C.N. Ramachandran Nair, J.

1. The petitioner is a co-operative society stated to be engaged in marketing agricultural produce of its members. Even though society was entitled to exemption from income tax during the assessment year 1997-98, it remitted an advance tax of Rs.10 lakhs during the accounting year. Besides this, an amount of Rs.47,957 is recovered by others from petitioner's bills towards tax deduction at source. The petitioner's audit is done by auditor appointed under Section 63(4) of the Kerala Co-operative Societies Act, 1969. Invariably the statutory audit is delayed and in this accounting year also, petitioner's audit was completed only on 28-1-2000. After completion of audit, petitioner filed return claiming refund of advance tax and TDS remitted by others through Ext. P-5 application. The Assessing Officer rejected the return as time barred and consequently declined refund. However, petitioner filed application under Section 119 (2) (b) of the Income Tax Act before the Central Board of Direct Taxes for condonation of delay in filing the refund application. The Board though heard the petitioner, rejected the same vide Ext. P-9 against which this W.P. is filed. I heard counsel for the petitioner and Standing Counsel appearing for the respondents.

2. The petitioner's case is that petitioner was prevented from filing the return of refund in time on account of delay in completion of statutory audit and besides this, if refund is rejected, the same will affect petitioner's financial condition causing genuine hardship to it. Counsel for the petitioner submitted that society has suffered heavy losses in the immediately succeeding five years. Counsel for the petitioner relied on the decision of the Karnataka High Court in A. Balakrishnan v. GM., H.M.T. Ltd. (2007) 290 I.T.R. 227 and contended that a belated return under Section 139(1) or 139(4) has to be considered on merits and the same cannot be rejected as time barred. Standing Counsel rightly pointed out that the decision does not refer to the relevant provisions on refund which are covered by Chapter XIX of the Income Tax Act. The scheme of refund under this Chapter provides in Section 239 (1) © that a claim of refund has to be made within one year from the last date of the relevant assessment year. Counsel for the petitioner submitted that when refund is claimed through a return, the process of assessment has to be completed as provided under Chapter XIV of the Income Tax Act. Even though a claim for refund made by filing a regular return involves assessment to determine liability, it cannot be said that the exercise is a regular assessment as contemplated under Chapter XIV of the Act. Section 139 provides for filing of return by assessees who declare themselves liable for payment of tax. Besides this, certain categories of assessees are required to file return only for the department to ensure that there is no escapement of assessable income. In other words, Chapter XIV is mainly oriented to ensure assessment and recovery of tax to protect the interest of the Revenue. On the other hand, Chapter XIX provides for refund and an application in this regard can be entertained only if it is filed within the time-limit prescribed under Section 239 of the Act. In other words, if delay is not condoned by the Board under Section 119 (2) (b), such application cannot be processed under Section 139 (1) or 139 (4) of the Act. I am therefore of the view that in order to consider belated return for refund on merit, delay has to be necessarily condoned by the Board under Section 119(2)(b) of the Act.

3. The next question to be considered is whether Ext. P-9 order is tenable or not. Counsel for the petitioner contended that even though petitioner has explained delay and substantiated their hardship, the Board declined to condone delay in exercise of it's powers under Section 119(2)(b) of the Act. Standing Counsel referred to Circular No.670 dated 26-10-1993 and proceedings o