SRI SHIVALINGAPPA CHANNABASAPPA KUMBAR SON OF CHANNABASAPPA KUMBAR vs. THE PRINCIPAL COMMISSONER OF INCOME TAX HUBLI

PDF · subscribers
WP/100314/2024HC KarnatakaKAHC02000204202427 June 2024Bench: PRADEEP SINGH YERUR8 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the petition, quashing the order dated 31.05.2023 passed by the Principal Commissioner of Income Tax (PCIT). The Court reasoned that while condonation of delay requires genuine reasons and demonstration of unjust hardship, the PCIT's rejection in this case might not have been correct. The Court found that there was no shortage of tax payment by the petitioner in either the original or revised returns, and the delay was primarily due to difficulties in furnishing complete details. The Court opined that a genuine undue unjust hardship would be caused to the petitioner if the delay is not condoned. The Court directed the respondents to process the revised return of income dated 04.07.2019 for Assessment Year 2017-18 in accordance with law. The demand order under Section 143(1)(a) was also set aside, to be reconsidered. The Court explicitly stated that it had not expressed any opinion on the merits of the matter.

What were the facts?

The petitioner, Sri. Shivalingappa Channabasappa Kumbar, a Civil Contractor, filed his Income Tax Return for Assessment Year 2017-18 on a presumptive basis, declaring an income of Rs.17,77,899/-. Due to unavailability of financial details, certain information like audit reports and closing balances were not filed with the original return. The CPC intimated the petitioner about proposed additions to turnover as income, which the petitioner claims he was unaware of due to his tax practitioner's portal access. Subsequently, a difference of Rs.1,85,95,838/- in turnover was noted compared to Form 26AS, leading to a significant demand. The petitioner filed a revised return on 04.07.2019, beyond the due date of 31.03.2019. An application for condonation of delay in filing the revised return was filed before the Principal Commissioner of Income Tax (PCIT), Hubli, who rejected it by order dated 31.05.2023.

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 the revised return of income for Assessment Year 2017-18 under Section 119(2)(b) of the Income Tax Act, 1961, despite the petitioner demonstrating genuine hardship? Assessee's Contention: The petitioner argued that the PCIT should have considered the application for condonation of delay on the ground of genuine and unjust hardship that would be caused by the demand order. The petitioner contended that Section 119(2)(b) allows condonation of delay in cases of genuine hardship, and the PCIT's rejection was not in line with this provision. The petitioner also argued that there was no shortage of tax payment in the original and revised returns, and the delay was due to difficulties in furnishing complete details, not frivolous grounds. The petitioner relied on the principle that delay should be condoned if it does not affect revenue and causes undue hardship. Revenue's Contention: The revenue contended that there was no illegality or arbitrariness in the impugned order passed by the PCIT. The revenue argued that the PCIT had considered relevant judgments, including B.M. Malani Vs. Commissioner of Income Tax & Anr., which stipulate that delay would be condoned only if genuine hardship is caused. The revenue asserted that the petitioner's case did not fall within the ambit of genuine hardship as contemplated by the law.

Which sections of the Income-tax Act were involved?

Section 119(2)(b),Section 139(5),Section 143(1)(a)

AI-generated summary — verify with the full judgment below

- 1 -

NC: 2024:KHC-D:8748 WP No. 100314 of 2024

IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 27TH DAY OF JUNE, 2024 BEFORE THE HON'BLE MR JUSTICE PRADEEP SINGH YERUR WRIT PETITION NO.100314 OF 2024 (T-IT) BETWEEN:

SRI. SHIVALINGAPPA CHANNABASAPPA KUMBAR S/O CHANNABASAPPA KUMBAR, AGED ABOUT 45 YEARS, AT POST BANKALAGI, TQ: SINDAGI, DIST: VIJAYAPUR, BANKALAGI-586128, PAN: BBZPK6344J. … PETITIONER (BY SRI S.V. RAVI SHANKAR AND SRI SHASHANK S. HEGDE, ADVOCATES)

AND:

1.

THE PRINCIPAL COMMISSIONER OF INCOME TAX, HUBLI, OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX, C.R. BUILDING, NAVANAGAR, HUBBALLI-580025.

2.

THE ASSISTANT DIRECTOR OF INCOME TAX, CPC, BANGALORE, R/BY INCOME TAX OFFICER, WARD-1 AND TPS, BIJAPUR-586101. … RESPONDENTS (BY SRI M. TIRUMALESH AND SMT. ROOPA ANAVEKAR, ADVOCATES)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE A WRIT OF CERTIORARI OR A DIRECTION IN THE NATURE OF WRIT OF CERTIORARI QUASHING THE ORDER UNDER SECTION 119(2)(B) OF THE INCOME TAX ACT, 1961 (FOR SHORT ‘THE ACT’) DATED 31/05/2023 PASSED BY THE RESPONDENT NO.1 IN ITBA/COM/F/17/2023-24/1053352909(1) FOR THE ASSESSMENT YEAR 2017-18 (ANNEXURE-A) AND ETC.

ASHPAK KASHIMSA MALAGALADINNI Digitally signed by ASHPAK KASHIMSA MALAGALADINNI Location: HIGH COURT OF KARNATAKA DHARWAD BENCH Date: 2024.07.10 12:23:44 +0530

- 2 -

NC: 2024:KHC-D:8748 WP No. 100314 of 2024

THIS PETITION COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:

ORDER

Heard learned counsel for the petitioner and learned counsel Sri M.Thirumalesh representing for respondent- Tax/Revenue Authorities. 2. This petition is filed by the petitioner seeking to quash the order dated 31.05.2023 passed by the 1st respondent vide Annexure-A and to quash the intimation issued under Section 143(1)(a) of the Income Tax Act, 1961 (for short, ‘the Act’) dated 26.03.2019 vide Annexure-C and seeking a writ of mandamus for a direction to respondents to condone the delay in filing the revised return of income dated 04.07.2019 for the assessment year 2017-18 and for other consequential reliefs. 3. Petitioner is a Civil Contractor involved in the business and profession for several years. For the assessment year 2017-18, he achieved gross turnover to Rs.2,20,20,000/- and accordingly calculated the income of

- 3 -

NC: 2024:KHC-D:8748 WP No. 100314 of 2024

Rs.17,77,899/- on the 8% of gross turnover. The ITR Form- 4 was filed by the petitioner through its tax practitioner, which requires the income on a presumptive basis and filed the returns on the premise that the full income has been offered to tax by paying the necessary taxes. While filing the tax returns and filling the Form-3, details of audit, closing balances of financials, details of turnovers, TDS, etc., were not available with the tax practitioner hence, they were not filed as on date it was required to file. This being the state of affairs, CPC intimated the petitioner that it proposed to make additions of the differences of turnover as income, same was served on the tax practitioner. 4. The petitioner contends that it was not brought to his notice. The petitioner contends that he was not aware of the password and email of the filing portal belonging to the tax practitioner and hence he was not aware and he was unaware of the error committed, until the CPC processes the return of income under Section 143(1) of the Act. On the basis of processing of the returns of the income, there was difference of turnover appearing in Form No.26AS of

- 4 -

NC: 2024:KHC-D:8748 WP No. 100314 of 2024

Rs.1,85,95,838/- as the income of petitioner and raised a back breaking demand and raised a demand which is effected and causing hardship to the petitioner. Subsequently, petitioner filed revised return on 04.07.2019 instead of filing it within 31.03.2019 was the due date for filing the revised return under Section 139(5) of the Act. The petitioner filed application for condonation of delay before the 1st respondent to condone the delay in filing the revised return and accept the return with higher taxes. Respondent No.1 without appreciating the circumstances under which the condonation of delay was sought by the petitioner passed an order rejecting the petition and declined to condone the delay in filing the revision returns of income for the assessment year 2017-18 vide order dated 31.05.2023, which is questioned by the petitioner herein. 5. It is vehement contention of the learned counsel for the petitioner that respondent No.1 could have considered the application for condonation of delay on the ground of genuine and unjust that would be caused to the petitioner in view of the demand order which is excess and

- 5 -

NC: 2024:KHC-D:8748 WP No. 100314 of 2024

ought to have condoned the delay rather than rejecting it. Petitioner contends that provision of Section 119(2)(b) of the Act contemplates that there is any genuine hardship to the petitioner same could be condoned by the board. In the present case, the respondent No.1 has rejected the application for condonation of delay by holding that case made out by the petitioner would not fall within the ambit of genuine hardship on merits by quoting the several judgments therein, including the Judgment in the case of B.M.Malani Vs. Commissioner of Income Tax & Antr. dated 01.10.2008, Civil Appeal No.5950 of 2008 (Arising out of SLP (C) No.4091 of 2007). 6. In the present case, the petitioner has filed his Income Tax returns, where the taxable income is shown, but in view of certain difficulties, the entire details were not furnished and he filed revised returns, which also shows the taxable income to be the same amount as was the earlier original returns. But there was a delay in filing the revised returns. As contemplated in law, while considering the application for delay no doubt, it is true that genuine reasons

- 6 -

NC: 2024:KHC-D:8748 WP No. 100314 of 2024

have to be made out by the petitioner to show that unjust hardship would be caused due to the act of the respondent No.1 on which ground delay could be condoned and not on frivolous and flimsy grounds as narrated in the impugned order, which is acceptable. But in the present case, there is no shortage of payment of tax by the petitioner by virtue of original returns filed and so also the revised returns, except for non-filing of the details as required under the Act and in fact he contends that he has paid more while this Court would not want to venture into the intricacies whether it is paid less or more i.e., the domain of the respondent No.1. The rejection of respondent No.1 for consideration of condonation of delay, in my humble opinion, may not be correct. In the present facts and circumstances of the case, as there is a genuine undue unjust hardship that would be caused to the petitioner. If delay is not condoned and further proceedings could be assessed by the authorities by making assessment, if any, afresh for calculation of any loss or excess payment of tax for underpayment of tax this is of course at the liberty of respondent.

- 7 -

NC: 2024:KHC-D:8748 WP No. 100314 of 2024

7.

Learned counsel for the respondents vehemently contends that there is no illegality or arbitrariness in the impugned order passed by the respondents, as it has taken into consideration the judgment in the case of B.M.Malani V/s. Commissioner of Income Tax and Anr., passed in Civil Appeal No.5950/2008 and several other judgments as stated in Annexure-A, nevertheless even in the said judgment, what is prescribed is genuine hardship, if it is caused, then the delay would be condoned. 8. In my opinion, there would be unjust and genuine hardship that would be caused, if an authority comes to a conclusion that there is under payment of taxes or less tax paid. An opportunity deservers to be granted to the petitioner, if there is minor delay which does not effect the revenue. Hence, I pass the following: ORDER i) The petition is allowed. ii) The impugned order passed by respondent No.1 dated 31.5.2023 vide Annexure-A is quashed. Thereby, the demand order made

- 8 -

NC: 2024:KHC-D:8748 WP No. 100314 of 2024

under Section 143(1)(a) of the Income Tax Act, 1961 vide Annexure-C would not hold good as the same will have to be reconsidered. iii) The writ of mandamus is issued to the respondents to process the revised return of income dated 04.07.2019 filed by the petitioner for the assessment year 2017-2018, in accordance with law. iv) It is needless to mention that this Court has not expressed any opinion on the merits of the matter.

Sd/- JUDGE

VB CT:BCK List No.: 1 Sl No.: 21

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 →