RAJBIR SINGH vs. PRINCIPAL COMMISSIONER OF INCOME TAX AND OTHERS

CWP/18800/2023HC Punjab & HaryanaPHHC01103224202323 September 2026Author: MR. JUSTICE SUNISH BINDLISH,MR. JUSTICE DEEPAK SIBAL15 pages
AI SummaryRemanded

What were the facts?

These 21 petitions were filed by former employees of HMT Limited's Tractor Division at Pinjore, Haryana. They challenged an order dated January 19, 2022, passed by the Principal Commissioner of Income Tax (PCIT), Panchkula. The PCIT had rejected their prayer for condoning the delay in filing revised income tax returns for the assessment year 2017-18. The petitioners sought to file these revised returns to claim a refund of excess income tax paid. HMT Limited, a public sector undertaking, faced financial decline, leading to the closure of its Tractor Division. Employees were offered a Voluntary Retirement Scheme (VRS). The petitioner, a Senior Office Assistant, opted for VRS and received Rs. 29,14,500, with Rs. 5,00,000 being taxable after exemption under Section 10(10C) of the Income Tax Act, 1961. The petitioner initially filed his return based on this, but later sought to revise it to claim exemption under Section 10(10C) for the entire amount, citing a subsequent favourable decision for similarly situated employees.

What did the High Court hold?

The High Court held that the impugned order dated January 19, 2022, passed by the PCIT, was bad in law and unsustainable. The Court found that the PCIT did not apply the tests laid down in Circular No. 9/2015. The Court distinguished between Section 5 of the Limitation Act, 1963, which requires "sufficient cause," and Section 119(2)(b) of the Income Tax Act, which empowers the Board to admit claims after the statutory period to avoid genuine hardship. The Court noted that Circular No. 9/2015, relied upon by the department itself, requires the authority to examine the correctness and genuineness of the income/loss declared and whether the case is one of genuine hardship. The Court found that the petitioner's explanation for the delay, stemming from the evolving legal position in similar cases, was a valid reason for seeking condonation. The Court quashed the PCIT's order and remitted the matter back to the PCIT to consider the petitioner's application for condonation of delay afresh, after affording an opportunity of hearing. The Court expressed no opinion on the merits of the petitioner's claim for refund.

What were the issues?

1. Whether the Principal Commissioner of Income Tax (PCIT) erred in rejecting the petitioner's application for condonation of delay in filing a revised return for assessment year 2017-18, thereby denying the claim for exemption under Section 10(10C) of the Income Tax Act, 1961? (Mixed question of law and fact, concerning Section 119(2)(b) and Section 5 of the Limitation Act, 1963). Assessee's contentions: The petitioner argued that the delay in filing the revised return was due to genuine reasons, as the legal position regarding the exemption under Section 10(10C) for VRS payments became clear only after favourable decisions were passed in the cases of similarly situated employees, such as Prempal and others, by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal (ITAT). They relied on Circular No. 9/2015 dated June 9, 2015, which allows for condonation of delay to avoid genuine hardship. Revenue's contentions: The revenue, through the PCIT, rejected the condonation application, primarily on the grounds that the petitioner's case was not covered by Circular No. 9/2015, and that the delay was not sufficiently explained. The department asserted that no reason was given by the petitioner when filing the original return, and that the explanation offered later was contrary to the department's records.

Which sections of the Income-tax Act were involved?

Section 10(10C),Section 10(10B),Section 203,Section 119(2)(b)

AI-generated summary — verify with the full judgment below

IN (Sr. No.207)

Rajbir Si

Principal

CW CW CW CW CW CW CW CW CW CW

CORAM

Present :

N THE HIGH COURT OF P AT CHANDI

CW

Da

ingh Versus l Commissioner of Income Tax WITH WP-18817-2023 WP-18857-2023 WP-18881-2023 WP-18809-2023 WP-18810-2023 WP-18814-2023 WP-18832-2023 WP-18854-2023 WP-18858-2023 WP-18859-2023 M : HON'BLE MR. JUSTICE HON'BLE MR. JUSTICE Mr. Nikhil Goyal, Advocate Ms. Shweta, Advocate for th Mr. Sourabh Kapoor, Senior (through VC) with Ms. Muskaan Gupta, Advoca Mr. Vivek Sharma, Advocate for the respondent(s)-Income

* * * PUNJAB & HARYANA IGARH

WP No.18800 of 2023 (O&M) te of decision : 23.09.2026 .....Petitio x, Panchkula and others .....Responde CWP-18873-2023 CWP-18851-2023 CWP-3683-2024 CWP-3689-2024 CWP-3690-2024 CWP-3691-2024 CWP-3692-2024 CWP-3693-2024 CWP-3697-2024 CWP-3709-2024 E DEEPAK SIBAL E SUNISH BINDLISH (through VC) and e petitioner.

The order continues below.

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