The court ruled that 'genuine hardship' under Section 119(2)(b) should be interpreted liberally to ensure substantive justice, allowing for the condonation of delay in procedural submissions avoiding undue hardhsip.

ORDER :

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

Heard learned advocate Mr. Sudhir M. Mehta for the petitioner and learned Senior Standing Counsel Mr. Karan G. Sanghani for the respondent.

2. By this petition under Article 226/227 of the Constitution of India, the petitioner has challenged the order dated 23.12.2022 passed by the respondent – Principal Commissioner of Income Tax, Vadodara-1 under Section 119(2)(b) of the INCOME TAX ACT , 1961 (for short “the Act”) whereby the application filed by the petitioner to condone the delay in filing Form No. 67 for the Assessment Year 2020-21 is rejected.

3. The brief facts of the case are as under :

3.1. The petitioner has filed the Return of Income declaring total income of Rs.1,37,73,200/- for Assessment Year 2020-21 on 30.10.2020. It is the case of the petitioner that the petitioner was appointed at Bangladesh in ‘Square Pharmaceutical Limited’ as Executive Vice President and Scientific Affairs from 16.06.2019 and the petitioner earned Rs.42,46,561/- (Indian currency) on which tax was paid in Bangladesh as per the certificates dated 27.10.2019 and 28.10.2019 issued by the Deputy Commissioner of Income Tax, Taxes Zone-II, Dhaka.

3.2. It is the case of the petitioner that as per Article 16 of the Double Taxation Avoidance Agreement (DTAA) between Bangladesh and India, the petitioner was entitled to credit of Rs.13,03,772/- on the tax payable on the amount of salary which was offered for tax by the petitioner as per the aforesaid certificates. The Return of Income filed by the petitioner was processed and intimation under Section 143(1) of the Act was issued on 24.12.2021 by the CPC, Bangalore. However, the petitioner did not file Form no. 67 as required by Rule 128(1) of the INCOME TAX RULES , 1962 (for short “the Rules”). The petitioner submitted Form no. 67 on 04.01.2022 that is after issuance of intimation under Section 143(1)of the Act dated 24.12.2021.

3.3. The petitioner thereafter preferred an application under Section 119(2)(b) of the Act on 12.10.2022 before the Principal Commissioner of Income Tax, Vadodara for condonation of delay in respect of filing of Form no. 67 under Rule 128 of the Rules for the Assessment Year 2020-21. The respondent passed an impugned order on 23.12.2022 rejecting the application for condonation of delay on the ground that there was no genuine hardship shown by the petitioner for not filing the Form no. 67 along with Return of Income as the petitioner has simply stated that he missed to file Form no. 67 before filing the Return of Income. The respondent therefore held that the reasons stated by the petitioner are general in nature. The respondent therefore rejected the application as there was no reasonable cause due to which the petitioner forgot to file Form no. 67 which prove any hardship is faced by him.

3.4. The petitioner has also preferred various applications under Section 154 of the Act for rectification of the intimation issued under Section 143(1) of the Act which were rejected by the Revenue. Being aggrieved, the petitioner also filed an appeal before the Commissioner (Appeals), which was also rejected by order dated 12.12.2023.

4. Learned advocate Mr. Sudhir Mehta for the petitioner submitted that the petitioner is entitled to the benefit of DTAA but only because of non-filing of Form no. 67, such benefit of the credit of tax paid by the petitioner in Bangladesh was denied. It was pointed out by learned advocate Mr. Mehta that the petitioner has duly disclosed the amount of tax credit available under Section 19(1) of the Act of Rs.13,03,772/- and only because the petitioner filed the Form no. 67 belatedly on 04.01.2022, the respondent was not justified in denying such benefit by not condoning the delay in filing such Form which is procedural in nature.

4.1. In support of his submissions, reliance was placed on the following decisions:-

(1) In the case of Nirzari Amitbhai Mehta v. Principal Commissioner of Income-Tax reported in [2024]