The Bombay High Court, while interpreting the scope of authority under section 119(2)(b) of the Income Tax Act, emphasized the need for authorities to consider condoning delays to ensure substantive justice for all parties involved. A Division Bench comprising Justice K. R. Shriram and Justice Dr. Neela Gokhale reiterated that the power to condone delays is granted to enable authorities to adjudicate cases on their merits and ensure that no party benefits unfairly due to delayed filings.
In a specific case before the court, an individual taxpayer had filed their return claiming a deduction under section 80-IC for an industrial unit located in an export processing zone. However, the deduction was denied without any stated reason in the intimation under section 143(1). Subsequently, the taxpayer realized that the audit report required for the deduction had not been uploaded online due to inadvertence. Despite filing for rectification and later applying under section 264, the taxpayer’s requests were dismissed on the grounds of delay.
When the taxpayer sought condonation of the delay nearly six years after filing the rectification application, the request was denied by the Assessing Officer (ACIT) on the basis that the reasons provided were too general and did not establish genuine hardship. Dissatisfied with this decision, the taxpayer approached the High Court through a writ petition.
The High Court, emphasizing the importance of considering genuine hardship, reiterated that no taxpayer should benefit unfairly from delayed filings, especially when it could result in tax advantages. Referring to precedent and the phrase “genuine hardship” used in the Income Tax Act, the Court emphasized a liberal interpretation of this term.
In its judgment, the Court directed the ACIT to dispose of the rectification application on its merits, given its long-pending status. Furthermore, the Court instructed the Principal Chief Commissioner of Income Tax (PCCIT) to take corrective action against the ACIT for failing in their duty to adjudicate the application in a timely manner.
Additionally, the Chairman of the Central Board of Direct Taxes was directed to take appropriate measures to ensure compliance with the Court’s directives. This ruling underscores the principle of fairness and justice in tax administration, highlighting the importance of considering genuine hardship and ensuring timely adjudication of taxpayer requests.
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