I-T - Sec 119(2)(b) - condonation of delay - NRI files refund claim -
Rajkumar
I-T - Sec 119(2)(b) - condonation of delay - NRI files refund claim - Revenue rejects on limitation - Word 'genuine' in phrase 'genuine hardship' should be construed liberally; if substantive justice is pitted against technicalities, substantive justice must be preferred: Bombay HC
MUMBAI, DEC 29, 2009: DELAY in filing return or claiming refund is a common thread that runs through all forms of taxation. Condonation of delay in such cases becomes a major bone of contention. Revenue feels its hands are tied with rules and procedures, and it cannot condone delay beyond certain period. There are also instances where Revenue fails to take note of genuine hardship of applicants and often ignores the larger objective of law that is to do justice. This is what happened even in this case where the refund claim of the Hong Kong-based NRI was rejected for 18 months delay. However, the High Court has remitted the issue by observing that the substantive justice should not be sacrificed in favour technicalities of procedures and departmental instructions. The word 'genuine' in 'Genuine hardship' used in Sec 119(2)(b) should be construed liberally.
Facts of the case
The Assessee is a Non-resident Indian settled in Hong Kong, makes investment in shares of Indian companies through NRE Account. Assessee earns short-term capital gains on which the concerned bank deducts tax at source @ 30%. Assessee files return of income, claiming that the capital gains qualify to be investment income u/s 115C and are taxable at a flat rate of 20% and files refund claim.
Prior to filing this return the assessee had never filed any return, and it was also barred by limitation. Assessee files an application u/s 119(2)(b) for condonation of delay. But the Revenue rejects the same, relying on the CBDT Instruction No.13/2006 dated 22nd December, 2006.
The assessee goes in writ and pleads that the petitioner was under bona fide belief that since the tax has been deducted by the bank, he was not required to file income tax return in India, as such the petitioner has failed to file return in time. When the return was filed, it was delayed by 18 months, therefore, the petitioner was required to move an application dated 25th February, 2004 u/s.119(2)(b) to seek condonation of delay in filing the return of income and claim refund.
Having heard the parties the Bench observes that,
++ the phrase 'genuine hardship' used in Section 119(2)(b) should be construed liberally. The Legislature has conferred the power to condone delay to enable the authorities to do substantive justice to the parties by disposing of the matters on merit.
++ Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.
++ When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
++ There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. The approach of the authorities should be justice oriented so as to advance cause of justice. If refund is legitimately due to the applicant, mere delay should not defeat the claim for refund.