MAGENTA POWER PRIVATE LIMITED vs. CENTRAL BOARD OF DIRCT TAX AND ORS

PDF · subscribers
WP/11679/2024HC BombayHCBM01037929202423 September 2025Author: HON'BLE SHRI JUSTICE B.P. COLABAWALLA,HON'BLE SHRI JUSTICE AMIT SATYAVAN JAMSANDEKAR4 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court held that there was a bona fide reason for the delay in filing the Income Tax Return for AY 2022-23. The Court found that corporate restructuring, such as mergers, is a legitimate tool in the current business environment and that the explanation provided for the delay was adequate. The Court emphasized that authorities considering applications under Section 119(2)(b) should adopt a justice-oriented rather than a pedantic approach, citing the case of Pushpa Geethan Gada V. Principal Commissioner of Income Tax-4, Mumbai & Ors. The Court found no justification for not condoning the delay and therefore quashed and set aside the impugned order dated April 2, 2024, and condoned the delay in filing the Income Tax Return. The Writ Petition was disposed of accordingly.

What were the facts?

The assessee, Magenta Power Private Limited, filed a writ petition before the Bombay High Court challenging an order dated April 2, 2024, which rejected their application for condonation of delay in filing the Income Tax Return for Assessment Year (AY) 2022-23. The return was filed 44 days late. The assessee explained the delay was due to finalization of accounts and preparation of financial statements in anticipation of a merger process under the Companies Act, 2013. The revenue opposed the condonation, stating sufficient opportunities were given and the order was just and fair. The High Court also permitted the assessee to substitute an inadvertently filed return for AY 2023-24 with the correct return for AY 2022-23.

What were the issues?

1. Whether the delay of 44 days in filing the Income Tax Return for AY 2022-23 ought to be condoned under Section 119(2)(b) of the Income Tax Act, 1961, considering the explanation provided by the assessee. Assessee's Contention: The assessee argued that the delay was bona fide and adequately explained by the need to finalize accounts and financial statements in anticipation of a merger process. They relied on the detailed explanation provided in their application under Section 119(2)(b) and contended that a justice-oriented approach should be adopted by the authorities. Revenue's Contention: The revenue opposed the condonation, arguing that the assessee was given sufficient opportunities to explain the delay and that the order rejecting the application was just, fair, and passed on merits. They contended that the delay in finalizing accounts due to merger anticipation was not a sufficient cause for condonation and highlighted that the extended due date for filing was November 7, 2022, while the return was filed on December 21, 2022.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

9.

AS.WP.11679.2024.doc

IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURI ICTION WRIT PETITION NO. 11679 OF 2024 Magenta Power 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:

P. C.

1.

At the outset, the learned Advocate appearing on behalf of the Petitioner states that though the subject matter of the above petition is in relation to A.Y. 2022-23, inadvertently, the return filed at Exhibit-C2 is for A.Y. 2023-24, and it is therefore solely to substitute Exhibit-C2 with the correct return, namely, for A.Y. 2022-23. 2. Mr. Sharma, the learned Advocate appearing on behalf of the Revenue, merely stated that the Revenue has no objection if the aforesaid substitution is allowed. Considering these facts and circumstances, the Petitioner are 9.AS.WP.11679.2024.doc

permitted to substitute Exhibit-C2 with the return of income filed for A.Y. 2022-23. The substitution shall be done immediately in front of the Associate.

3.

Rule. Respondents waive service. With the consent of the parties, Rule made returnable forthwith and heard finally.

4.

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 a delay of 44 days in filing the Return of Income for the A.Y. 2022-23. The delay has been explained in detail paragraphs 3 and 4 of the Application filed by the 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.

5.

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 No.1 9.AS.WP.11679.2024.doc

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 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. 2022. However, the original return of income for A.Y. 2022-23 was filed on 21.12.2022 and revised return was filed on 29.12.2022, declaring a loss of Rs. 1,62,54,101/-. The delay in finalization of books of accounts and preparation of financial statements, in anticipation of the 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.

6.

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 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 9.AS.WP.11679.2024.doc

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. 7. 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.

8.

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.

9.

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.

10.

This order will be 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.] DATTAPRASAD GHANSHYAM PARAB DATTAPRASAD GHANSHYAM PARAB Date: 2025.09.26 12:08:24 +0530

More judgments on Section 119(2)(b)

All 980 judgments and leading authorities on Section 119(2)(b) →

Recent GST High Court judgments

Search GST case law →