MAGENTA EV SOLUTIONS PRIVATE LIMITED vs. CENTRAL BOARD OF DIRECT TAX AND ORS

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WP/11689/2024HC BombayHCBM01037905202423 September 2025Bench: HON'BLE SHRI JUSTICE B.P. COLABAWALLA,HON'BLE SHRI JUSTICE AMIT SATYAVAN JAMSANDEKAR4 pages
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What did the High Court hold?

The Bombay High Court held that there was a bona fide reason for the delay in filing the Return of Income. The Court observed that corporate restructuring is a legitimate tool for enhancing company value in the current competitive environment. The explanation provided for the delay was deemed adequately explained. The Court reiterated its consistent view that authorities considering applications under Section 119(2)(b) of the Income Tax Act, 1961, should adopt a justice-oriented approach, citing the decision in Pushpa Geethan Gada (Legal Heir/Legal Representative of Geethan Damji Gada) v. Principal Commissioner of Income Tax-4, Mumbai & Ors. Consequently, the Court found no justification for not condoning the delay. The impugned order dated April 2, 2024, was quashed and set aside, and the delay in filing the Income Tax Return was condoned. The writ petition was disposed of in terms of these directions, with no order as to costs.

What were the facts?

The petitioner, Magenta EV Solutions Private Limited, filed a writ petition before the Bombay High Court challenging an order dated April 2, 2024. This order rejected their application for condonation of delay in filing their Income Tax Return for Assessment Year 2022-23. The delay in filing the return was 52 days. The petitioner explained the delay in their application filed under Section 119(2)(b) of the Income Tax Act, 1961, citing reasons related to the finalization of accounts and preparation of financial statements in anticipation of a merger process. The respondents argued that sufficient opportunities were given and the delay was not adequately explained, particularly in light of the extended due date and the nature of the stated reasons.

What were the issues?

1. Whether the delay of 52 days in filing the Income Tax Return for AY 2022-23 by the assessee, Magenta EV Solutions Private Limited, is adequately explained and ought to be condoned under Section 119(2)(b) of the Income Tax Act, 1961, considering the reasons provided regarding corporate restructuring and merger anticipation. Assessee's Contentions: - The delay of 52 days in filing the Return of Income for AY 2022-23 was adequately explained in the application filed under Section 119(2)(b). - The reasons provided, related to the finalization of accounts and preparation of financial statements in anticipation of a merger process, constitute sufficient cause for the delay. - The authorities should adopt a justice-oriented approach rather than a pedantic one when considering applications under Section 119(2)(b), as held in Pushpa Geethan Gada v. Principal Commissioner of Income Tax-4, Mumbai & Ors. Revenue's Contentions: - The assessee was provided sufficient opportunities to explain the delay. - The order rejecting the application was based on available material and merits, and was just and fair. - There was no violation of the principles of natural justice. - The delay in finalization of books of accounts and preparation of financial statements due to anticipation of a merger process does not constitute sufficient cause to condone the delay, especially since the return was filed on 29.12.2022, after the extended due date of 07.11.2022.

Which sections of the Income-tax Act were involved?

Section 139(1),Section 119(2)(b)

AI-generated summary — verify with the full judgment below

10.AS.WP.11689.2024.doc

IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 11689 OF 2024 Magenta EV Solutions Private Limited .. Petitioner Versus Central Board of Direct Tax and Ors. .. Respondents Mr.Devendra Jain a/w. Mr.Shashank A. Mehta, a/w. Ms. Saukhya Lakade, Advocates for the Petitioner. Mr. Akhileshwar Sharma, Advocate for the Respondents.

CORAM: B. P. COLABAWALLA & AMIT S. JAMSANDEKAR, JJ. DATE: SEPTEMBER 23, 2025 P. C. 1. Rule. Respondents waive service. With the consent of the parties, Rule made returnable forthwith and heard finally. 2. The above Writ Petition has been filed to quash and set aside the impugned order dated 2nd April 2024, rejecting the condonation application in filing its return under Section 139 (1) of the Income Tax Act, 1961. Mr Jain, the learned Counsel for the Petitioner, submitted that there was а delay of 52 days in filing the Return of Income for the A.Y. 2022-23. The delay has been explained in detail in paragraphs 3 and 4 of the Application filed by the Page 1 of 4 SEPTEMBER 23, 2025 D.G. Parab, HG Steno

10.AS.WP.11689.2024.doc

Assessee company under Section 119 (2) (b) of the IT Act. The Application filed under Section 119 (2) (b) is on record at Exhibit-C3 to the Petition. He further submitted that, in the facts of the case, the delay is adequately explained, and therefore, the delay ought to have been condoned. 3. Mr. Sharma, learned Counsel for the Respondent, opposed the prayer of the Petitioner. He submitted that the assessee was provided sufficient opportunities to explain the delay. The order was passed by Respondent Νο.1 after giving adequate opportunities to the assessee. The action of Respondent No. 1 in rejecting the application is on the basis of material available on records as well as on merits. It is a just and fair order. There is no violation of the principles of natural justice. Relying upon the affidavit affirmed on 2nd January, 2025, he further submitted that the date of filing the return was extended for the said A.Y. 2022-23 to 7th November 2022. However, the return of income for A.Y. 2022-23 was filed on 29.12.2022, declaring loss of Rs. 13,30,54,080/-. The delay in finalization of books of accounts and preparation of financial statements, in anticipation of merger process filed u/s 233 of the Companies Act, 2013, before the Regional Director, Registrar of Companies cannot be deemed as sufficient cause to condone the delay. Page 2 of 4 SEPTEMBER 23, 2025 D.G. Parab, HG Steno

10.AS.WP.11689.2024.doc

4.

We have heard the parties at length. We find that there was a bona fide reason for the delay in filing the Return of Income. In the ever emerging challenges and competition, corporate restructuring is a legitimate tool to enhance value of a company. In our opinion, the explanation given for the delay is adequately explained. Time and again, this Court has the taken the view that the Authorities, whilst considering applications under Section 119

(2) (b), ought to take a justice oriented approach rather than a pedantic one. One such decision is in the case of Pushpa Geethan Gada (Legal Heir/Legal Representative of Geethan Damji Gada) v. Principal Commissioner of Income Tax-4, Mumbai & Ors. [Writ Petition No.2094 of 2025, decided on 02/09/2025]. 5. In the facts of the present case, we find no justification for not condoning the delay in filing the Income Tax Return by the Assessee company. 6. In these circumstances, we hereby quash and set aside the impugned order dated 2nd April 2024. We also hereby condone the delay in filing the Income Tax Return of the Assessee company under Section 139 (1) of the IT Act. Page 3 of 4 SEPTEMBER 23, 2025 D.G. Parab, HG Steno

10.AS.WP.11689.2024.doc

7.

Rule is made absolute in the aforesaid terms, and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs. 8. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order. [ AMIT S. JAMSANDEKAR , J.] [B. P. COLABAWALLA, J.] Page 4 of 4 SEPTEMBER 23, 2025 D.G. Parab, HG Steno DATTAPRASAD GHANSHYAM PARAB Digitally signed by DATTAPRASAD GHANSHYAM PARAB Date: 2025.09.26 12:09:30 +0530

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