Condonation Of Delay Application Should Focus On Sufficient Reason, Not Merits Of Claim U/S 119(2)(B) Of Income Tax Act: Kerala High Court

The Kerala High Court stated that an application for condonation of delay should focus on whether there was sufficient reason to condone the delay under Section 119(2)(B) of the Income Tax Act, rather than on the merits of the assessee's claim.

Section 119(2)(B) of the Income Tax Act, 1961 empowers CBDT to direct income tax authorities to allow any claim for exemption, deduction, refund and any other relief under the income tax act even after the expiry of the time limit to make such claim.

The Bench of Justice Gopinath P. observed that “………the Principal Commissioner of Income Tax had considered the merits of the claims raised by the assessee instead of assessing whether there was sufficient reason to condone the delay or extend time as per the provisions in Section 119(2)(b) of the Income Tax Act, 1961………..”

In this case, the assessee has challenged an order issued under Section 119(2)(b) of the Income Tax Act, 1961, which refused to extend the deadline for filing revised returns of income for the assessment years 2007-2008 to 2018-2019.

The assessee argued that, rather than assessing the validity of the application for condonation of delay, the competent authority evaluated the merits of the assessee's claim and concluded that the assessee is not entitled to relief under Section 119(2)(b) of the Income Tax Act.

The department contended that the power under Section 119(2)(b) of the Income Tax Act can be exercised only in exceptional circumstances and not as a matter of course. It submitted that, although the merits of the matter were referenced, the competent authority found no reason to extend the filing deadline for the assessment years in question. Therefore, the assessee has not established grounds for relief under Article 226 of the Constitution of India.

High Court agreed with the assessee that the application for condonation of delay should be considered not on the merits of the claim putforth by the assessee, but on the question as to whether there was sufficient reason for condoning the delay in terms of the provisions contained in Section 119(2)(b) of the Income Tax Act.

The bench, after reviewing the order, observed that the Principal Commissioner of Income Tax had considered the merits of the claims raised by the assessee instead of assessing whether there was sufficient reason to condone the delay or extend time as per the provisions in Section 119(2)(b) of the Income Tax Act, 1961, and in line with Circular No. 9/2015 dated 09.06.2015, issued by the Central Board of Direct Taxes for considering claims of delay condonation under this section.

In view of the above, the bench allowed the petition.

Counsel for Petitioner/ Assessee: Padmanathan K.V. and R. Sreejith

Counsel for Respondent/ Department: P.G. Jayashankar and G. Keerthivas

Case Title: Mohan Poovampally Gopal v. Principal Commissioner of Income Tax

Case Number: WP(C) NO. 26159 OF 2024

Citation: 2024 LiveLaw (Ker) 681

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