Condonation applications under Section 119(2)(b) cannot be rejected without specific, cogent reasons.

The petitioner, a medical professional earning income from salary and profession, filed returns for Assessment Years (AYs) 2017–18 and 2018–19. While filing his return for AY 2019–20, he became aware of the presumptive taxation scheme under Section 44ADA of the Income-tax Act, 1961, and sought to claim the same benefit for the earlier years by filing revised returns.

Since the statutory period for filing revised returns had expired, he applied on 16 October 2020 for condonation of delay under Section 119(2)(b), seeking consequential refunds.

After reminders dated 24 June 2022 and 24 March 2023, the Income Tax Department sought further documents, which the petitioner supplied on 8 June 2023.

By separate orders dated 6 July 2023, the Principal Commissioner rejected the applications, stating that the petitioner did not satisfy the conditions of CBDT Circular No. 9/2015 dated 9 June 2015.

In its affidavit before the High Court, the Department additionally contended that the petitioner had filed valid original returns but had failed to file revised returns within the prescribed period.

Whether the impugned orders rejecting the petitioner’s applications for condonation of delay under Section 119(2)(b) were legally sustainable when they did not disclose specific and cogent reasons for rejection.

Whether CBDT Circular No. 9/2015 imposed an absolute bar on entertaining the petitioner’s applications for AYs 2017–18 and 2018–19.

Whether the petitioner’s failure to file revised returns within the prescribed period could itself justify rejection of an application seeking condonation of that delay.

Section 119(2)(b) of the Income-tax Act, 1961 authorises the competent Income Tax authority, where desirable or expedient to avoid genuine hardship, to admit belated claims for exemption, deduction, refund or other relief and decide them on merits.

CBDT Circular No. 9/2015 allocates authority according to the monetary value of the claim and provides that a condonation application for refund or loss cannot be entertained beyond six years from the end of the relevant assessment year; it does not create an absolute bar for claims filed within that period.

Administrative orders exercising such statutory discretion must disclose proper application of mind and cogent reasons.

Applications for condonation of delay are generally to be considered liberally rather than hyper-technically.

The Court found that the petitioner’s applications, filed on 16 October 2020 for AYs 2017–18 and 2018–19, were within the six-year limitation contemplated by Clause 3 of Circular No. 9/2015, calculated from 31 March 2018 and 31 March 2019 respectively.

Therefore, the Circular did not prohibit their consideration.

The impugned orders merely referred to the Circular without identifying the specific condition allegedly violated or providing reasons for rejection, demonstrating non-application of mind.

The additional reason advanced in the Department’s affidavit—that the petitioner had not filed revised returns within the statutory period—was illogical, because the very purpose of the condonation application was to seek permission to overcome that delay.

The Court consequently held that the orders were unsustainable, while leaving the merits of the condonation applications to be reconsidered by the competent authority.

Respondent No. 1 was directed to reconsider afresh the petitioner’s application dated 16 October 2020, the reminders, and the reply dated 8 June 2023, in accordance with law and the principles stated in the judgment.

The exercise was to be completed within three months from service of the certified copy of the judgment.

The Court did not itself grant condonation or the refund claim, and made no order as to costs.