024, holding that negligence of the accountant did not constitute “genuine hardship” under CBDT Circular No. 09/2015. The rejection led to the denial of concessional tax under Section 115BAA and a demand of Rs. 1.34 lakh.

Main Issue: Whether failure to file ITR and Form 10-IC within the prescribed time due to the accountant’s lapse amounted to “genuine hardship” warranting condonation under Section 119(2)(b).

HC’s Decision: The Court noted that the PCIT’s order lacked reasoning and failed to consider whether the accountant’s lapse constituted reasonable cause. It emphasised that Section 119(2)(b) is a beneficial provision and “genuine hardship” must be construed liberally, as held in B.M. Malani v. CIT, Sitaldas K. Motwani v. DIT, and Ramesh Kumar Shokeen v. PCIT. The Bench observed that a taxpayer should not suffer solely for the mistakes of professionals they depend upon.

Relying also on Rafiq v. Munshi Lal, the Court held that the impugned order was unreasoned and mechanical. Therefore, it set aside the order dated 21.06.2024 and remanded the matter back to the PCIT for fresh adjudication of the condonation application in accordance with law.

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