M/S. SAI BABA PROJECTS PRIVATE LIMITED vs. PRINCIPAL COMMISSIONER OF INCOME TAX

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WP/16559/2024HC KarnatakaKAHC01033843202404 April 2025Bench: S.R.KRISHNA KUMAR5 pages
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What did the High Court hold?

The High Court held that the impugned order passed by the respondent-Principal Commissioner of Income Tax adopted a hyper-technical approach and failed to appreciate the petitioner's circumstances. The Court found that the inability to file revised IT returns within the prescribed period was due to the inadvertence of the petitioner's accountant, which led to a bonafide reason, unavoidable circumstance, and sufficient cause, constituting genuine hardship as per Circular No. 9/2015. The Court deemed it just and appropriate to set aside the impugned order and condone the delay in filing the returns, adopting a justice-oriented approach. The ratio decidendi is that genuine hardship, even if arising from an accountant's inadvertence, should be considered for condonation of delay under Section 119(2)(b), especially when bonafide reasons and sufficient cause are established. The operative directions were to allow the petition, set aside the impugned order, allow the application for condonation of delay, and direct the respondents to accept the returns submitted by the petitioner for Assessment Year 2022-23, with liberty to verify the claim.

What were the facts?

The petitioner, M/s. Sai Baba Projects Private Limited, filed a writ petition seeking to quash an order dated February 29, 2024, passed by the Principal Commissioner of Income Tax. This order rejected the petitioner's application under Section 119(2)(b) of the Income Tax Act, 1961, seeking condonation of a 161-day delay in filing its income tax returns for Assessment Year 2022-23. The petitioner contended that the delay was due to its accountant erroneously adding matured investment proceeds to its income, necessitating revised returns, and that the delay was caused by bonafide reasons, unavoidable circumstances, and sufficient cause, constituting genuine hardship as per Circular No. 9/2015.

What were the issues?

1. Whether the order dated February 29, 2024, passed by the Principal Commissioner of Income Tax, rejecting the petitioner's application for condonation of delay in filing income tax returns for Assessment Year 2022-23 under Section 119(2)(b) of the Income Tax Act, 1961, is lawful and legal, considering the petitioner's grounds of genuine hardship and bonafide reasons. Assessee's Contentions: The petitioner argued that the delay in filing revised income tax returns was due to its accountant's inadvertent error in wrongly adding matured investment proceeds to its income. This necessitated filing revised returns. The petitioner claimed that due to bonafide reasons, unavoidable circumstances, and sufficient cause, it could not file the revised returns within the prescribed period. This constituted genuine hardship as contemplated in Circular No. 9/2015. Therefore, the respondent erred in rejecting the condonation application. Revenue's Contentions: The learned counsel for the respondents-Revenue supported the impugned order and submitted that the petition lacked merit and was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 119(2)(b)

AI-generated summary — verify with the full judgment below

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NC: 2025:KHC:14595 WP No. 16559 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF APRIL, 2025 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO.16559 OF 2024 (T-IT) BETWEEN:

M/S. SAI BABA PROJECTS PRIVATE LIMITED (A PRIVATE LIMITED COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956) B-3 NO.28, SWAPNNALOK, AGA ABBAS ALI ROAD, ULSOOR, BENGALURU-560 042. REPRESENTED BY ITS MANAGING DIRECTOR, SHRI. RANJAN SAIN. …PETITIONER (BY SRI. ASHOK A KULAKARNI, ADVOCATE) AND:

1.

PRINCIPAL COMMISSIONER OF INCOME TAX BENGALURU-1, BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU-560 095,

2.

ASSISTANT DIRECTOR OF INCOME TAX CENTRALISED PROCESSING CENTER, POST BOX NO-1, ELECTRONIC CITY POST OFFICE, BENGALURU-560 100.

…RESPONDENTS (BY SRI.M. DILIP, ADVOCATE)

THIS W.P IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 29.02.2024 BEARING DIN AND ORDER NO.ITBA/COM/F/17/2023- 24/1061731379(1), ANNEXURE F PASSED BY THE 1ST RESPONDENT AS UNLAWFUL AND ILLEGAL ALONG WITH THE ATTENDANT ACTIONS AND ETC.

Digitally signed by CHANDANA B M Location: High Court of Karnataka

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NC: 2025:KHC:14595 WP No. 16559 of 2024

THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR

ORAL ORDER In this petition, petitioner seeks quashing of the impugned order at Annexure– F dated 29.02.2024 passed by respondent No.1, whereby the application filed by the petitioner under Section 119(2)(b) seeking condonation of delay of days in filing the income tax returns in relation to the Assessment Year 2022-23 was rejected by respondent No.1.

2.

Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record. 3. A perusal of the material on record will indicate that in relation to the aforesaid Assessment Year 2022-23, the petitioner filed returns after the prescribed period along with the application seeking condonation of delay of 161 days in filing the returns interalia contending that the accountant of the petitioner had wrongly added the Matured Investment proceeds to the income of the petitioner for the aggrieved assessment year and whereby the petitioner had to file a revised return of income and owing to

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NC: 2025:KHC:14595 WP No. 16559 of 2024

bonafide reasons, unavoidable circumstances and sufficient cause, the petitioner was not in a position to file the revised returns within the prescribed period. It was contended that the delay in filing the I.T. returns was due to genuine hardship as contemplated in the Circular No.9/2015 dated 09.06.2015 and as such, the respondent committed an error in rejecting the application for condonation of delay filed by the petitioner under Section 119(2)(b) of the I.T.Act, which deserves to be set aside.

4.

Per contra, learned counsel for the respondents-Revenue would support the impugned order and submits that there is no merit in the petition and the same is liable to be dismissed.

5.

A perusal of the impugned order will indicate that the respondents have adopted a hyper technical approach in refusing to condone the delay without appreciating that the inability and omission on the part of the petitioner to file revised I.T. returns within the prescribed period was due to inadvertence of the petitioner’s accountant in wrongly adding the Matured Investment proceeds to the income of the petitioner for the aggrieved assessment year, who was forced to file the revised I.T. returns subsequent to expiry of the prescribed period. The respondents

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NC: 2025:KHC:14595 WP No. 16559 of 2024

failed to appreciate that the petitioner could not file his revised I.T. returns within the prescribed period on account of bonafide reasons, unavoidable circumstances and sufficient cause, which clearly constituted genuine hardship on the part of the petitioner / assessee as contemplated in the said Circular dated 09.06.2015 and failure to appreciate this, has resulted in erroneous conclusion warranting interference by this Court in the present petition.

6.

Under these circumstances, by adopting a justice oriented approach and having regard to valid and sufficient ground pleaded by the petitioner in support of his claim for condonation of delay, I deem it just and appropriate to set aside the impugned order and condone the delay in filing the returns by the petitioner by allowing the application filed by the petitioner. 7. In the result, I pass the following: O R D E R (i) The petition is hereby allowed. (ii) The impugned order at Annexure– F dated 29.02.2024, is hereby set-aside; (iii) The application filed by the petitioner under Section 119(2)(b) for condonation of delay of 161 days

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NC: 2025:KHC:14595 WP No. 16559 of 2024

in filing Income Tax Returns for the Assessment Year 2022-23 is hereby allowed; (iv) The respondents are directed to accept the returns submitted by the petitioner for the aforesaid Assessment Year 2022-23; (v) It is needless to state that respondents are at liberty to verify the claim of the petitioner and proceed further in accordance with law.

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

Srl.

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