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Judgment
Badar Durrez Ahmed, J.—In this writ petition, the petitioner sought the quashing of the order dated 29-10-2009 passed by the Central
Board of Direct Taxes (''CBDT''), rejecting the application of the petitioner u/s 119 of the income tax Act, 1961 (''the said Act''), whereby a
prayer had been made for condoning the delay of one day in filing the return of income in respect of the assessment year 2004-05. It is an admitted
position that the due date for filing of the return was 1-11-2004. The return was, in fact, filed on 2-11-2004. According to the petitioner, the
petitioner''s representative reached the Central Revenue Building, I.P. Estate around 5.15 p.m. on 1-11-2004 for the purposes of filing the said
return of income. However, he was sent from one room to the other and by the time he reached room No. 398-F, where his return was said to be
accepted, it was already 6.00 p.m. and he was told that the return would not be accepted because the counter had been closed. These
circumstances are recorded in the letter dated 1-11-2004, which was delivered in the office of the Deputy Commissioner of income tax, Circle
12(1), New Delhi on the very next day, i.e., on 2-11-2004 along with the return of income. A copy of the said letter has been placed as Annexure
P-3 to this petition. On 3-11-2004, the petitioner''s representative met the Commissioner of income tax-IV, Central Revenue Building, New Delhi
and informed him that the return for the assessment year 2004-05 along with the covering letter dated 1-11-2004 was filed on 2-11-2004. A letter
dated 3-11-2004 was also sent to the said Commissioner of income tax for information and record. A copy of the same was marked to the
Additional Commissioner of income tax, Range XII, Central Revenue Building, New Delhi. We may point out that in the return of income, the
petitioner had declared a loss of Rs. 2,74, 83,730. This fact is recorded in the assessment order. The assessment order passed on 1-12-2006,
wherein it has been noted in the very first line that the assessee had filed his return of income declaring a loss of Rs. 2,74,83,730 on 2-11-2004.
The assessment was completed and by virtue of the same, the petitioner was allowed to carry forward the loss amounting to Rs. 2,66,97,383.
Thereafter, the Commissioner of income tax-IV passed an order u/s 263 of the said Act and held that the assessment order was erroneous and
prejudicial to the interest of the revenue on the ground that the return had been filed late and there was no order u/s 119 of the said Act by the
CBDT condoning the delay. The Commissioner of income tax observed that, although the assessee had contended that an application had been
filed before the CBDT for condonation of the delay, no order u/s 119 of the said Act had been received till date. Subsequently, on 29-10-2009,
the order of the CBDT on the petitioner''s application u/s 119 for condonation of delay in filing of the return u/s 139(1)/139(3) of the said Act in
respect of the assessment year 2004-05 was communicated to the petitioner. The order is a non-speaking one and it merely states as under:--
After careful examination of the petition, as well as other related documents, your request for condonation of delay u/s 119 of the income tax Act,
1961 is rejected.
It is against this order that the petitioner has come up before this court by way of a petition under article 226 of the Constitution of India seeking
quashing of the same. It was contended by the learned counsel for the respondent that since this was a case of a loss return, there was no provision
under law for condoning the delay in filing the return. The learned counsel for the respondent drew our attention to the provisions of section
139(3), section 80, section 119 and, in particular, to section 119(2)(b). She contended that there was no specific provision contained in section
119(2)(b) which permitted the board to condone the delay in filing a return and that the said provision only applied to applications or claims for
exemption, deduction, refund or any other relief under the said Act.
We find that the very same contention was raised before the Karnataka High Court in the case of Associated Electro Ceramics Vs. Chairman,
Central Board of Direct Taxes and Another, . In that case, the board had disposed of the application u/s 119(2) of the said Act taking the view
that section 119(2)(b) did not cover the case of a belated return on the basis of which loss, for the purposes of carrying forward the loss, had to be
determined and that the matter was regulated by sections 139, 72, 74 and 157. The view taken by the board was that section 119(2)(b) speaks of
an ''application'' or a ''claim'' and not a ''return'' to be filed beyond time. Consequently, the board did not accede to the request of the petitioner for
condoning the delay. The Karnataka High Court in the case of Associated Electro Ceramics (supra) examined the matter in detail and came to the
conclusion that though the claim of carry forward of loss in the case of a loss return was not a claim regarding exemption, determination or refund
referred to in section 119(2)(b), it was definitely relatable to a claim arising under the category of any other relief available under the Act, as
indicated in the said provision itself. The court also held that the contention of the department that if no power had been granted to an income tax
Officer or any other officer to condone the delay in making such a claim, the Board could also not extend time, was not correct. It also held that
the provision expressly provided that where any time-limit had been fixed, such time-limit could be extended and the delay could be condoned by
the Board. It rejected the finding of the Board that the application of claim referred to in section 119(2)(b) did not cover a loss claim made in a
return.
The learned counsel for the petitioner has also drawn our attention to Circular No. 8/2001, dated 16-5-2001 which was with reference to the
Board''s order u/s 119(2)(b), dated 12-10-1993 and Circular No. 670, dated 26-10-1993 which laid down the procedure for condonation of
delay in the case of belated claims of refund. In paragraph 3 of the said Circular dated 16-5-2001, the decision of the Karnataka High Court in the
case of Associated Electro Ceramics (supra) has been specifically noted. The said circular also notes the fact that as per the said decision, the
Board had the power to condone the delay in cases having claims of carry forward of losses. It also notes that the department did not file any SLP
against the said order of the Karnataka High Court and subsequently the matter was taken up with the Ministry of Law which also agreed with the
view that the Board had the power to condone the delay in filing the return u/s 119(2)(b) of the said Act in a case having a claim of carry forward
of losses. The said circular dated 16-5-2001 further clarified that the delay in making a refund claim as well as a claim of carry forward of losses,
both could be condoned in cases where the returned income is a loss provided the other conditions are satisfied.
In view of the foregoing, it is absolutely clear that the submissions sought to be raised before us by the learned counsel for the respondent have
specifically and categorically been rejected by the Karnataka High Court and the same have been accepted not only by the Board, but also by the
Ministry of Law. We notice that a similar view has also been taken by the Bombay High Court in the case of Sitaldas K. Motwani v. DGIT
(International Taxation) [2010] 187 Tax 44. Consequently, agreeing with the Karnataka High Court, we are of the view that the Board has the
power u/s 119(2) to condone the delay in the case of a return which is filed late and where, a claim for carry forward of losses is made. Coming
back to the facts of the present case, we find that the impugned order u/s 119 passed by the Board is a non-speaking one. Normally, we would
have remanded the matter to the Board to consider the application of the petitioner afresh. However, we find that in the present case, the delay is
only of one day and the circumstances have been explained and have not been controverted by the respondents. The fact of the matter is that the
petitioner did reach the Central Revenue Building before the closure of the counter on 1-11-2004. It is only because he was sent from one room to
the other and had to wait in long queues that he could not present the return at the counter which was receiving the returns prior to 6.00 p.m. on
that date. We feel that sufficient cause has been shown by the petitioner for the delay of one day in filing the return. If the delay is not condoned, it
would cause genuine hardship to the petitioner. Thus, in the circumstances of this case instead of remanding the matter back to the CBDT, we
direct that the delay of one day in filing of the return be condoned.
The writ petition is allowed. There shall be no order as to costs.