Aghast by the arbitrary rejection of the condonation of delay in filing Form 10-IC, the Allahabad High Court ruled that filing of Form 10-IC prior to filing of return is not mandatory, and if “genuine hardship” is shown, then delay may be condoned taking the provision of Section 119(2)(b) of the Income Tax Act as a beneficial piece of legislation. The Court thus clarified that even if a procedural delay occurs due to “genuine hardship”, it should not prevent an assessee from receiving a rightful tax benefit.
The Division Bench comprising Justice Shekhar B. Saraf and Justice Praveen Kumar Giri referred to Section 119(2)(b) of the Act to observe that this statutory provision confers discretionary power upon the tax authorities to mitigate “genuine hardship” faced by assessees.
Therefore, when the undeniable and tragic circumstances of successive family deaths of the person handling the petitioner company’s tax matters, unequivocally establish a case of profound personal hardship that directly impaired the petitioner’s ability to ensure timely compliance, the Bench cautioned that dismissal of such a well-substantiated cause as insufficient for condonation not only negates the remedial intent of Section 119(2)(b) but also constitutes an arbitrary exercise of discretion, particularly when the petitioner’s intent to avail the beneficial provisions of Section 115BAA was evident from its original return and audit report.
In this case, the petitioner-company filed its return declaring income of Rs. 38.91 lacs, to avail the benefit of the newly introduced Section 115BAA of the Income Tax Act, by which a concessional rate of 22% was applied to its total income, and the Minimum Alternate Tax (MAT) regime was made inapplicable. Although the petitioner had filed Form 3CD (audit report, it failed to file the newly introduced Form 10-IC along with the return. This resulted in the CPC issuing a demand of Rs. 45.89 lacs. The petitioner then sought condonation of delay and pleaded that the non-filing of Form 10-IC was not intentional but due to personal difficulties of the staff member. The Department, however, rejected the application for condonation, opining that the petitioner company was not in genuine hardship, even though the documentary evidence attached to the application was found genuine by the AO.
When the matter reached the High Court, it was observed that the genuine hardship shall be seen by the concerned respondent authority as the petitioner is not getting the benefit of the concessional rate of tax under the Income Tax Act, in respect of the delay that occurred in the filing of Form 10-IC. The Court therefore answered in favour of the petitioner, by directing the respondent authority to condone the delay in filing Form 10-IC and provide consequential relief to the petitioner by recomputing its tax liability on the submission of its ITR by taking into account Form 10-IC.
Appearances:
Advocate Rahul Agarwal, for the Petitioners
Advocate Manu Ghildyal, for the Respondents