Embassy One Gets Fresh Condonation Review For ₹1.65-Crore TDS Refund Claims As Karnataka HC Says Conglomerate Status Alone Isn’t Enough

In brief

The question

Whether the respondent’s rejection of the applications for condonation under Section 119(2)(b) could stand when the applications had not been considered by reference to the genuine-hardship test in CBDT Circular No. 9/2015.

The court held

The Court allowed the petitions in part and quashed both rejection orders.

It also directed

It restored the condonation applications for reconsideration, directed the petitioner to submit a copy of the judgment to the first respondent on 23 November 2026, and required the first respondent to reconsider the applications in light of the Court’s observations and communicate its decision within six weeks.

The Court did not itself condone the delay or direct the grant of TDS credit.

01Facts

The petitioner sought condonation under Section 119(2)(b) of the Income-tax Act, 1961, to file revised returns for AY 2021–22 and AY 2023–24 and claim credit for tax deducted at source (TDS) by its group company, Embassy Inn Private Limited (EIPL).

The petitioner said the TDS was not reflected in Form 26AS when it filed its original returns.

For AY 2021–22, EIPL had deducted TDS on 31 March 2021 but deposited it with the Government on 31 March 2022; the petitioner applied for condonation on 3 March 2026.

pp. 6–10

The applications were rejected, including on the grounds that the petitioner was a large conglomerate, had not claimed TDS in its original return, and had applied after a further delay.

pp. 6–10

The petitioner challenged the rejection orders dated 17 August 2026 and 24 August 2026.

p. 6, 12

02Issues

i.Whether the respondent’s rejection of the applications for condonation under Section 119(2)(b) could stand when the applications had not been considered by reference to the genuine-hardship test in CBDT Circular No. 9/2015.

pp. 10–11

ii.Whether the applications should be reconsidered on their merits, rather than rejected on the stated grounds concerning the petitioner’s size and the timing of its TDS claims.

pp. 9–11

03Law Applied

Section 119(2)(b) of the Income-tax Act, 1961, provides the basis for seeking condonation in matters including delayed claims for refund.

Under CBDT Circular No. 9/2015 dated 9 June 2015, the decision must turn on whether the applicant establishes genuine hardship, assessed in light of the reasons offered.

p. 10

The Court also noted the petitioner’s reliance on CBDT Circular No. 11/2024, but directed reconsideration by reference to Circular No. 9/2015.

p. 8, 11

Provisions in the judgment · 1

Companies Act, 1956 Section 119

04Reasoning

The Court held that the applications could not be rejected merely because the petitioner was a large conglomerate or because it had not claimed TDS that was absent from Form 26AS when the original returns were filed.

p. 10

The relevant inquiry was whether the petitioner could provide cogent reasons establishing genuine hardship, including for the delay in seeking condonation after the TDS was deposited and reflected in the tax records.

pp. 10–11

Because the impugned orders did not address that inquiry as required by Circular No. 9/2015, reconsideration was necessary.

p. 11