IMPORTANT POINT
The court established that genuine hardship under Section 119(2)(b) should be assessed liberally, allowing for condonation of delay in exceptional circumstances.

JUDGMENT :

Raja Basu Chowdhury, J.

1. The present writ petition has been filed, inter alia, challenging the order dated 31st January, 2024, whereby the petitioner’s application for condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961 (hereinafter referred to as the “said Act”) in filing returns under Section 139(1) or 139(4) of the said Act for the Assessment Year 2022-23, had been rejected.

2. Mr. Surana, learned advocate representing the petitioner submits that the petitioner is an income tax payee and had been regularly filing its income tax returns for the last 23 years. It is the petitioner’s case that the petitioner could not file its return of income under Section 139(1) of the said Act for the Assessment Year 2022-23 for the reasons beyond its control. It is also the petitioner’s case that the petitioner’s senior accountant, Mr. Arun Chatterjee, had been diagnosed with heart ailments for which he had to be hospitalized and as such the books of accounts could not be finalized which resulted in delayed finalization of accounts.

3. According to the petitioner, due to deteriorating health of Mr. Chatterjee, he had to resign from the petitioner company. Unfortunately, however, the petitioner could not find an immediate replacement. By reasons of the aforesaid, the petitioner was unable to hold its Annual General Meeting (AGM) within the time prescribed and at the instance of the petitioner, the Registrar of Companies had granted an extension, for the petitioner to hold such AGM on or before 30th September, 2022. Insofar as filing of return of income is concerned, the tax audit could not be completed as the accounts were not finalized within the time prescribed and it is for such reason the petitioner had been compelled to apply before the Central Board of Direct Taxes (hereinafter referred to as the Board) explaining the reasons for non-filing of the return within the time prescribed and had sought for condonation of delay on the ground of genuine hardship. The Board, however, by its order dated 31st January, 2024 was, inter alia, pleased to observe that the petitioner had adopted a casual approach and took more than three months time to find a suitable replacement for its accountant. The same according to the Board constituted willful negligence on the part of the management and the same does not constitute genuine hardship and in the facts as aforesaid, refused to condone the delay.

4. Mr. Surana, learned advocate representing the petitioner by placing the order dated 30th January, 2024 submits that the Board ought not to have rejected the application for condonation of delay under Section 119 (2)(b) of the said Act, especially, when at the instance of the Board, by a letter dated 28th April, 2023, the Principal Chief Commissioner of Income Tax, West Bengal and Sikkim had recommended condonation of delay in non-filing of return of income for the Assessment Year 2022-23. He submits that the finding reached by the Board that the petitioner had adopted a casual approach and was willfully negligent was based on no evidence and is perverse. The material placed before the Board to establish genuine hardship was also not considered. The impugned order is perverse and should be set aside. He prays that necessary direction should also be issued by this Hon’ble Court thereby condoning the delay in terms of Section 119(2)(b) of the said Act. In support of his contention he has placed reliance on an unreported judgment delivered by the High Court of Judicature at Bombay in WP No. 4832 of 2021 in the case of M/s Bhatewara Associates v. Union of India.

5. Mr. Dudhoria, learned advocate representing the respondents enters appearance in the matter. He submits that in the facts of this case, the Board had passed a discretionary order. The petitioner had failed to demonstrate that the petitioner had suffered any genuine hardship. As such, no interference in this case is called for.

6. Heard the learned advocates appearing for