Section 119(2)(b) requires liberal consideration of genuine hardship; delay alone cannot defeat legitimate refund claims.

The petitioner filed its return of income for Assessment Year 2019–20 under Section 139(1) of the Income-tax Act, 1961 on 30 October 2019.

The return was subsequently treated as invalid by the CPC, Bengaluru. A defect notice under Section 139(9), dated 20 February 2020, was uploaded on the Income Tax Department’s common portal, though the petitioner claimed that it had not received the notice by e-mail or post.

The petitioner thereafter sought condonation of delay under Section 119(2)(b) for filing a revised return and claiming a refund of ₹13,95,78,300.

The application was rejected by order dated 8 April 2024 on the ground that sufficient reasons for the delay had not been furnished.

The petitioner challenged the rejection as arbitrary, contrary to natural justice, and legally unsustainable, relying on decisions concerning the liberal interpretation of “genuine hardship” under Section 119(2)(b).

The Revenue contended that the petitioner had failed to cure the defect despite the notice uploaded on the portal and had approached the Court without clean hands.

1. Whether the rejection of the petitioner’s application for condonation of delay under Section 119(2)(b) of the Income-tax Act, 1961, for filing a revised return and claiming refund, was legally sustainable?

2. Whether the expression “genuine hardship” under Section 119(2)(b) should be applied liberally, rather than by adopting a rigid or formulaic approach, where the taxpayer claims a legitimate refund?

3. Whether the petitioner was entitled to upload the revised return and obtain interim protection against the Section 245 intimation pending processing of that return?

Section 119(2)(b) of the Income-tax Act, 1961 empowers the competent authority to admit an application or claim for exemption, deduction, refund, or other relief after the prescribed period where genuine hardship is established; the expression “genuine hardship” must be construed in a justice-oriented and liberal manner, and delay should not defeat a legitimate refund claim merely because the explanation is not accepted mechanically.

Section 139(9) concerns defective returns and permits the taxpayer to cure the identified defects, while Section 245 concerns adjustment of refunds against outstanding tax demands.

The Court relied upon Nileshmukar Uttamchand Rathod v. Office of the Principal Commissioner of Income Tax-1, Ahmedabad & Anr., 2024 (3) TMI 152; Ming Sheng Xuan Limited Company v. Principal Chief Commissioner of Income Tax (International Taxation) & Ors., 2021 (4) TMI 596; and K.S. Baliwala & Ors. v. Principal Commissioner of Income Tax-17, Mumbai & Ors., 2024 (1) TMI 950, particularly for the principles that genuine hardship admits of no straight-jacket formula and that refusal to condone delay may defeat a meritorious claim at the threshold.

The Court found that the petitioner had made out a prima facie case warranting interference with the order under Section 119(2)(b).

It considered the petitioner’s reliance on the authorities concerning genuine hardship and held that those principles could not be applied mechanically or as a straight-jacket formula, since doing so could frustrate the cause of justice.

Although the Revenue relied on the uploading of the Section 139(9) defect notice and the petitioner’s alleged failure to cure the defect, the Court concluded that the rejection of condonation required interference.

The Court therefore treated the petitioner’s request for an opportunity to file the revised return as deserving consideration and directed that the return be uploaded and processed in accordance with law.

The order dated 8 April 2024 rejecting the petitioner’s application under Section 119(2)(b) was quashed and set aside.

The intimation issued under Section 245 was directed to remain stayed until the revised return was processed in accordance with law.

The petitioner was directed to upload the revised return within two weeks of communication of the order, and the Revenue authorities were directed to keep the portal open within one week of receiving due communication of the order to enable such filing.

The writ petition, WPA 15731 of 2024, was accordingly disposed of.