Mere Delay In Filing Return Should Not Defeat Refund Claim Of Taxpayer If Legitimately Due To Him: Bombay HC
Observing that the approach of the authority should be justice oriented to advance the cause of justice, the Bombay High Court quashed an order rejecting the Assessee’s application for condonation of delay of 43 days in filing the return of income and remits the matter back to CBDT for de-novo consideration.
If the refund is legitimately due to the applicant, a mere delay should not defeat the claim for refund, added the Court.
The Division Bench comprising of Justice K.R. Shriram and Justice Firdosh P. Pooniwalla observed 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. 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”.
The Bench stated that the CBDT Member has not passed the order but it was passed by a Director of Income-tax and hence it deserves to be quashed.
Advocate Bharat Raichandani appeared for the Assessee while Revenue was represented by Advocate Akhileshwar Sharma.
The brief facts of the case were that for the AY 2016-17, the Assessee filed ITR with delay and sought a refund of Rs.82.13 Lacs along with a request for condonation of delay in filing ITR which was rejected.
After considering the submission, the Bench observed that CBDT has not considered Assessee’s prayer for condonation in its proper perspective and in accordance with CBDT Circular dated Jun 09, 2015, and thus it needs to be considered afresh.
The Bench also rejected the Revenue’s argument that the Assessee failed to prove the genuine hardship by relying on a co-ordinate bench ruling in Sitaldas K. Motwani Vs. Director General of Income Tax (International Taxation) & Ors [2009 SCC OnLine Bom 2195], wherein it was held that the term ‘genuine hardship’ as envisaged under Section 119(2)(b) should be construed liberally, particularly when 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.
The High Court noted that as per the order rejecting condonation of delay, the partner of the Asesssee-Firm was held up abroad whereas the Assessee in its letter submitted that partners were in India but the person entrusted to advise on ITR filing was out of the country.
The High Court also remarked that such issues could have been addressed by calling upon the Assessee to explain which was not done; observing that the order mentions the remark of the field authorities stating that one of the partners was abroad was not supported by any evidence.
However, the Bench underscored that, in accordance with the principles of natural justice, the said statement should have been provided to the Assessee for a response to be submitted.
Referring to the CBDT Circular dated Jun 09, 2015, the Bench observed that the refund claim exceeding Rs.50 Lacs shall be considered by the CBDT.
The Bench found that the order was not sent to the Member, CBDT on whose approval it was supposed to have been passed.
Thus, the High Court directed the CBDT to decide the question of hardship as well as that of correctness and genuineness of Assessee’s refund claim of Rs.82.13 Lacs, and at the same time, clarified that the order cannot be passed by anyone else even with the approval of the CBDT.
Cause Title: Madhani Prakash Engineers JV v. Union of India and Ors.
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