Delay in filing Loss Return as Chartered Accountant was busy in wedding of his sister: HC condones Delay

The Bombay High Court in the matter of M/s ADCC Infocom Private Limited vs. The Principal Chief Commissioner of Income Tax, condones delay in filing Loss Return as Chartered Accountant was busy in wedding of his sister.

The petitioner is a company registered under the Companies Act and engaged in the business of Geospatial and Engineering Services. During the Financial Year 2019-2020, the petitioner suffered a loss in its business. In case of a loss, an assessee is required to file his return within due date as specified under Section 139(1) of the Income Tax Act, 1961 (hereinafter referred to as “Act” for short). If the return is filed beyond the due date, the loss suffered in the business cannot be carried forward for set off in the next succeeding year. Since the petitioner is a company and liable for audit under the Act, the due date for filing the return of income tax for the Assessment Year 2020-2021 (Financial Year 2019-2020) was 31/10/2020. Due to COVID-19 pandemic, the due date for filing of income tax return for the Assessment Year 2020-2021 was extended up to 15/02/2021. The return came to be filed on 23/03/2021 after the delay of 36 days. On 21/05/2021, the petitioner filed an application for condonation of delay of 36 days before respondent No.1 by email. Respondent No.1, by its order dated 24/03/2022, rejected the application for condonation of delay. Feeling aggrieved with the order of rejection dated 24/03/2022, the present petition came to be filed.

It is case of the petitioner that during the said period, COVID-19 pandemic was at its peak and a large number of people were testing positive for COVID-19. Due to heavy workload it’s Chartered Accountant was engaged and due to wedding of his sister, which was scheduled on 16/02/2021, she was busy in arranging and attending the relatives, therefore, she could not file the return of loss of the petitioner by 15/02/2021. According to the petitioner, there was genuine hardship for not filing the return within due date.

The respondents filed affidavit-in-reply opposing the writ petition that the return of income tax for the Assessment Year 2020-2021 has been filed on 23/03/2021 beyond the due date of 15/02/2021. No sufficient reason has been disclosed by the petitioner. The petitioner had sufficient time to file the return of income tax within due date. It is contended that no satisfactory, convincing or cogent reason for delay or any hardship was demonstrated.

The rival contentions, which now called for our consideration, have to be examined in the context of Section 119(2)(b) of the Act, which is provided for condonation of delay, reads thus :

“ Section 119(2)(b)- The Central Board of Direct Taxes may, if it considers it desirable or expedient to do so for avoiding genuine hardship, authorize any income tax authority to admit an application or claim for any exemption, deduction, refund or any other relief under the Act after expiry of the period specified by or under the Act.”

We are mindful of the fact that during the relevant period, COVID-19 pandemic was in second phase. Though, the date has been extended till 15/02/2021, the fact remains that during this period, new variant of virus of COVID-19 was emerged. That apart, there is a statement on oath of the Chartered Accountant of the petitioner contending that there was marriage of her elder sister on 16/02/2021 and she was discharging her family obligations. Rather, she has taken the responsibility mentioning that there was failure on her part to file return of income tax of the petitioner before the due date.

It is settled principle that for the mistake on the part of the professionals, the litigant should not suffer. This Court in the case of Subhkaran & Sons vs. N.A. Kazi, 5th ITO and others – 1984 SCC OnLine Bom 411 has held in paragraph 6 as under :

“6. In these circumstances, the better order, and one more in consonance with justice, should have been to accept the firm’s request and condone the delay in filing Form No.11A. Refusal to do so resulted in technicality triumphing over justice. A party may not suffer for no fault on this part and for a sheer mistake or oversight on the part of his legal or tax advisers. All that was necessary for the firm to do was in fact done by it and its partners. That the chartered accountants made a mistake through oversight should not have been considered a fatal circumstance outweighing all the other facts and circumstances in favour of the assessee. Though to be perfect is divine, this mortal world has not as yet come across one so perfect and divine as to make no mistake at all.”

To summarize, firstly, the affidavit of the Chartered Accountant, which has neither been disputed nor controverted by the respondents. Secondly, due to fault on the part of professional, the party should not suffer. Thirdly, that the delay is only of 36 days. Considering the phrase “genuine hardship” used in Section 119(2)(b) of the Act, to be construed liberally, as held in various decisions of the Apex Court and various High Courts, we find that the case of the petitioner comes within the sweep of phrase ‘genuine hardship’, particularly, when there is no allegation of mala fide or deliberate delay on the part of the petitioner.

We are, therefore, of the view that the impugned order dated 24/03/2022 deserves to be set aside and hereby set aside. The delay of 36 days in filing the loss return for the Assessment Year 2020-2021 is hereby condoned. The Income Tax Authorities to act accordingly.

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