Compliance with statutory requirements under Income Tax Act is essential even if a party claims misunderstanding; genuine hardship must be assessed to condone filing delays.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Heard learned advocate Mr. Vijay Patel for the petitioner and learned Senior Standing Counsel Mr. Varun Patel for the respondent.

2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Varun Patel waives service of notice of rule for and on behalf of the respondent.

3. Having regard to the controversy arising in this petition which is in a narrow compass, with the consent of learned advocates appearing for respective parties, the petition is taken up for hearing today.

4. By this petition under Article 227 of the Constitution of India, the petitioner has challenged the Order dated 5.12.2023 passed by the respondent exercising its powers under Section 119(2)(b) of the INCOME TAX ACT , 1961 (for short ‘the Act’) rejecting the application preferred by the petitioner to condone the delay for filing a fresh Income Tax Return in response to the notice under Section 139(9) of the Act.

5. Brief facts of the case are as under:

5.1 The petitioner filed return of income for Assessment Year 2018-19, on 14.9.2018, which was marked as defective return as per the provisions of Section 139(9) of the Act.

5.2 In response to the notice issued under Section 139(9) of the Act, the petitioner filed a reply with an explanation that the petitioner is not required to obtain the audit report under Section 44AB of the Act as the total turnover of the petitioner Company was to the tune of Rs.41,60,956/- which is below the threshold limit of Rs.1 Crore. It was also submitted by the petitioner that books of accounts of the petitioner Company were audited under the provisions of Companies Act, 2013, however, as the turnover of the petitioner is below the threshold limit as provided under Section 144AB of the Act, the petitioner did not get it books of account audited for the year under consideration.

5.3 The petitioner, therefore, has filed the return of income under Section 139(1) of the Act, claiming return of Rs.7,14,950/-.

5.4 It appears that in the return of income filed by the petitioner, the petitioner has shown sales of Rs.41,60,956/- and gross interest receipt of Rs.78,87,493/- in the income from business and profession. Therefore, the respondent, considering the return of income filed by the petitioner, has held that the petitioner was required to get the audit report as per the provisions under Section 44AB of the Act. The return of income filed by the petitioner was, therefore, rightly considered as defective by the Central Processing Unit.

6. Learned advocate Mr. Vijay Patel for the petitioner, under instructions, submitted that the petitioner is ready and willing to obtain audit report under Section 44AB of the Act and thereafter file a fresh return of income for the year under consideration, if the delay in filing such return is condoned as the petitioner was under bona-fide belief that accounts are not required to be audited as the turnover of the petitioner was less than Rs. 1 Crore and the petitioner considered the interest income as not part of the turnover.

7. On the other hand, learned Senior Standing Counsel Mr. Varun Patel has referred to and relied upon the affidavit-in-reply filed on behalf of the respondent, which read as under:

“3. At the outset it is submitted that the petitioner's application has been decided based on the facts of the case and material available on records. It is submitted that the power of condonation of delay has been delegated by the CBDT vide Circular No.9/2015 (F.No.312/22/2015-01) dated 09.06.2015 whereby the authority concerned is required to examine whether