IMPORTANT POINT
The main legal point established in the judgment is the need for a liberal approach in considering delay under Section 264 of the Income Tax Act 1961 and the wide powers conferred upon the Commissioner to rectify errors and provide relief to the assessee in cases of over-assessment.

JUDGMENT :

K.R. SHRIRAM, J.

WRIT PETITION NO. 569 OF 2023

1. Petitioner is impugning an order dated 6th March 2019 rejecting petitioner’s application under Section 264 of the Income Tax Act 1961 (the Act) on two grounds, namely; there was a substantial delay in filing the application and second, that the intimation under Section 143(1) of the Act was not an assessment order.

2. Petitioner during AY 2009-10 had filed its return of Fringe Benefit Tax (FBT) amounting to Rs.10,23,47,059/- under Section 115WD(1) of the act showing the value of chargeable fringe benefits at Rs.30,11,09,327/-alongwith the return of income tax. Assessee company also annexed by way of note with FBT return that certain sums were included as chargeable to FBT out of abandunt caution and that the same should not be chargeable to FBT. Similar claim was made for AY-2007-08. For AY-2007-08, the Assessing Officer (AO) did not allow these claims. On appeal, the Commissioner of Income Tax (Appeals) (CIT)(A), by an order dated 31st August 2016, allowed those claims of assessee. Since the CIT(A) allowed those claims, petitioner filed an application under Section 264 of the Act for refund of the FBT return. On the issue of delay, it is petitioner’s case that there was no delay because only when the CIT(A) allowed the appeal, it was ascertained that the amounts included in the FBT returns were not chargeable to FBT. The fact that CIT(A) took almost 5 or 6 years to decide assessee’s appeal, cannot be held to the prejudice of assessee. It was also submitted that application for condonation of delay should be liberally considered. It was submitted by Mr. Jain that a litigant does not stand to benefit by lodging the appeal or an application late and refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. Mr. Jain submitted that against this, when the delay is condoned, the highest that can happen is that a case would be decided on merits after hearing the parties. Relying on judgment of the Apex Court in Collector, Land Acquisition vs Mst. Katiji, (1987) 167 ITR 471(SC), Mr. Jain submitted that the authority should not take a pedantic approach and the doctrine must be applied in pragmatic manner. Mr. Jain submitted that 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.

3. Per contra, Mr. Sharma submitted that even if the application filed under Section 264 of the Act, there are no explanations given for delay, save and except quoting headnote of judgment of Madras High Court in Subuthi Finance Limited Vs. Commissioner of Income Tax, (2012) 20 taxmann.com 838 (mad). Mr. Sharma stated that petitioner ought to have articulated the reason for delay. Therefore, the observation by the commissioner that assessee has not given any reason for the said inordinate delay, except mention in the petition “condonation of delay”, cannot be faulted with.

4. Mr. Jain responded in rejoinder that during the personal hearing petitioner made detailed submissions and post personal hearing also filed written submissions in which, all what was submitted in court today has been explained. Mr. Jain also submitted that copies of the judgments were also tendered.

5. On the issue of condonation of delay in an application filed under Section 264 of the Act, this court and many other courts including the Apex Court have held that authorities should not take a pedantic approach but should be liberal. The courts have held that the words ‘sufficient cause' should be given a liberal construction so as to advance substantial justice when no negligence nor inaction nor want of bonafide is imputable to assessee. The courts have held that the principle of advancing substantial justice is of prime importance and while considering the