Gujarat High Court
M/S Mehul Construction vs Principal Commissioner Of Income Tax, ... on 10 November, 2025
Author: A.S. Supehia
Bench: A.S. Supehia
NEUTRAL CITATION
C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 10269 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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Approved for Reporting Yes No
√
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M/S MEHUL CONSTRUCTION
Versus
PRINCIPAL COMMISSIONER OF INCOME TAX, JAMNAGAR
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Appearance:
MR. HARDIK V VORA(7123) for the Petitioner(s) No. 1
MR. KARAN SANGHANI, SENIOR STANDING COUNSEL for the
Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 10/11/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI) 1 Heard Mr.Hardik Vora, learned advocate for the petitioner and Mr.Karan Sanghani, learned Senior Standing Counsel for the respondent.
2 Rule. Learned Senior Standing Counsel Mr.Karan Sanghani waives service of notice of rule on behalf of the respondent. By this petition under Articles 226 and 227 of the Page 1 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined Constitution of India, the petitioner has challenged the order dated 31.12.2024 passed by the respondent - Principal Commissioner of Income Tax, Jamnagar, under Sec.119(2)(b) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act' for short), whereby, the application filed by the petitioner for condonation of delay in filing Return of Income for the Assessment Year 2022-23 is rejected.
3 The brief facts which led to filing of the present writ petition are as under:
3.1 The petitioner is a partnership firm incorporated on 30.08.2006, engaged in providing construction service and other civil contract works.
3.2 It is the case of the petitioner that during the Assessment Year 2022-23, the books of accounts of the petitioner were audited, finalized and the Tax Audit Report was filed by Chartered Accountant Parth S. Sudani, proprietor of P.S.Sudani & Associates on 28.09.2022.
3.3 However, income tax return of the petitioner were regularly filed by Chartered Accountant Dipak Dama, partner of Chetan Agarwal & Co. It is the case of the petitioner that as Page 2 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined soon as the books of accounts were finalized, all necessary documents and details were duly provided by the petitioner to Chartered Accountant Dipak Dama. The partners of the petitioner firm were under the bonafide impression that Return of Income would be filed on time by the Chartered Accountant.
3.4 It is the case of the petitioner that upon inquiring about the status about the filing of the income tax return and further requesting the copy of the same, Chartered Accountant Dipak Dama informed the petitioner that due to heavy work load on the due dates, staff of the Chartered Accountant had inadvertently failed to file the return of income. Upon learning of this lapse, the petitioner immediately filed an application for condonation of delay on 28.03.2023, along with the affidavit of the Chartered Accountant Dipak Dama. Petitioner also attached Form 26AS and computation of income showing total income at Rs.19,68,890/-.
3.5 Subsequent to the application preferred by the petitioner, the respondent issued a notice on 28.11.2024 calling upon the petitioner to explain the genuine hardship Page 3 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined that would be caused if the application of delay was not admitted. Petitioner filed filed detailed reply on 03.12.2024.
However, the respondent rejected the application preferred by the petitioner which is impugned in the present writ petition.
4 Mr.Hardik Vora, learned advocate for the petitioner, has submitted that in view of the facts mentioned hereinabove, it is evident that there was no malafide intention on the part of the petitioner in not filing the return of income for the Assessment Year 2022-23 for the reasons which were beyond the control of the petitioner. The due date for filing the original return of income for the Assessment Year 2022-23 was 31.10.2022 and the due date for filing the belated return was 31.12.2022. However, the petitioner came to know only in March 2023 that due to miscommunication, the staff had inadvertently failed to file the return of income. In view of such facts, the application for condonation of delay was filed on 28.03.2023.
4.1 It was further submitted that in the contemporary tax regime, businesses routinely engages third party professionals Page 4 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined such as tax consultants, chartered accountants and legal advisors to navigate the complexities of legal and procedural compliance. Judicial precedents have consistently held that delays or omissions arising from the conduct of such professionals do not, in themselves, constitute negligence on the part of the assessee. On the contrary, the engagement of qualified professional reflects the assessee's diligent and proactive efforts to ensure compliance with statutory obligation.
4.2 It was further submitted that penalizing an assessee for lapses attributable to third party professionals is contrary to the principles of natural justice. Both the Income-Tax Act and judicial interpretations emphasize the importance of maintaining a fair balance between strict technical compliance and equitable treatment.
4.3 It was further submitted by learned advocate Mr.Hardik Vora that the Chartered Accountant Dipak Dama has furnished an affidavit admitting that the delay was caused due to the mistake on his part and hence, the petitioner should not be punished for the mistake of the third party.
Page 5 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined 5 On the other hand Mr.Karan Sanghani learned Senior Standing Counsel for the respondent submitted that the petitioner has failed to show any genuine cause which has resulted into hardship of the petitioner which may have led to belatedly filing of the income tax return. The petitioner has not pointed out any other cause except the fact that the Chartered Accountant had inadvertently missed filing the income tax return. The petitioner was duty bound to file the income tax return on 31.10.2022 as per the provisions of the Act. Ignorance of law or blaming the third party professional cannot be ground to claim the benefit of the Act.
5.1 It was further agitated that the petitioner is a habitual late filer and even for the Assessment Years 2017-18 and 2018-19, there were applications for condonation of delay under Sec.119(2)(b) of the Act by the petitioner. Therefore, the petitioner is not entitled to any benefit of quashing the delay caused in filing the Income Tax Return.
6 Having heard learned advocates for the respective parties and considering the facts, it is not in dispute that the Chartered Accountant of the petitioner was the reason which Page 6 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined has resulted into non filing of the income tax return. The Audit Report had been duly certified and was filed with the department. However, as per the affidavit of the Chartered Accountant, due to heavy work load, the staff of the Chartered Accountant had missed the filing of the Income Tax Return on time and in such a situation an application was made on 28.03.2023 under Sec.119(2)(b) of the Act. Therefore, the respondent authority could not have rejected the application as filing of return for claiming benefit under the provision of the Act is procedural and the benefit accrued to the assessee cannot be taken away on account of technicalities when there is a genuine hardship. This can be drawn from the case of Sitaldas K. Motwani v. Director General of Income Tax (International Taxation), [2010] 323 ITR 223 (Bombay) as well as the case of Bombay Mercantile Co-operative Bank Ltd. vs. CBDT & Ors., reported in [2011] 332 ITR 87 (Bombay). Similarly, in case Pankaj Kailash Agarwal v.
Assistant Commissioner of Income Tax reported in [2024] 464 ITR 65 (Bombay), the Hon'ble Bombay High Court has held as under :-
"10. On the issue of genuine hardship, relying on R. K. Madhani Prakash Engineers, Mr Sarda submitted that while considering this aspect of genuine hardship, the authorities are expected to bear in Page 7 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined mind that ordinarily the applicant applying for condonation of delay does not stand to benefit by lodging its claim late. More so, when the applicant is claiming the deductions under section 80-IC of the Act. Mr. Sarda submitted that the Central Board of Direct Taxes has failed to understand that when the delay condoned, the highest that can happen is that the cause would be decided on merits after hearing the parties and the approach of the Central Board of Direct Taxes should be justice oriented so as to advance cause of justice.
11. in the affidavit in reply, the respondents have only reiterated what was stated in the impugned order and Mr. Rattesar resubmitted the same.
12. We would agree with Mr Sarda that no assessee would stand to benefit by lodging its claim late. More so, in the case of the nature at hand, where the assessee would get tax advantage/benefit by way of deduction under section 80-IC of the Act. Of course, there cannot be a straitjacket formula to determine what is "genuine hardship" In our view, certainly the fact that an assessee feels that he would be paying more tax if he does not get the advantage of deduction under section 80-IC of the Act, that will be certainly a "genuine hardship" It would be apposite to reproduce paragraph 4 of the judgment in K. S. Bilausula v. Pr CIP włuch reads as under
(para 5. page 768 of 463 ITR):
"4 There cannot be a straitjacket formula to determine what is genuine hardship. In our view, certainly the fact that an assessee feels he has paid more tax than what he was liable to pay will certainly cause hardship and that will be certainly a genuine hardship. This court in Optra Health Pvt Ltd. v.
Addi CIT Writ Petition No. 15544 of 2023 dated December 19, 2023. In paragraph Nos 9 and 10 held as under (page 241 of 462 ITR).
Page 8 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined
9. While considering the genuine hardship, the Principal Chief Commissioner of Income-tax was not expected to consider a solitary ground as to whether the assessee was prevented by any substantial cause from filing the corrections within a due time. Other factors also ought to have been taken into account. The phrase "genuine hard ship" used in section 119(2)(b) of the Act should have been construed liberally. The Legislature has conferred the power to condone the delay to enable the authorities to do substantial justice to the parties received a liberal meaning in view of the law laid down by the apex by disposing of the matters on merits. The expression "genuine" has court and while considering this aspect, the authorities are expected to bear in mind that ordinarily the applicant, applying for condonation of delay, does not stand to benefit by lodging erroneous returns. 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. 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 action. There is no presumption that a delay in correcting an error or responding to a notice of invalid return received under section 139(9) of the Act is occasioned deliberately or on account of culpable negligence or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. The approach of the authority should be justice-oriented so as to advance cause of justice. If the case of an applicant is genuine, mere delay should not defeat the claim. We find Page 9 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined support for this view in Sitaldas K. Motwani v. Director General of Income-tax, relied upon by Mr. Walve, where paragraph Nos. 13 to 17 read as under (page 227 of 323 ITR):
"13. Having heard both the parties, we must observe that while considering the genuine hardship, respondent No. 1 was not expected to consider a solitary ground so as to whether the petitioner was prevented by any substantial cause from filing return within due time. Other factors detailed hereinbelow ought to have been taken into account.
14. The apex court, in the case of B. M. Malani v. CIT, has explained the term 'genuine' in following words (page 207 of 306 ITR):
'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)."
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 Gujarat High Court in the case of Gujarat Electric Co. Ltd. was pleased to hold as under (headnote):
'The Board was not justified in rejecting the claim for refund on the ground that a case of genuine hardship was not made out by the petitioner and delay in claiming the relief was not satisfactorily explained, more particularly when the returns could not be filed in time due to the ill health of the officer who was looking after the taxation matters of the petitioner'.
The Madras High Court in the case of R. Seshammal, was pleased Page 10 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined to observe as under (page 187 of 237 ITR) 'This is hardly the manner in which the State is expected to deal with the citizens, who in their anxiety to comply with all the requirements of the Act pay monies as advance tax to the State, even though the monies were not actually required to be paid by them and thereafter, seek refund of the monies so paid by mistake after the proceedings under the Act are dropped by the authorities concerned. The State is not entitled to plead the hypertechnical plea of limitation in such a situation to avoid return of the amounts. Section 119 of the Act vests ample power in the Board to render justice in such a situation. The Board has acted arbitrarily in rejecting the petitioner's request for refund."
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 October 12, 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 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 mala fides. A litigant does Page 11 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined 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.
16. Whether the refund claim is correct and genuine, the authority must satisfy itself that the applicant has a prima facie correct and genuine claim, does not mean that the authority should examine the merits of the refund claim closely and come to a conclusion that the applicant's claim is bound to succeed. This would amount to prejudging the case on merits. All that the authority has to see is that on the face of it the person applying for refund after condonation of delay has a case which needs consideration and which is not bound to fail by virtue of some apparent defect. At this stage, the authority not expected to go deep into the niceties of law. While determining whether refund claim is correct and genuine, the relevant consideration is whether on the evidence led, it was possible to arrive at the conclusion in question and not whether that was the only conclusion which could be arrived at on that evidence.
17. Having said so, turning to the facts of the matter giving rise to the present petition, we are satisfied that respondent No. 1 did not consider the prayer for condonation of delay in its proper perspective. As such, it needs consideration afresh."
10. This was followed by this court in Artist Tree (P.) Ltd. v. CBDT relied upon by Mr. Walve, where paragraph Nos. 19, 21 and 23 read as under (page 701 of 369 ITR):
'19. The circumstance that the accounts were duly audited way back on September 14, 1997, is not a circumstance that can be held h against the petitioner. This circumstance, on the contrary adds force to the explanation furnished by the Page 12 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined petitioner that the delay in filing of returns was only on account of misplacement or the TDS certificates, which the petitioner was advised, has to be necessarily filed along with the return of income in view of the provisions contained in section 139 of the said Act read along with the Income tax Rules 1962 and in particular the report in the prescribed forms of return of income then in vogue which required an assessee to attach the TDS certificates for the refund being claimed. The explanation furnished is that on account of shifting of registered office, it is possible that TDS certificates which may have been addressed to the earlier office, got misplaced. There is nothing counterfeit or bogus in the explanation offered. It cannot be said that the petitioner has obtained any undue advantage out of delay in filing of income-tax returns. As observed in the case of Sitaldas K. Motwani, there is no presumption that delay is occasioned deliberately or on account of culpable negligence or on account of mala fides. It cannot be said that in this case the petitioner has benefited by resorting to delay. In any case when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to prevail without in any manner doing violence to the language of the Act.
21 We find that the impugned order dated May 16, 2006 of the Central Board of Direct Taxes also seeks to reject the application for condonation of delay on account of delay from the date of filing the return of income, i. e, September 14, 1999 up to April 30, 2002. This was not the ground mentioned in the notice dated February 7, 2006 given to the petitioner by the Central Board of Direct Taxes for rejecting the application for condonation of delay. Thus the petitioner had no occasion to meet the same. It appears to be an afterthought. How-ever, as pointed out in paragraph 20 Page 13 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined hereinabove, the delay in filing of an application if not coupled with some rights being created in favour of others, should not by itself lead to rejection of the application. This is of course upon the court being satisfied that there were good and sufficient reasons for the delay on the part of the applicant.
23. In the light of the aforesaid discussion, we are of the opinion that an acceptable explanation was offered by the petitioner and a case of genuine hardship was made out. The refusal by the Central Board of Direct Taxes to condone the delay was a result of adoption of an unduly restrictive approach. The Central Board of Direct Taxes appears to have proceeded on the basis that the delay was deliberate, when from explanation offered by the petitioner, it is clear that the delay was neither deliberate, nor on account of culpable negligence or 2006 made by the Central Board of Direct Taxes refusing to condone the delay to be set aside.
Consistent with the provisions of section & delay in filing the return of income for the assessment year 1997-98 119(2)(b) of the said Act, the concerned Income-tax Officer or the Assessing Officer would have to consider the return of income and deal with the same on merits and in accordance with law".
12.1 The court has held that the phrase "genuine hardship" used in section 119(2)(b) of the Act should be considered liberally. The Central Board of Direct Taxes should keep in mind, while considering an application of this nature, that the power to condone the delay has been conferred is t enable the authorities to do substantial justice to the parties by disposing of matters on the merits and while considering these aspects, the authorities are expected to bear in mind that no applicant would stand to benefit by lodging delayed returns. The court also held that refusing to Page 14 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined 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 delay is condoned, the highest that can happen is that a cause would be decided on the merits after hearing the parties. Similar issue came to be considered in R. K. Madhani Prakash Engineers, where paragraph 8 reads as under
(page 51 of 458 ITR):
"8. Further it is recorded in the impugned order that the petitioner has failed in proving the genuine hardship. In this regard, we would refer to the judgment of a Division Bench of this court in the case of Sitaldas K. Motwani v. Director General of Income-tax where the court has discussed the phrase 'genuine hardship' used in section 119(2)(b) of the Act. The court has held that the phrase 'genuine hardship' 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 of matter on the merits. While considering this aspect of genuine hard-ship, the authorities are expected to bear in mind that ordinarily the applicant applying for condonation of delay does not stand to benefit by lodging its claim late. More so, in the case at hand where the applicant was seeking refund of a large amount of Rs. 82,13,340.
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 the merits after hearing the parties. In our view, the approach of the authority 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.Page 15 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025
NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined Paragraph Nos. 13 to 16 of Sitaldas K. Motwani read as under (page 227 of 323 ITR):
'13. Having heard both the parties, we must observe that while considering the genuine hardship, respondent No. 1 was not expected to consider a solitary ground as to whether the petitioner was prevented by any substantial cause from filing return within due time. Other factors detailed hereinbelow ought to have been taken into account.
14. The apex court, in the case of B. M. Malani v. CIT, has explained the term "genuine" in following words (page 207 of 306 ITR):
"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)'
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 Gujarat High Court in the case of Gujarat Electric Co. Ltd. v. CIT, was pleased to hold as under (headnote):
"The Board was not justified in rejecting the claim for refund on the ground that a case of genuine hardship was not made out by the petitioner and delay in claiming the relief was not satisfactorily explained, more particularly when the returns could not be filed in time due to the ill health of the officer who was looking after the taxation matters of the petitioner."Page 16 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025
NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined The Madras High Court in the case of R. Seshammal v. ITO, was a pleased to observe as under (page 187 of 237 ITR):
"This is hardly the manner in which the State is expected to deal with the citizens, who in their anxiety to comply with all the requirements of the Act pay monies as advance tax to the State, even though the monies were not actually required to be paid by them and thereafter seek refund of the monies so paid by mistake after the proceedings under the Act are dropped by the plea of limitation in such a situation to avoid return of the amounts. Section 119 of the Act vests ample power in the Board to render justice in such a situation. The Board has acted arbitrarily in rejecting the petitioner's request for refund."
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 October 12, 1993. The Legislature has conferred the power to condone delay to enable the d 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 e 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 being defeated. As against this, when delay is condoned the highest that can happen is that a cause would be decided on the 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 Page 17 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined presumption that delay is occasioned deliberately, or on account of g culpable negligence, or on account of mala fides. 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.
16. Whether the refund claim is correct and genuine, the authority must satisfy itself that the applicant has a prima facie correct and genuine claim, does not mean that the authority should examine the merits of the refund claim closely and come to a conclusion that the applicant's claim is bound to succeed. This would amount to prejudging the case on merits. All that the authority has to see is that on the face of it the person applying for refund after condonation delay has a case which needs consideration and which is not bound to fail by virtue of some apparent defect. At this stage, the authority is not expected to go deep into the niceties of law. While determining whether refund claim is correct and genuine, the relevant consideration is whether on the evidence led, it was possible to arrive at the conclusion in question and not whether that was the only conclusion which could be arrived at on that evidence." (emphasis supplied) 12.2 This court in R. K. Madhani Prakash Engineers had quashed and set aside the impugned order on the ground that the impugned order is not passed by the Central Board of Direct Taxes but only with the approval of the Member (IT and R), Central Board of Direct Taxes. So also in the case of Tata Autocomp wherein paragraphs 11, 12 and 13 read as under (page 64 of 464 ITR):
"11. Moreover, the order says, This issues with the approval of Member (IT&R), Central Board of Direct Taxes' and is signed by one Virender Singh, Additional Commissioner of Income-tax (ITA Cell). Central Board of Direct Taxes, New Page 18 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined Delhi. If a personal hearing has been granted by the Member (IT&R), the order should have been passed by him. Mr. Sharma states there could be file notings. If that is so, that has not been made available to the petitioner.
12. In the circumstances, on these two grounds alone, we quash and set aside the impugned order dated December 5, 2023 and remand the matter to Central Board of Direct Taxes. The Member/Members shall within three weeks from the date this order is uploaded make available to the petitioner all field reports/documents/instructions received by the Central Board of Direct Taxes from the field authorities and within two weeks of receiving the same, the petitioner shall file, if advised, further submissions in support of their application for condonation of delay.
13. Thereafter, an order shall be written, passed and that order shall be authored and signed by the member of the Central Board of Direct Taxes, who has given a personal hearing and when we say this, it is not the member holding the same delegation. The same individual who gave a personal hearing, shall writ and sign the order. All rights and contentions of the petitioner are kept open . Before passing any order which shall be a reasoned order dealing with all submissions of the petitioner, a personal hearing shall be given to the petitioner, notice whereof shall be communicated at least seven working days in advance."
13. In our view, the Legislature has conferred power on respondent No.3 to condone the delay to enable the authorities to do substantive justice to the parties by disposing of matter on the merits. Routinely passing the order without appreciating the reasons why the provisions for condonation of delay has been provided in the Act, defeats the cause of justice."
Page 19 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined 7 This Court in the case of Surat Smart City Development Ltd. Vs. Principal Commissioner of Income Tax, reported in [2024] 169 taxmann.com 222 (Guj) has also considered the decision of the Hon'ble Apex Court in the case of Principal Commissioner of Income Tax v. Wipro Limited reported in [2022] 446 ITR 1 (SC) and observed as under :-
"17. On perusal of the above observation of the Hon'ble Apex Court, it is also apparent that the Hon'ble Apex Court has considered the significance of filing declaration under Section 10B(8) of the Act considering the provisions of Section 10B(5) of the Act being a check to verify the correctness of the claim of deduction at the time of filing of return so that if an assessee claims an exemption under the Act by virtue of Section 10B of the Act, then the correctness of the claim has already been verified under Sub-section (5) of Section 10B and therefore, if the claim is withdrawn post the date of filing of return, the report of the Accountant filed under Section 10B(5) of the Act would become falsified and would stand to be nullified. However, the provisions of Section 115BAA of the Act are in a way granting relief to the assessee-Companies to enable them to pay the reduced rate of tax at rate of 22% on exercise of the option on the various conditions mentioned therein.
18. In such circumstances, the respondent No.1 was required to consider the facts of the case by permitting the petitioner to file a fresh Form 10IC and condoning the delay in filing such Form by molding the prayer made by the petitioner to treat the Form 10IC filed by the petitioner for Assessment Year 2021-2022 to be treated as that of for Assessment Year 2021. The provisions Page 20 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined of Section 119(2)(b) of the Act are meant for redressal of the grievance and hardships caused to the petitioner as held by the Hon'ble Madras High Court in case of R.Seshammal (Supra) as under :
"This is hardly the manner in which the State is expected to deal with the citizens, who under anxiety to comply with all the requirements of the Act pay monies as advance tax to the State, even though the monies were not actually required to be paid by them and thereafter seek refund of the monies so paid by mistake after the proceedings under the Act are dropped by the authorities concerned. The State is not entitled to plead the hypertechnical plea of limitation in such a situation to avoid return of the amounts. Section 119 of the Act vests ample power in the Board to render justice in such a situation. The Board has acted arbitrarily in rejecting the petitioner's request for refund."
8 Considering the facts of the case as well as the settled legal position, the petition succeeds and is accordingly allowed. The impugned order dated 31.12.2024 is hereby quashed and set aside and the matter is remanded to the respondent to pass a fresh order to condone the delay in filing the income tax return.
8.1 Such exercise shall be completed within twelve (12) weeks from the date of receipt of a copy of this order.
9 The petition is accordingly disposed of. Rule is made Page 21 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025 NEUTRAL CITATION C/SCA/10269/2025 JUDGMENT DATED: 10/11/2025 undefined absolute to the above extent.
(A. S. SUPEHIA, J) (PRANAV TRIVEDI,J) BIMAL /2 Page 22 of 22 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Nov 19 2025 Downloaded on : Fri Nov 21 22:59:29 IST 2025