Income-Tax Authorities Should Take Liberal Approach To Condoning Filing Delays: Punjab & Haryana HC

The Punjab and Haryana High Court has recently observed that income-tax authorities should take a liberal approach while considering requests to condone delays in filing income-tax returns where genuine hardship is shown.

A Division Bench of Justice Deepak Sibal and Justice Sunish Bindlish made the observation while setting aside an order of the Chief Commissioner of Income Tax, Panchkula, which rejected a cooperative society's request to condone a 34-day delay in filing its return for assessment year 2020-21.

The court observed, “While applying circulars issued by the CBDT under Section 119(2)(b) of the Act the income tax authorities should be liberal because these circulars apply to cases of genuine hardships being faced by the assessees.”

The society was seeking a deduction under Section 80P, a provision that allows eligible cooperative societies to claim certain deductions from their income.

However, Section 80AC(ii) requires the return to be furnished by the prescribed due date to claim certain deductions, including those under Section 80P.

The society's return was filed 34 days late. The delay occurred during the COVID-19 period, and the society had also received its audit report after the prescribed return-filing date.

The audit report was received on February 22, 2021, and was required to accompany the return. It was also statutorily required to be routed through the State department.

The society relied on CBDT Circular No. 13/2023, which specifically deals with applications for condonation of delay in filing returns by cooperative societies seeking deductions under Section 80P. The circular requires authorities to examine whether the delay was caused by circumstances beyond the assessee's control, including delay in obtaining the statutory audit.

The Chief Commissioner, however, considered the request under an earlier CBDT circular dealing with condonation of delay in returns involving refund claims and carry-forward of losses. The high court held that Circular No. 13/2023 specifically covered cooperative societies seeking Section 80P deductions and applied to the society's case.

The court also found that the Chief Commissioner had not referred to Circular No. 13/2023, despite the society having specifically relied on it. It described this as a “complete non-application of mind.”

On the reasons for the delay, the court took note of the circumstances prevailing in February and March 2021, when COVID-19 restrictions were in force. It held that the circumstances leading to the 34-day delay were beyond the society's control and brought the case within clauses 6(i) and 6(ii) of the 2023 circular.

The court accordingly set aside the Chief Commissioner's order and condoned the 34-day delay. It directed the income-tax authorities to consider the society's claim for deduction under Section 80P for assessment year 2020-21 in accordance with law.

For Petitioner: Senior Advocate Radhika Suri, with Advocates Abhinav Narang, Parnika Singla and Sidhant Suri

For Income Tax Department: Senior Standing Counsel Saurabh Kapoor, with Junior Standing Counsel Rana Gurtej Singh, appeared for the Income Tax Department.