Gujarat High Court Quashes Order Refusing Condonation Of Delay In Filing Income Tax Return By Co-op Society In View Of 'Genuine Hardship'

The Gujarat High Court quashed an order passed by tax department refusing to condone delay of 29 days by a Co-operative Housing Society in filing income tax return for Assessment Year 2018-19, after noting that the audit report was belatedly filed as the auditor was not appointed within time.

In doing so the court said that the filing of the audit report in 2019 belatedly by the Sub-auditor can termed as a "genuine predicament". 

A division bench of Justice AS Supehia and Justice Pranav Trivedi in its order referred to Section 119(2)(b) of the Income Tax Act which permits the Central Board of Direct Taxes (CBDT), if it considers "expedient" to do so in order to avoid genuine hardship in a case, authorise any income-tax authority to admit an application or claim for any exemption, deduction, refund or any other relief after the expiry of the period specified under the  Act.

The provision states that the CBDT may condone the delay in filing of the claim and deal with it on its merits. 

Referring to the petitioner's reasons for delay in filing return the bench said:

"The petitioner-Society in the writ petition more particularly, in paragraph Nos.3 and 4 has categorically stated on affidavit that the Sub-auditor of Cooperative Societies did not make the appointment of the Auditor till 31.10.2018 and on the advice of the Income Tax Consultant, the petitioner-Society filed its return of income on 29.11.2018. Such assertions made in the writ petition have not been denied by the respondent-department. Thus, in wake of the fact that the Auditor Report is of the year 2019, the respondent-department ought to have allowed the application filed by the petitioner-Society for condonation of delay instead of rejecting the same". 

The court was hearing a plea by a co-operative housing society seeking setting aside of an order by the Chief Commissioner of Income Tax, Surat which had refused to  condone delay of 29 days in filing return of income for AY 2018-19.

The petitioner referred to the Audit Report dated 06.03.2019 prepared by the Sub-auditor of the Cooperative Societies, Surat for the period between 01.04.2014 to 31.03.2018. It was submitted that the Sub-auditor of the Cooperative Societies did appoint any Auditor till 31.10.2018 and hence, the Return of Income (ROI) was not filed within prescribed time limit.

It was submitted that subsequently, on advice of the Income Tax Consultant, the petitioner-Society filed return of income on 29.11.2018, without waiting further for completion of audit however, the respondent-Department issued intimation order under section 143(1) of the Act dated 16.05.2019 holding that the gross total income in the hand of the petitioner-Society is Rs.3,62,115 and thereafter, disallowed deduction under section 80P of the Act.

It was submitted that the petitioner-Society filed an application on 16.02.2024 seeking condonation of delay under section 119(2)(b) of the Act for filing return of income for the Assessment Year 2018-19 and also to claim deduction under section 80P of the Act. However, this was rejected by the respondent. 

The respondent submitted that the petitioner Society has filed its return and the same is further has been assessed. It was submitted that shelter taken by the petitioner-Society under the Audit Report is inappropriate since the petitioner-Society is a habitual late filer of the return of income. 

The bench referred to a 2023 circular which states that the tax authority shall while deciding applications for condonation of delay in furnishing return of income, shall satisfy themselves that the applicant's case is a fit case. As per the circular the authority is to consider a case where delay in furnishing return of income was caused due to delay in getting the accounts audited by statutory auditors appointed under the respective state Law under which such person is required to get his accounts audited. 

The court thus said, "The delay of getting the accounts audited and filing of Audit Report belatedly by the Sub-auditor appointed by the State will come within the purview of the provisions of paragraph No.6(ii) of the said Circular". 

"Thus, the respondent-Department was supposed to invoke the provisions of the aforesaid Circular and in wake of the undisputed fact of the Audit Report having been prepared in the year 2019, the petitioner's application was ought to be allowed as indubitably, filing of the report in the year 2019 belatedly by the Subauditor can be said to be genuine predicament," it added. 

Allowing the plea, the court directed the department to allow the petitioner to file a fresh return of income within 1 month, for Assessment Year 2018-19.

Case title: MAHERNAGAR CO-OP. HOUSING SERVICE SOCIETY LTD. v/s  CHIEF COMMISSIONER OF INCOME TAX

R/SPECIAL CIVIL APPLICATION NO. 14175 of 2024

Click Here To Read/Download Order 

Citation : 2025 LiveLaw (Guj) 194