M/S EMBASSY ONE DEVELOPERS LIMITED vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL)

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WP/28198/2026HC KarnatakaKAHC01061882202629 September 2026Bench: B M SHYAM PRASAD13 pages
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What did the High Court hold?

The High Court allowed the petitions in part, quashing the impugned orders dated August 17, 2026, and August 24, 2026. The Court held that the applications for condonation of delay should not have been rejected solely on the grounds that the petitioner is a conglomerate or that the refund was not claimed in the original return because the TDS was not reflected in Form 26AS at that time. The Court emphasized that the question of genuine hardship, as contemplated under CBDT Circular No. 9/2015, needed to be examined. The delay in filing the revised returns after the TDS was credited by EIPL should have been assessed based on whether the petitioner could establish genuine hardship with cogent reasons. The Court found that the salient aspects of the circular were not considered. Consequently, the petitioner's applications for condonation of delay were restored for reconsideration by the first respondent (Principal Commissioner of Income Tax). The first respondent was directed to re-examine the applications in light of the Court's observations and communicate a decision within six weeks.

What were the facts?

The petitioner, M/s. Embassy One Developers Limited, filed writ petitions challenging orders dated August 17, 2026, and August 24, 2026, passed by the Principal Commissioner of Income Tax (Central) under Section 119(2)(b) of the Income Tax Act, 1961. These orders rejected the petitioner's applications for condonation of delay in filing revised returns for Assessment Year (AY) 2021-22 and AY 2023-24. The petitioner sought to claim credit for Tax Deducted at Source (TDS) amounting to Rs. 91,98,961/- for AY 2021-22 and Rs. 72,92,380/- for AY 2023-24. The delay arose because the TDS, though booked by a group company, M/s. Embassy Inn Private Limited (EIPL), on March 31, 2021, was credited to the government account only on March 31, 2022. The petitioner initially filed returns without claiming the TDS as it was not reflected in Form 26AS at that time. Revised returns were filed in March 2026, with applications for condonation of delay citing the complexity of transactions as a conglomerate.

What were the issues?

1. Whether the rejection of the petitioner's application for condonation of delay in filing revised returns for AY 2021-22 and AY 2023-24 under Section 119(2)(b) of the Income Tax Act, 1961, was arbitrary, unreasoned, illegal, and contrary to CBDT Circular No. 11/2024 and principles of natural justice. Assessee's Contention: The petitioner argued that the impugned orders were arbitrary and unreasoned. They relied on CBDT Circular No. 11/2024, stating that applications for refund can be filed within five years after October 1, 2024, and that applications must be considered based on genuine hardship as per CBDT Circular No. 9/2015. The petitioner contended that their application was not considered in light of these directives. They also highlighted that the delay was due to voluminous transactions and that the TDS was not reflected in Form 26AS when the original returns were filed. Revenue's Contention: The revenue, through its counsel, argued that the reasoning for not claiming TDS in the original return due to its non-reflection in Form 26AS was weak for a large conglomerate. They pointed out that the TDS was deducted on March 31, 2021, but deposited on March 31, 2022, and EIPL provided no reason for this delay. Furthermore, the TDS returns were filed on April 7, 2022, making the credit available in Form 26AS from April 2022, yet the condonation petition was filed nearly four years later on March 3, 2026. The revenue also noted that EIPL, holding a 45% stake, did not furnish reasons for the delayed TDS payment.

Which sections of the Income-tax Act were involved?

Section 119(2)(b)

AI-generated summary — verify with the full judgment below

Heard together (3 matters)

WP No. 28198 of 2026
WP No. 28367 of 2026
W.P. NO. 4829/2022

Read from the judgment's own cause title. This page is filed under one of them.

HC-KAR IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH DAY OF SEPTEMBER, 2026 BEFORE THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 28198 OF 2026 (T-IT) C/W WRIT PETITION NO. 28367 OF 2026 (T-IT)

IN WP No. 28198/2026

BETWEEN:

M/S EMBASSY ONE DEVELOPERS LIMITED A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956, HAVING ITS REGISTERED OFFICE AT 14TH FLOOR, PINNACLE TOWER, EMBASSY ONE, NO. 8, BELLARY ROAD, GANGANAGAR, BENGALURU 560 032. REPRESENTED BY ITS AUTHORISED SIGNATORY, SRI. DHARMALINGAM VIJAYKUMAR.

…PETITIONER (BY SRI. SHASHIKIRAN SHETTY., SENIOR ADVOCATE FOR SRI. A MAHESH CHOWDHARY.,ADVOCATE A/W SMT. KRISHIKA VAISHNAVI., ADVOCATE)

Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA HC-KAR AND:

1.

THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) CENTRAL REVENUE BUILDING, QUEENS ROAD, BENGALURU 560 001.

2.

THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(3), CENTRAL REVENUE BUILDING, QUEENS ROAD, BENGALURU 560 001.

…RESPONDENTS

(BY SRI.M. DILIP., ADVOCATE A/W SRI. VINAYAKA S PANDIT., ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE IMPUGNED ORDER DATED 17.08.2026 BEARING DIN AND ORDER NO. ITBA/COM/F/17/2026- 27/1092253344(1) PASSED BY RESPONDENT NO.1 UNDER SECTION 119(2)(B) OF THE INCOME TAX ACT, 1961, REJECTING THE PETITIONER-S APPLICATION DATED 03.03.2026 FOR CONDONATION OF DELAY IN FILING A REVISED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2021-22 AT ANNEXURE A, AS BEING ARBITRARY, UNREASONED, ILLEGAL, CONTRARY TO CBDT CIRCULAR NO. 11/2024 DATED 01.10.2024, OPPOSED TO THE PRINCIPLES OF HC-KAR NATURAL JUSTICE AND BAD IN THE EYES OF LAW; B) DIRECTING RESPONDENT NO.1 TO ALLOW THE PETITIONER-S APPLICATION DATED 03.03.2026 UNDER SECTION 119(2)(B) OF THE INCOME TAX ACT, 1961 AT ANNEXURE B, CONDONE THE DELAY AND PERMIT THE PETITIONER TO FILE A REVISED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2021-22 CLAIMING CREDIT OF TAX DEDUCTED AT SOURCE OF RS. 91,98,961/-; C) IN THE ALTERNATIVE TO PRAYER (B), DIRECTING RESPONDENT NO.1 TO CONSIDER AFRESH AND DISPOSE OF THE PETITIONER-S APPLICATION DATED 03.03.2026 UNDER SECTION 119(2)(B) OF THE INCOME TAX ACT, 1961 AT ANNEXURE B ON MERITS, IN ACCORDANCE WITH LAW AND IN THE LIGHT OF PARAGRAPH 6 OF CBDT CIRCULAR NO. 11/2024 DATED 01.10.2024, AFTER AFFORDING THE PETITIONER AN OPPORTUNITY OF HEARING, WITHIN A TIME FRAME TO BE FIXED BY THIS HON-BLE COURT; D) DIRECTING RESPONDENT NO.2 TO GRANT CREDIT OF THE TAX DEDUCTED AT SOURCE OF RS. 91,98,961/- REFLECTED IN FORM 26AS OF THE PETITIONER FOR THE ASSESSMENT YEAR 2021-22 AND TO REFUND THE SAME TO THE PETITIONER IN ACCORDANCE WITH LAW.

HC-KAR IN WP NO. 28367/2026

BETWEEN:

M/S EMBASSY ONE DEVELOPERS LIMITED A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956, HAVING ITS REGISTERED OFFICE AT 14TH FLOOR, PINNACLE TOWER, EMBASSY ONE, NO. 8, BELLARY ROAD, GANGANAGAR, BENGALURU 560 032. REPRESENTED BY ITS AUTHORISED SIGNATORY, SRI. DHARMALINGAM VIJAYKUMAR.

...PETITIONER

(BY SRI. SHASHIKIRAN SHETTY., SENIOR ADVOCATE FOR SRI. A MAHESH CHOWDHARY., ADVOCATE A/W SMT. KRISHIKA VAISHNAVI., ADVOCATE)

AND:

1.

THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) CENTRAL REVENUE BUILDING, QUEENS ROAD, BENGALURU 560 001.

2.

THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(3), CENTRAL REVENUE BUILDING, QUEENS ROAD, BENGALURU 560 001. ...RESPONDENTS

(BY SRI.M. DILIP., ADVOCATE A/W SRI. VINAYAKA S PANDIT., ADVOCATE)

HC-KAR THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO A)

QUASHING THE IMPUGNED ORDER DATED 24.08.2026 BEARING DIN AND ORDER NO. ITBA/COM/F/17/2026- 27/1092524724(1) PASSED BY RESPONDENT NO.1 UNDER SECTION 119(2)(B) OF THE INCOME TAX ACT, 1961, REJECTING THE PETITIONERS APPLICATION DATED 11.03.2026 FOR CONDONATION OF DELAY IN FILING A REVISED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2023-24 AT ANNEXURE A, AS BEING ARBITRARY, UNREASONED, ILLEGAL, CONTRARY TO CBDT CIRCULAR NO. 11/2024 DATED 01.10.2024, OPPOSED TO THE PRINCIPLES OF NATURAL JUSTICE AND BAD IN THE EYES OF LAW; B) DIRECTING RESPONDENT NO.1 TO ALLOW THE PETITIONER'S APPLICATION DATED 11.03.2026 UNDER SECTION 119(2)(B) OF THE INCOME TAX ACT, 1961 AT ANNEXURE B, CONDONE THE DELAY AND PERMIT THE PETITIONER TO FILE A REVISED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2023-24 CLAIMING CREDIT OF TAX DEDUCTED AT SOURCE OF RS. 72,92,380/-; C) IN THE ALTERNATIVE TO PRAYER (B), ISSUE A WRIT OF MANDAMUS OR ANY OTHER WRIT, ORDER OR DIRECTION OF A LIKE NATURE DIRECTING RESPONDENT NO.1 TO CONSIDER AFRESH AND DISPOSE OF THE PETITIONER'S APPLICATION DATED 11.03.2026 UNDER SECTION 119(2)(B) OF THE INCOME TAX ACT, 1961 AT ANNEXURE B ON MERITS, IN ACCORDANCE WITH LAW, IN THE LIGHT OF PARAGRAPH 6 OF CBDT CIRCULAR NO. 11/2024 DATED 01.10.2024 AND THE DECISION OF THIS HON'BLE COURT IN MANYATA PROMOTERS PRIVATE LIMITED (W.P. NO. 4829/2022 (T-IT)), AFTER AFFORDING THE PETITIONER AN OPPORTUNITY OF HEARING, WITHIN A TIME FRAME TO BE FIXED BY THIS HON'BLE COURT.

HC-KAR THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD

ORAL ORDER

The petitioner has filed Revised returns for refund of the TDS effected by its Group Company relevant to the assessment years 2021 - 22 and 2023-24. The petitioner's application for condonation of delay in filing the Revised Returns and for refund is rejected by the impugned orders. The details of the impugned orders, which are impugned in the respective petitions, are as follows: Writ petition Number

Orders

Date Provisions of Income Tax Act, 1961 28198/2026 Order 17.08.2026 119(2)(b) 28367/2026 Order 24.08.2026 119(2)(b)

2.

Sri Shashikiran Shetty, the learned Senior Counsel for the petitioner, submits that this Court must intervene with the impugned order emphasizing the following.

HC-KAR [A] The petitioner's Group Company, M/s.Embassy Inn Private Limited [M/s. EIPL], had received Inter-Corporate Deposits from the petitioner and though M/s. EIPL booked the TDS on 31.03.2021, it credited TDS to the Government's account only on 31.03.2021. [B] The Form 26AS did not disclose the TDS effected as of the date on which the petitioner filed its Returns. [C] As such the petitioner has filed returns without claiming refund of the TDS. [D] After the TDS is credited, the petitioner has filed Revised returns in the month of March, 2026 along with an application for condonation of delay stating that the delay is because of the voluminous transactions that the petitioner had to go through as a conglomerate.

HC-KAR [e] The application is rejected only because the petitioner is described as a large conglomerate without considering the specifics though alluded.

The learned Senior Counsel submits that the order dated 01.10.2024 in F.No.312/63/2023-OT is categorical in stating that an application for refund can be filed within five years of the applications filed after 01.10.2024 and that it is also not disputed that an application must be considered based on assessment of genuine hardship as contemplated under the Circular dated 09.06.2015 in No.9/2015 and that the impugned orders must fail because the petitioner’s application is not considered in the light of these order and circular.

3.

Sri M.Dilip along and Sri Vinayaka S. Pandit [a learned senior standing counsel/learned standing counsel for the respondents] who accept HC-KAR notice, are heard on whether there must be any interference with the impugned orders. The reasons assigned to reject the petitioner's application relevant to the assessment year 2021-2022 in W.P.No.28198/2026 read as under after there is a reference to the delay in the Group Company depositing the TDS to the government account.

9.3 Not claiming TDS deduction in the ROI filed by the assessee on the pretext of not being reflected in 26AS is very weak reasoning for such a large conglomerate. The assessee, at the time of finalization of its accounts had all the time to ensure its receipts from all sources so as to arrive at its total income apart from ensuring that the corresponding TDS was effected and deposited into the Government account. The assessee had all the right to stake a claim for the entire TDS rather than restricting itself to claiming the TDS that was reflected in the 26AS in the original return of income filed on 15.03.2022. 9.4 Moreover, as already stated earlier, the TDS deducted on 31.03.2021 was deposited into Government account only on 31st March 2022. Further, EIPL, another company of the same HC-KAR group, which holds 45% of its stake, has not furnished any reason for the delayed payment of TDS into Government account. Moreover, the TDS returns reflecting the TDS deduction was filed on 07.04.2022 and certainly from April 2022 end this TDS credit was filed very much available in 26AS of the assessee company and still the condonation petition has been filed in this office after a lapse of nearly four years on 03.03.2026.

The reasons assigned for rejection of the application in the next petition [in W.P.No.28367/2026] though not verbatim the same are also for similar reasons.

4.

It is salient that the question of genuine hardship has to be examined in terms of the Circular in No.9/2015 dated 09.06.2015 and the application could not have been rejected only on the ground that the petitioner is a conglomerate and the refund was not claimed in the original ITR because TDS was not reflected in Form 26AS as of such date. There is a delay in filing the application for condonation of delay because the Revised Returns are not filed HC-KAR immediately after M/s. EIPL credited the TDS deducted. The outcome on the application for condonation of delay should have turned on whether the petitioner is able to establish genuine hardship offering reasons as contemplated under Circular No.9/2015 especially when the right to refund is not in dispute.

5.

This Court, in these circumstances and because the salient in terms of the Circular is not considered, is of the view that there must be interference quashing the orders restoring the proceedings for reconsideration observing that the application must be considered with reference to the Circular in No.9/2015 dated 09.06.2015 examining whether the reasons offered are sufficient to establish genuine hardship by offering cogent reasons. In the light of the afore, the following:

HC-KAR

ORDER

A. The petitions are allowed-in-part and the following impugned adjudication orders are quashed.

Writ petition Number

Orders

Date Provisions of Income Tax Act, 1961 28198/2026 Order 17.08.2026 119(2)(b) 28367/2026 Order 24.08.2026 119(2)(b)

B. The petitioner's application for condonation of delay is restored for reconsideration.

C. The petitioner shall without further notice file a copy of this order for reconsideration with the first respondent on 23.11.2026.

D. The first respondent is called upon to re- examine the applications in the light of this Court's observation and HC-KAR communicate the decision within the next six [6] weeks.

Sd/- (B M SHYAM PRASAD) JUDGE

SA Ct:sr

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