If Refund Is Legitimately Due, Mere Delay Should Not Defeat The Claim For Income Tax Refund: Bombay High Court

The Bombay High Court has quashed the CBDT’s order rejecting the assessee’s application for condonation of the 43-day delay in filing the return of income (ITR).

"Refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and the 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 will be decided on merits after hearing the parties. In our view, the approach of the authority should be justice-oriented so as to advance the cause of justice. If a refund is legitimately due to the applicant, the mere delay should not defeat the claim for refund," the bench of Justice K.R. Shriram and Justice Firdosh P. Pooniwalla observed.

The petitioner/assessee is in the business of executing the projects launched by the Municipal Corporation of Greater Mumbai (MCGM).

The assessee paid the tax, which is also reflected in Form 26AS. Petitioner filed its return of income belatedly on November 30, 2016. The due date for filing the income tax return was September 30, 2016. The time to file an income tax return has been extended up to October 17, 2016. Hence, there was a delay of 43 days in filing the return of income.

The assessee requested that the respondent, the Commissioner of Income Tax, condone the delay in filing the return of income for A.Y. 2016–2017. The assessee explained that the delay was due to the concerned person, who was entrusted with the work of filing the return, being indisposed due to medical reasons.

The assessee received the order rejecting the petitioner’s request for condonation of delay. The last sentence in the order read, "This order is passed with the approval of the Member (TPS & Systems), CBDT." The order stated that the assessee had failed to prove genuine hardship.

The court noted that the phrase "genuine hardship is used in Section 119(2)(b) of the Income Tax Act. The court has held that the phrase "genuine hardship" should be construed liberally, particularly when the legislature conferred the power to condone the delay to enable the authorities to do substantive justice to the parties by disposing of the matter on merits.

The court said that the authorities are expected to bear in mind that ordinarily, an applicant applying for a condonation of delay does not stand to benefit by lodging its claim late. More so in the case at hand, where the applicant has sought a refund of a large amount of Rs. 82,13,340.

The court remitted the matter back to CBDT for de novo consideration.

Case Title: Madhani Prakash Enginers JV Versus UOI

Case No.: Writ Petition No. 3620 Of 2021

Date: 18/07/2023

Counsel For Petitioner: Bharat Raichandani

Counsel For Respondent: Akhileshwar Sharma

Click Here To Read The Order