'Did Not Apply Mind': Gujarat High Court Quashes Tax Authority's Order Refusing To Condone Delay In Filing Return Due To COVID Pandemic

The Gujarat High Court quashed an order of the tax authorities rejecting a partnership firm's application seeking condonation of 13 day delay in filing income tax return on account of Covid pandemic, observing that authority "did not apply its mind" to the reasons given by the firm.

The petitioner partnership firm engaged in real estate development business had challenged a 27.10.2023 rejecting its application for condonation of delay in filing income tax return for Assessment Year 2021-22 under Section 119(2)(b) of the Income Tax Act. 

Due date of filing return under section 139(1) was 31.10.2021. Due to COVID-19 outbreak the same was extended to 15.03.2022 vide Notifications dated 20.05.2021, 09.09.2021 and 11.01.2022. The petitioner filed the return on 28.03.2022 offering income at Rs.4,56,17,090.

As there was a delay of 13 days, deduction of Rs.4,35,00,000 under Section 80IBA was not allowed by the authority in the Intimation issued under section 143(1) dated 12.12.2022. The authority placed reliance on a 2015 Circular while rejecting the condonation of delay application of the petitioner and had said that the petitioner's case would not be covered under expression 'genuine hardship'.

A division bench of Justice AS Supehia and Justice Pranav Trivedi observed that the 2015 circular would not be applicable to the petitioner as it exclusively refers for dealing the applications filed belatedly or refund claim and claim of carry forward loss.

With respect to "genuine hardship" the court noted that the petitioner had mentioned the reasons for delay in filing return of income which was due to covid pandemic. It said:

"Thus, the petitioner had given aforementioned reasons seeking condonation of delay, however, it appears that the respondents, while passing the order rejecting the application, has not dealt with the aforesaid issues. We find that the reasons assigned by the petitioner as mentioned above, in fact would, encompass the expression 'genuine hardship'. The respondents did not apply its mind to the  reasons assigned as mentioned hereinabove, which also includes that there was restriction of 50% of overall capacity in official clerical staff and the petitioner being infrastructure undertaking, there was directive of Central Government to provide food and shelter within construction site to the labourers, and there was limited access to the bills, vouchers and other details received at the construction site due to the COVID-19 pandemic. These factors in fact can be said to be genuine hardship.

"Thus, looking to the prevailing situation at the relevant time wherein the entire nation was facing COVID-19 pandemic, in our opinion, the explanation tendered by the present petitioner in his application seeking condonation of delay of 13 days was required to be accepted" the court added.

It thus set aside the 27.10.2023 order, restoring the petitioner's application  for condonation of delay in filing the return of income for A.Y. 2021-22 under the provisions of Section 119(2)(b) to its original file.

The court directed the respondent to consider the application in light of the observations made by the high court and pass appropriate order within 12 weeks.

The plea was allowed.

Case title: RAJGREEN INFRALINK LLP v/s THE PRINCIPAL COMMISSIONER OF INCOME TAX 1 SURAT

R/SPECIAL CIVIL APPLICATION NO. 19799 of 2023

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