Danny Denzongpa vs. CIT (Bombay High Court)

In matters giving benefit to assessee, dept must avoid pedantic approach

The assessee, a Sikkimese national offered dividend & interest to tax in the normal course. Subsequently, s. 10(26 AAA) was inserted by the Finance Act 2008 w.r.e.f 1.4.1990 to provide that dividends & interest received by Sikkimese nationals shall be exempt from tax. Pursuant to the said amendment, the assessee filed an application u/s 264 requesting that completed assessments be revised to give effect to the exemption in s. 10(26AAA). As the applications were beyond the time limit, the assessee also filed an application requesting condonation of delay. The CIT accepted that the retrospective amendment had occasioned the revision applications but rejected the same on the ground that they were filed after the time limit. The assessee challenged the rejection. HELD upholding the challenge:

(i) S. 264(6) empowers the CIT with power to condone delay if there is “sufficient cause” for the delay. Though the assessee had set out the retrospective amendment as the reason for the filing of the application, the CIT had not even adverted to the reasons mentioned by the assessee but had in a cryptic manner rejected the application by observing that he was unable to entertain the application beyond the time limit prescribed. Once the CIT is vested with the power of condonation of delay, then it is incumbent upon the CIT to take into consideration the reasons mentioned by the assessee seeking condonation of delay. In matters of this kind, wherein a benefit is sought to be given to an assessee that too with retrospective effect, a highly technical and pedantic approach is required to be eschewed and approach which furthers the intent and purport of the legislation is required to be adopted;

(ii) Though in the normal circumstances the matter would have been remanded to the CIT for de novo consideration, it is not appropriate to do in this case and full relief has to be given to the assessee.