Telangana High Court
Gayatri Crescent Joint Venture vs The Principal Chief Commissioner Of ... on 3 July, 2025
Author: P.Sam Koshy
Bench: P.Sam Koshy
THE HONOURABLE SRI JUSTICE P.SAM KOSHY
AND
THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA
WRIT PETITION Nos.8758, 8759, 8761 & 8916 of 2025
COMMON ORDER:(per the Hon'ble Sri Justice P.Sam Koshy) Since the issue in the present writ petitions is one and the same, they are being disposed of by this Common Order.
2. Heard Mr. Karan Talwar, learned counsel for the petitioners, Mr. G.Bhaskar Reddy, learned counsel for respondent No.1, Ms. Bokaro Sapna Reddy, learned Senior Standing Counsel for Income Tax Department for respondent No.3, Mr. B.Mukherjee, learned Additional Government Pleader, representing Mr. Gadi Praveen Kumar, learned Deputy Solicitor General of India for respondent No.4.
3. These are four writ petitions filed by the petitioners challenging the order passed by respondent No.1 in declining to condone the delay application filed by the petitioners under Section 119 (2)(b) of the Income Tax Act, 1961 (for short, the 'Act').
4. All the petitioners herein in four writ petitions are partners in a joint venture by the name Gayatri Projects Limited. The petitioners herein for some Page 2 of 17 unavoidable circumstances were not able to file their income tax returns for the assessment year 2023-24. It was the contention of the petitioners that Corporate Insolvency Resolution Process (for short, the 'CIRP') was initiated against the lead partner Gayatri Projects Limited and proceedings commenced before the National Company Law Tribunal, Hyderabad Bench (for short, the 'NCLT') from 15.11.2022. Subsequently, an Interim Resolution Professional (for short, the 'IRP') was appointed. Because Gayatri Projects Limited had gone into CIRP, there was a substantial loss of employees and manpower and because of the then prevailing situation, the lead partner itself having gone into CIRP, and an IRP also being appointed, the returns could not be filed within the stipulated period. Subsequently, the petitioners moved an application before respondent No.1 under Section 119 (2)(b) of the Act in around March and April 2024 with a delay ranging in all these four writ petitions between 135 days to 153 days, 153 days being the maximum period of delay i.e. roughly around 5 months' time.
5. According to the petitioners, if their returns are accepted by condoning the delay, they would be entitled for refund as per the Assessing Officer's report and, personal hearing on the application seeking condonation of delay was granted to the petitioners, which was availed by them. Page 3 of 17
6. It was the contention of the petitioners that in between because of the establishment being subjected to CIRP, the establishment got occupied in constant day to day firefighting of project management issues such as handling threats of termination, and protection of BGs etc. Meanwhile, the IRP who was recently appointed could not take requisite steps so far as the state of affairs of the establishment is concerned and the statutory compliance could not be done within the stipulated time, particularly the time stipulated for filing of the income tax returns for the assessment year 2023-24. All these factors which were beyond the control of the petitioners, prevented them from timely filing of income tax returns for the assessment year 2023-24 and it was for this reason that the condone delay petitions were filed for condoning the delay ranging from 135 days to 153 days in the present writ petitions.
7. According to the petitioners, the delay was entirely beyond their control. It was neither intentional nor was it as a result of wilful negligence. According to the petitioners, they were already in distressed financial condition and there was also the risk of instability and insecurity. The petitioners submitted written submissions dated 02.01.2025 to respondent No.1 and reconciled the differences between the amount determined by respondent No.3 and the amount of refund Page 4 of 17 claimed by them, following which the petitioners could claim for refund that they have made.
8. The respondent No.1, however, vide the impugned order dated 13.01.2025 rejected the request for condonation of delay in filing of the income tax returns for the assessment year 2023-24. The rejection of the application seeking condonation of delay under Section 119(2)(b) by respondent No.1 was primarily disbelieving the averments made by the petitioners in respect of the difficulties that the petitioners were facing on account of lead partner in the joint venture i.e. Gayatri Projects Limited having drawn into NCLT proceedings by corporate creditors on account of its default in repaying the loan. It was also the view of respondent No.1 that the petitioners have not been able to show genuine hardship that would be caused if the delay is not condoned enabling the petitioners in filing the income tax returns for the assessment year 2023-24.
9. For understanding the grievance of the petitioners, it would be appropriate if the provisions of Section 119(2)(b) of the Act are taken into consideration. For ready reference, Section 119(2)(b) of the Act is reproduced hereunder:
"(2) Without prejudice to the generality of the foregoing power,-
(a) ...... ..... ...Page 5 of 17
(b) the Board may, if it considers it necessary or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorize [any income-tax authority, not being [a Joint Commissioner (Appeals) or] a Commissioner (Appeals)] to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law;"
10. Before we refer to the recent decisions on the said issue, it would be more appropriate to take note of the Circular No.11/24 of CBDT issuing instructions to the subordinate authorities so far as admitting an application for condonation of delay in filing returns claiming refund and returns claiming carry forward of loss and set-off thereof under Section 119(2)(b) of the Act. The contents of the said Circular clearly reflects the intention of CBDT while issuing instructions to the subordinate authorities empowered to consider and decide an application under Section 119 (2)(b) of the Act. The Circular empowers the Principal Commissioners, Chief Commissioners, Principal Chief Commissioners and Commissioners etc. in a given case to consider and decide an application seeking condonation of delay under Section 119 (2)(b) of the Act. The only restriction that is reflected in the said circular is that no application seeking condonation of delay should be entertained if it is filed beyond a period of five years from the end of the assessment year for which such application is made. Page 6 of 17 In the instant batch of writ petitions, the delay ranges from a period of 135 days to 153 days.
11. From the impugned order itself, it would be evident that one of the major grounds that was raised by the petitioners seeking condonation of delay was that the establishment going under CIRP. The further ground raised was that because the establishment had gone under CIRP, there was a huge loss of manpower including the higher level authorities where many of the officers and employees had resigned and left the establishment. In addition, the establishment also faced severe financial crisis; all of which resulted in delayed filing of income tax returns.
12. In the factual backdrop, the respondent No.1 ought to had considered the Section 119(2)(b) petitions, which according to the petitioners have been decided in a very technical manner and without proper application of mind.
13. The Bombay High Court in the case of Bombay Mercantile Co-op Bank Ltd. vs. Central Board of Direct Taxes, Ministry of Finance and Others 1, in paragraph Nos.7 and 8, has held as under:
1
2010 SCC OnLine Bom 1387 Page 7 of 17 "7. As can be seen from the reading of the said provision the Board is vested with the power to admit any application after the expiry of the period specified by or under this Act if sufficient grounds are made out. In our view, therefore, the said reason mentioned by the petitioner in its application, deserves to be accepted. The other reasons cited for condonation of delay, therefore, need not be gone into as the petitioner in our view, would be entitled to condonation of delay on the said ground alone.
8. It is well settled that in matters of condonation of delay a highly pedantic approach should be eschewed and a justice-oriented approach should be adopted and a party should not be made to suffer on account of technicalities."
14. The High Court of Karnataka in the case of Dr. (Smt.) Sujatha Ramesh vs. Central Board of Direct Taxes, New Delhi 2, held at paragraph No.12, as under:
"12. The wide powers of the Central Board of Direct Taxes or other higher authorities of the Department to whom such powers can be delegated under Section 119 of the Act, Date of Order 24-10-2017 W.P.No.54672/2015 Dr.(Smt.) Sujatha Ramesh Vs. Central Board of Direct Taxes and another. need not always take only a pro revenue approach in such matters. Their approach in such cases should be equitious, balancing and judicious which should reflect the application of mind to the facts of the case and before denying the genuine claim of the assessee on the grounds of mere delay in making such claim, something more than the user of innocuous terms as employed in the present case, should be forthcoming. Technically, strictly and literally speaking, the Board might 2 (2017) taxmann.com 228 Karnataka Page 8 of 17 be justified in denying the exemption from capital gains tax by rejecting such condonation application, but an assessee, who substantially satisfies the condition for availing such exemption should not be denied the same, merely on the bar of limitation, especially, when the legislature has conferred wide discretionary powers to condone such delay on the highest executive authority of the Central Board of Direct Taxes under the Act."
15. In the case of B.M. Malani vs. Commissioner of Income Tax and Another3, the Hon'ble Supreme Court held in paragraph Nos.16, 17 and 18 as under:
"16. The term "genuine" as per the New Collins Concise English Dictionary is defined as under:
"'Genuine' means not fake or counterfeit, real, not pretending (not bogus or merely a ruse)".
17. [Ed.: Para 17 corrected vide Official Corrigendum No. F.3/Ed.B.J./5/2009 dated 20-1-2009.] For interpretation of the aforementioned provision, the principle of purposive construction should be resorted to. Levy of interest is statutory in nature, inter alia, for recompensating the Revenue from loss suffered by non-deposit of tax by the assessee within the time specified therefor. The said principle should also be applied for the purpose of determining as to whether any hardship had been caused or not. A genuine hardship would, inter alia, mean a genuine difficulty. That per se would not lead to a conclusion that a person having large assets would never be in difficulty as he can sell those assets and pay the amount of interest levied.
3 (2008) 10 Supreme Court Cases 617 Page 9 of 17
18. The ingredients of genuine hardship must be determined keeping in view the dictionary meaning thereof and the legal conspectus attending thereto. For the said purpose, another well-known principle, namely, a person cannot take advantage of his own wrong, may also have to be borne in mind. The said principle, it is conceded, has not been applied by the courts below in this case, but we may take note of a few precedents operating in the field to highlight the aforementioned proposition of law. [See Priyanka Overseas (P) Ltd. v. Union of India [1991 Supp (1) SCC 102] (SCC at pp. 122-23, para 39); Union of India v. Major General Madan Lal Yadav (Retd.) [(1996) 4 SCC 127 : 1996 SCC (Cri) 592] (SCC at p. 142, paras 28-
29); Ashok Kapil v. Sana Ullah [(1996) 6 SCC 342] (SCC at p. 345, para
7); Sushil Kumar v. Rakesh Kumar [(2003) 8 SCC 673] (SCC at p. 692, para 65, first sentence); Kusheshwar Prasad Singh v. State of Bihar [(2007) 11 SCC 447] (SCC at pp. 451-52, paras 13-14 and 16).]"
16. In the case of Sitaldas K.Motwani vs. Director General of Income Tax and Others4, the Bombay High Court held at paragraph No.15 as under:
"15. The phrase "genuine hardship" used in Section 119(2)(b) should have been construed liberally even when the petitioner has complied with all the conditions mentioned in Circular dated 12th October, 1993. The Legislature has conferred the power to condone delay to enable the authorities to do substantive justice to the parties by disposing of the matters on merit. The expression "genuine" has received a liberal meaning in view of the law laid down by the Apex Court referred to hereinabove and while considering this aspect, the authorities are expected to bare in mind that ordinarily the applicant, applying for condonation of delay does not stand to benefit by lodging its claim late. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice 4 Writ Petition No.1749 of 2009 of the Bombay High Court Page 10 of 17 being defeated. As against this, when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of malafides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. The approach of the authorities should be justice oriented so as to advance cause of justice. If refund is legitimately due to the applicant, mere delay should not defeat the claim for refund."
17. The High Court of Kerala in the case of Pala Marketing Co-op. Socy. Ltd. vs. Union of India & Ors. 5, held at paragraph No.3 as under:
"3. What is stated in Section 119(2)(b) is that if the Board considers desirable or expedient for avoiding genuine hardship to the assessee, it should condone the delay. In other words, what the Board should consider is hardship to the party if delay is not condoned. The Board should condone the delay if failure to condone the delay causes genuine hardship to the assessee, no matter whether the delay in filing return is meticulously explained or not. In other words, once the Board allows the application under Section 119(2)(b) of the Act, the matter goes to the Assessing Officer for considering assessee's claim for refund under Section 237. Section 237 makes it clear that the Assessing Officer while considering application for refund should consider the amount of tax chargeable on the claimant under the Act and refund arises only if -payment is in excess of the tax payable under the Act."5
2008 (1) KLJ 561 Page 11 of 17
18. This High Court also in the case of Shilparamam Arts, Crafts and Cultural Society vs. Additional / Joint / Deputy / Assistant Commissioner of Income Tax / Income Tax Officer6, dealing with the provisions of Section 119 (2)(b) of the Act, allowing a writ petition of similar nature and referring to a few decisions of the recent past in paragraph Nos.17 to 22, has held as under:
"17. Now if we look into the statutory provisions, what is reflected is that the provisions under Section 119(2)(b) has been enacted with a specific purpose empowering the authorities concerned to condone the delay on the part of the assessee in furnishing or in submitting of the returns or an appropriate application within a reasonable period of time. The said provision of law does not provide for any specific period of time within which the application for condonation of delay needs to be filed. The said provision has also been enacted to ensure that genuine hardship which an assessee may face can be avoided by condoning the delay if any that has occurred and an appropriate application seeking for condonation of delay is filed.
18. The High Court of Gujarat in the case of Sarvodaya Charitable Trust v. Income Tax Officer. (Exemption) 7 dealing with similar issue under the provisions of law in paragraph Nos.31 and 32 held as under:
"31. Having given our due consideration to all the relevant aspects of the matter, we are of the view that the approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, the respondent no.2 might be justified in denying the exemption under section 12 of The Act by rejecting such 6 Writ Petition No.31360 of 2023, decided on 24.11.2023 7 [2021] 124 taxmann.com 75 (Gujarat) Page 12 of 17 condonation application, but an assessee, a public charitable trust past 30 years who substantially satisfies the condition for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned.
32. We may also refer to the decision of this Court in CIT v. Gujarat Oil and Allied Industries Ltd. [1993] 201 ITR 325 (Guj.)., wherein it is held that the provision regarding furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had produced the audit report along with the return of income but produced the same before the completion of the assessment. This Court took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either before the Income-tax Officer or before the appellate authority by assigning sufficient cause."
19. The High Court of Gujarat further in the case of COMMISSIONER OF INCOME-TAX v. GUJARAT OIL AND ALLIED INDUSTRIES 8 held as under:
"In our view, the aforesaid reasoning of the Allahabad High Court and the Patna High Court would squarely apply to the facts of the present case. The provision about furnishing of the auditors' report along with the return has to be treated as a procedural provision, directory in nature, 8 [1993] 201 ITR 325 (Guj) Page 13 of 17 and its substantial compliance should suffice, meaning thereby that such report should be made available by the assessee to the Assessing Officer latest when the question of framing of assessment is taken up by the Income-tax Officer and when he applies his mind to the claim of the assessee and if by that time, the assessee has put his house in order and has furnished the report of the auditor for supporting the return, he can be said to have satisfied the requirement of section 80J(6A) of the Act."
20. A similar view is available from the High Court of Punjab and Haryana in the case of COMMISSIONER OF INCOME TAX v.
SHAHZEDANAND CHARITY TRUST 9, where again the Division Bench of High Court of Punjab and Haryana dealing with similar facts and circumstances of the case referring to the circular of the Income Tax Department itself held as under:
"The provisions of section 80J(6A) and section 12A of the Act are pari material. The ratio of the law laid down in CIT v. Jaideep Industries [1989] 180ITR 81 (P & H) would have been applicable to the facts of the present case as well had the Central Board of Direct Taxes not issued the circular dated February 9, 1978, reproduced in the earlier part of the judgment. As per the circular it is not mandatory under section 12A(b) to file the audit report along with the return of income. Normally, a charitable or religious trust or institution is expected to file the auditor's report along with the return but in cases where for reasons beyond the control of the assessee some delay has occurred in filing the said report, the Income-tax Officer, for reasons to be recorded, 9 228 ITR 292(P&H) Page 14 of 17 has been authorized to condone the delay in furnishing the auditor's report and accept the same at a belated stage. It has been clarified that the exemption available to the trust under section 11 may not be denied merely on account of delay in furnishing the auditor's report. The word ''shall"
occurring in section 12A cannot, under the circumstances, be read as a "must" making it mandatory for the trust to furnish the auditor's report along with the filing of the return. If for certain unavoidable circumstances, the assessee is unable to furnish the auditor's report along with the return then the same can be furnished at a later date with the permission of the Assessing Officer who may permit the assessee to do so after recording his reasons for so doing.
Counsel appearing for the Revenue then argued that as per the circular, the auditor's report could only be furnished up to the stage of framing of assessment as the power to condone the delay for accepting the auditor's report at a later date has only been given to the Income-tax Officer and not thereafter, i.e., at the appellate stage. We find no merit in this submission. The Central Board of Direct Taxes by issuing the circular dated February 9, 1978, has treated the provisions regarding furnishing of the auditor's report along with the return to be procedural and, there-fore, directory in nature. By showing sufficient cause, the auditor's report could be produced at any later stage either before the Income-tax Officer or before the appellate authority."
Page 15 of 17
21. Coming to the decisions relied upon by the learned counsel for the respondent-Department, those decisions were rendered under 13 entirely different contextual background and thus in both the cases it was not a situation where the income tax return was filed and the audit report also stood uploaded more than 2.5 years much before the Assessing Officer had passed the assessment order. Therefore, the said judgments cannot be applied in a straight jacket manner to the facts of the present case.
22. For the aforesaid reasons, we are inclined to allow the writ petition setting aside the impugned order dated 31.07.2023. As a result, the consequential order passed subsequent to the rejection of the application under Section 119(2)(b) of the Act would also get automatically quashed and the application of the petitioner for condonation of delay stands allowed. Wherefore the respondent No.3 would be required to pass an appropriate consequential order in accordance with law."
19. The Bombay High Court further in the case of K.S. Bilawala and Others vs. Principal Commissioner of Income-Tax and Others 10 in paragraph No.6 has held as under:
"6. Therefore, the phrase "genuine hardship" used in section 119(2)(b) of the Act should be considered liberally. The respondent should keep in mind, while considering an application of this nature, that the power to condone the delay has been conferred to enable the authorities to do substantial justice to the parties by disposing of the matters on the merits. While considering these aspects, the authorities are expected to bear in mind that no applicant stand to benefit by lodging delayed returns. Refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when the 10 [2024] 463 ITR 766 (Bom) Page 16 of 17 delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties."
20. Keeping in view all the aforesaid judicial pronouncements, we are of the considered opinion that refusal to entertain an application under Section 119 (2)(b) of the Act by respondent No.1 while passing the impugned order dated 13.01.2025 was in a routine manner without considering the catena of judicial pronouncements those have been decided against the Revenue insofar as the application under Section 119 (2)(b) of the Act is concerned. The impugned order dated 13.01.2025 passed by respondent No.1, therefore, deserves to be and is accordingly set aside / quashed. The delay caused in not filing of income tax returns by the petitioners within time stands condoned keeping in view the contents of CBDT's circular. As a consequence, the respondent No.1 is directed to take appropriate steps in accordance with law on the returns submitted by the petitioners along with their applications under Section 119(2)(b) of the Act and thereafter permit the petitioners to upload the returns and the same may be processed in accordance with law. The respondent No.1 may, whenever, required open the portal enabling the petitioners to upload the returns accordingly.
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21. With the aforesaid observations and directions, the present batch of writ petitions stand allowed. No costs.
22. As a sequel, miscellaneous petitions pending if any, shall stand closed.
________________ P.SAM KOSHY, J _______________________________ NARSING RAO NANDIKONDA, J Date: 03.07.2025 GSD