The Delhi high court dismissed a writ petition filed by a technology company, seeking condonation of delay in filing its income-tax return for FY20. The Central Board of Direct Taxes had refused to invoke its powers accorded to it under section 119 of the I-T Act to condone this delay — the HC found no justification to interfere with this view.
This order is being widely discussed among tax circles, including I-T officials.
A major fallout of not filing a timely return is that carry-forward of losses, which is typically available over the subsequent eight-year period is denied, as are several tax benefits. A govt official said, this order will mitigate instances of taxpayers adopting a lax attitude in complying with statutory provisios.
Sunil Agarwal, senior standing counsel for the I-T department and one of the advocates representing the matter, said, “Genuine hardship is the cornerstone for exercise of this discretion by the CBDT. The taxpayer’s contentions such as the delay arose owing to the fallout of Covid, that the delay was one-time aberration or even of financial crisis were proved to be factually incorrect and found non-sustainable by the high court.”
Several taxpayers, who were impacted by the fall out of the pandemic, had found it difficult to file their I-T returns and pay their dues. For FY20, the CBDT had extended the timeline for filing the I-T returns to 15.02.2021 (for large taxpayers who are obligated to carry out a tax audit) and to 10.01.2021, for other. Yet, some taxpayers continued to seek condonation for delays in filing of the I-T return beyond the extended due date.
The HC observed that authorities had taken various facts into consideration when the prayer for condonation was made by Lava International. The company had up to 15.02.2021, to file its I-T return, yet although its financial were signed on 31.07.2020, the I-T return was filed by it only on 30.03.2021. This reflected negligence. Second, it was noted that the company had filed belated I-T returns in several instances, the delay for the financial year 2019-20 was not an aberration. In response to a show-cause notice the company attributed the delay to a financial and cash crunch. However, the financial statements for the relevant period showed a profit of Rs. 24.8 crore and a cash flow of Rs. 12.3 crore, which did not reflect any financial hardshipl.
The HC noted that the “power of condonation under section 119(2) can be exercised to deal with extraordinary circumstances only, which would have led to delay in statutory compliance. The same cannot be exercised routinely”.
Source: The Times of India
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