PRIMARY AGRICULTURAL CREDIT CO OPERATIVE vs. INCOME TAX OFFICER

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WP/12903/2023HC KarnatakaKAHC01030398202304 September 2024Bench: S.R.KRISHNA KUMAR7 pages
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What did the High Court hold?

The High Court allowed the petition. It held that the petitioner's inability to file the income tax return before the due date for Assessment Year 2018-19 was due to genuine hardship and circumstances beyond its control, as evidenced by the fact that returns for the subsequent four years were filed within the due dates. The Court found that the respondent committed an error in rejecting the application filed under Section 119(2)(b) of the Income Tax Act, 1961. Consequently, the impugned order under Section 119(2)(b), the consequential assessment order, notice of demand, and penalty notices were set aside. The application for condonation of delay was allowed, and the delay was condoned. The respondent was directed to accept the income tax returns as if filed within the due date and proceed accordingly. The ratio decidendi is that a genuine hardship, even if arising from inadvertence or incorrect advice, coupled with a consistent compliance in subsequent years, warrants condonation of delay under Section 119(2)(b) to avoid undue hardship.

What were the facts?

The petitioner, Primary Agricultural Credit Co Operative Society Limited, filed a writ petition challenging several orders for Assessment Year 2018-19. These included an order under Section 119(2)(b) dated 27/02/2023 by the Principal Commissioner of Income Tax (PCIT), an assessment order under Section 147 r.w.s. 144B dated 23/02/2023, a notice of demand under Section 156 dated 23/02/2023, and notices proposing penalties under Section 270A and Section 271B dated 09/03/2023. The petitioner had belatedly filed an application on 23.8.2022 seeking condonation of delay in filing its income tax return for AY 2018-19, attributing the delay to incorrect advice from its auditor and inadvertence as a cooperative society. The petitioner also highlighted that returns for subsequent years were filed within the due dates.

What were the issues?

1. Whether the order under Section 119(2)(b) of the Income Tax Act, 1961, dated 27/02/2023, rejecting the petitioner's application for condonation of delay in filing the income tax return for Assessment Year 2018-19, is sustainable in law? 2. Whether the consequential assessment order, notice of demand, and penalty notices for Assessment Year 2018-19 are sustainable in law, given the rejection of the condonation application? Assessee's Contentions: The petitioner argued that the delay in filing the return was due to genuine hardship, unintentional, and caused by circumstances beyond its control, specifically citing incorrect advice from its auditor and oversight as a cooperative society. It further contended that the refusal to condone the delay was an error, especially since returns for subsequent years were filed within the prescribed period. The petitioner sought to quash the impugned orders and notices and sought a direction to condone the delay. Revenue's Contentions: The respondent submitted that there was no merit in the petition and it was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 119(2)(b),Section 147,Section 144B,Section 156,Section 270A,Section 271B

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:36336 WP No. 12903 of 2023

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 12903 OF 2023 (T-IT) BETWEEN:

PRIMARY AGRICULTURAL CREDIT CO OPERATIVE SOCIETY LIMITED, A COOPERATIVE SOCIETY REGISTERED UNDER THE KARNATAKA COOPERATIVE SOCIETY ACT, 1959 REGISTERED ADDRESS AT BELAL POST, BELTHANGADY TALUK, DAKSHINA KANNADA DIST. REP. BY ITS PRESIDENT SRI. H. PADMA GOWDA, S/O SRI. LATA KUKKA GOWDA, AGED ABOUT 67 YEARS. …PETITIONER (BY SRI. SHREEHARI, ADVOCATE) AND:

1.

INCOME TAX OFFICER, WARD(1), PUTTUR, THE ASSESSING OFFICER UNDER THE INCOME TAX ACT, 1961 INCOME TAX OFFICE, RADHIKA COMPLEX, COURT ROAD, PUTTUR - 574 201

2.

NATIONAL FACELESS ASSESSMENT CENTRE A CENTRE DESCRIBED UNDER SECTION 144B OF THE INCOME TAX ACT, 1961,

Digitally signed by LEELAVATHI S R Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:36336 WP No. 12903 of 2023

ROOM NO.401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI-110 003, REP. BY PR. CHIEF COMMISSIONER OF INCOME TAX(NEAC).

3.

PRINCIPAL COMMISSIONER OF INCOME TAX PCIT, PANAJI AAYKAR BHAVAN, PLOT NO.05, EDC COMPLEX, PATTO PLAZA, PANAJI, GOA-403 001, AN AUTHORITY UNDER THE INCOME TAX ACT, 1961 …RESPONDENTS (BY SRI. Y.V. RAVIRAJ, ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE ORDER UNDER SECTION 119(2)(B) OF THE INCOME TAX ACT, 1961 DATED 27/02/2023 ISSUED BY THE R3 FOR THE ASSESSMENT YEAR 2018-19 WHICH BEARS IN DIN VIZ ITBA/COM/S/91//2022-23/1050172804(1) WHICH IS ENCLOSED AS ANNEXURE-K AND ETC.

THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR

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NC: 2024:KHC:36336 WP No. 12903 of 2023

ORAL ORDER

In this petition the petitioners seek for the following reliefs : "a. Issue a writ of certiorari or direction in the nature of writ of certiorari quashing the order under section 119(2)(b) of the Income Tax Act, 1961 dated 27/02/2023 issued by the Respondent No.3 for the Assessment Year 2018-19 which bears the DIN viz., ITBA/COM/M/17/2022- 23/1050172804 (1) which is enclosed as Annexure K;

b. Issue a writ of certiorari or direction in the nature of writ of certiorari quashing the order of assessment under section 147 r.w.s. 144B of the Income Tax Act, 1961 dated 23/02/2023 issued by the Respondent No. 2 for the Assessment Year 2018-19 which bears the DIN viz., ITBA/AST/S/147/2022- 23/1050062605(1) which is enclosed as Annexure Q;

c. Issue a writ of certiorari or direction in the nature of writ of certiorari quashing the notice of demand under section 156 of the Income Tax Act, 1961 dated 23/02/2023 issued by the Respondent No. 2 for the Assessment Year 2018-19 which bears the DIN viz., ITBA/AST/S/156/2022-23/1050062702(1) enclosed as Annexure Q1.

d. Issue a writ of certiorari or direction in the nature of writ of certiorari quashing the notice proposing penalty under section 270A of the Income Tax Act, 1961 dated 09/03/2023 issued by the Respondent No. 2 for the Assessment Year 2018-19 which bears the DIN viz., ITBA/PNL/F/270A/2022- 23/1050544298(1) which is enclosed as Annexure R.

e. Issue a writ of certiorari or direction in the nature of writ of certiorari quashing the notice proposing

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NC: 2024:KHC:36336 WP No. 12903 of 2023

penalty under section 271B of the Income Tax Act, 1961 dated 09/03/2023 issued by the Respondent No. 2 for the Assessment Year 2018-19 which bears the DIN viz., ITBA/PNL/F/2718/2022- 23/1050544005(1) which is enclosed as Annexure R1.

f. Issue a writ of mandamus or direction in the nature of writ of mandamus directing the respondent no.3 to condone the delay in filing of the return of income filed in Annexure H.

g. And pass such other orders as this Hon'ble Court deems fit and proper in the interest of justice and equity including awarding of cost of this petition.

2.

A perusal of the material on record would indicate that in relation to assessment year 2018-19, the petitioner belatedly filed an application on 23.8.2022 requesting for condonation of delay in filing income tax returns for the assessment year 2018-19. In the application, petitioner specifically contended that due to incorrect advise given by his auditor and since the petitioner was a co-operative society, due to oversight and inadvertence, the petitioner did not file income tax returns within the prescribed period and before the due date. It is also submitted that for the subsequent years i.e., 2019-20, 2020-21, 2021-22 and

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NC: 2024:KHC:36336 WP No. 12903 of 2023

2022-23, the petitioner filed income tax returns within the prescribed period and before the due date. It is therefore, submitted that the respondent committed an error in refusing to accept the explanation given by the petitioner which establishes genuine hardship on the part of the petitioner for circumstances beyond his control. It is also submitted that the consequent notices etc. also deserve to be quashed. 3. Per contra, learned counsel for the respondent submits that there is no merit in the petition and the same is liable to be dismissed. 4. As rightly contended by the learned counsel for the petitioner, a perusal of the application filed by the petitioner under Section 119(2)(b) of the Income Tax Act, 1961 would clearly indicate that the inability and omission on the part of the pt. to file income tax returns before the due date and within the prescribed period was due to genuine hardship and the same was unintentional and not deliberate and due to circumstances beyond the control of

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NC: 2024:KHC:36336 WP No. 12903 of 2023

the petitioner-assessee. The fact that hardship would be caused to him if delay is not condoned stands substantiated by the material on record which indicate that the petitioner had, in fact, filed his returns for the subsequent four years i.e., 2019-20, 2020-21, 2021-22 and 2022-23 within the due date and before expiry of the prescribed period. Under these circumstances, I am of the considered opinion that the respondent committed error in rejecting the application filed by the petitioner under Section 119(2)(b) by passing the impugned order as well as consequential assessment order and by issuing the impugned notice etc., all of which deserve to be quashed.

5.

In the result, the following order is passed :

ORDER i) Petition is hereby allowed;

ii) The impugned order at Annexure-K and impugned order at Annexure-Q and impugned notices Q1, R and R1 are hereby set aside;

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NC: 2024:KHC:36336 WP No. 12903 of 2023

iii) The application filed by the petitioner under section 119 (2)(b) dated 23.8.2022 is hereby allowed and the delay on the part of the petitioner in submitting income tax returns is hereby condoned;

iv) Respondent no.2 is directed to accept the income tax returns filed by the petitioner as if it was filed within the due date and proceed further in accordance with law.

Sd/- (S.R.KRISHNA KUMAR) JUDGE

rs List No.: 1 Sl No.: 51

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