A pending appeal does not bar review of a rejected Section 119(2)(b) condonation application.

The petitioner filed its return for A.Y. 2020–21 on 25 March 2021, attributing the delay to the COVID-19 outbreak.

In assessment proceedings, the Assessing Officer disallowed the petitioner’s claim for a deduction of ₹19,30,28,003 under Section 80IBA of the Income-tax Act, 1961, on the ground that the return was belated; the petitioner appealed against that assessment order.

The petitioner subsequently applied under Section 119(2)(b) to condone the 25-day delay in filing its return.

The application was rejected on 27 October 2023.

The petitioner sought judicial review of that rejection, relying on the High Court’s earlier decision concerning its application for A.Y. 2021–22.

Whether the pending appeal against the assessment order prevented the High Court from reviewing the rejection of the petitioner’s application under Section 119(2)(b).

Whether the rejection of the application to condone the 25-day delay should be set aside in light of the petitioner’s COVID-related explanation and the resulting disallowance of its Section 80IBA claim.

Section 119(2)(b) of the Income-tax Act, 1961 empowers the competent authority, in appropriate cases, to admit a delayed claim or application where doing so would avoid genuine hardship.

The provision requires consideration of the reasons offered for the delay; the dominant purpose is to address genuine hardship, and the explanation for delay should receive appropriate weight.

The Court relied on its earlier decision in the petitioner’s A.Y. 2021–22 matter, which quoted Vrushti Aulkumar Shah and Sitaldas K. Motwani v. Director General of Income Tax, applying a liberal construction of “genuine hardship” under Section 119(2)(b).

The Court also accepted that the Commissioner of Income-tax (Appeals) had no power to condone the delay in filing the return.

The Court held that the pending appeal did not bar review because the appellate authority could not condone the late filing of the return, leaving the Section 119(2)(b) application as the relevant remedy for that relief.

It considered the petitioner’s COVID-related explanation and the 25-day delay alongside its earlier decision concerning the petitioner’s similar application for A.Y. 2021–22, in which the Court had set aside a rejection involving a 13-day delay.

The fact that an assessment order had already been passed, and that an appeal was pending, did not justify allowing the rejection to stand, particularly given the potential hardship arising from the disallowance of the deduction.

The Court did not determine whether the petitioner was substantively entitled to the deduction.

It clarified that the Commissioner of Income-tax (Appeals) must examine the disallowance of the Section 80IBA deduction on its merits and pass an order in accordance with law.