W.P. (C) No. 37648 of 2023

Facts of the case

Writ petition was filed challenging the order passed by Principal Commissioner of Income Tax (PCIT) under section 119(2)(b) of Income-tax Act, 1961 wherein the application of the assessee for condonation of delay of one day in filing return of income for A.Y. 2021-22 was rejected.

Contentions of the assessee

The assessee submits that the Act does not give power to Principal Chief Commissioner/Principal Commissioner of Income Tax to consider the merits of the claim of income, loss etc. In the impugned order passed under section 119(2)(b), PCIT has not delineated the grounds for condoning the delay but has rejected the application considering the merits of the claim.

Analysis of legal provisions by the Court

On a perusal of section 119(2)(b), it is evident that the said section only empowers CBDT to admit an application or claim for exemption, deduction, refund or any other relief under the Act after the expiry of the period specified by or under the Act for making such application or claim and deal with the same on merits in accordance with law.
CBDT has delegated such power to Principal Chief Commissioner of Income Tax/Principal Commissioner of Income Tax vide the Circular No.09/2015 dated 09.06.2015.

A Division Bench of this Court had an occasion to consider the provisions of Section 119(2)(b) and said circular in the case of Daisy vs. PCIT W.A. No. 1420/2023 wherein the Court was of the opinion that the Circular empowers the PCCIT/PCIT to consider the merits of the refund claim while exercising the delegated powers under section 119(2)(b) which would amount to circumvent of Section 119(2)(b).

Decision

PCCIT/PCIT has no power to consider the merits of the refund application and what is required to be considered is the merits of the application for condonation of delay only.
The writ petition is allowed and the impugned order passed by PCIT under section 119(2)(b) stands unsustainable and is set aside. The matter is remitted back to PCIT to pass fresh order on the application of the assessee for condonation of delay in filing return. While considering the said application for condonation of delay, PCIT is not required to go into the merits of the claim of the assessee.