HARSHA DEVANI,J. - (1.) This petition under article 226 of the Constitution of India is directed against the order dated May 30, 2018 passed by the Central Board of Direct Taxes (CBDT) under section 119(2)(b) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), whereby the application moved by the petitioner for condonation of delay in filing the return of income for the assessment year 2009-10 has been rejected.
(2.) The facts stated briefly are that the petitioner is a co-operative bank engaged in the business of banking. In financial year 2008-09, relevant to assessment year 2009-10, the petitioner incurred loss of Rs. 8,56,52,868. The petitioner originally filed return of income for assessment year 2009-10 on September 30, 2009 declaring total income at Rs. nil. It is the case of the petitioner that its income-tax matters were handled by M/s. U.A. Maheshwari and Co., chartered accountants, However, the income-tax matters for the assessment year 2012-13 were handed over to M/s. R.K. Doshi and Co., chartered accountants. During the course of assessment proceedings for the assessment year 2012-13, the then Assessing Officer called for the details of brought forward losses. Therefore, M/s. R.K. Doshi and Co., authorised representative of the petitioner, called for old records from the petitioner so as to ascertain and also substantiate the amount of brought forward losses available for set off. While undertaking this exercise, it was realised that though there was a book loss of Rs. 8,56,85,868 for the assessment year 2009-10, the return of income for the said assessment year was filed declaring income at Rs. nil in the income-tax return-7 without claiming carry forward losses of Rs. 7,91,66,338. Since the return of income was processed under section 143(1) of the Act, the above error went unnoticed. Upon being properly advised, the petitioner filed correct return of income in the income-tax return-5 for assessment year 2009-10 under section 139(9) of the Act on March 24, 2015 declaring income at Rs. (-) 7,91,66,338, that is, loss. Since the return of income for the assessment year 2009-10 filed on March 24, 2015 was a belated return, the petitioner filed an application dated March 9, 2015 before the Central Board of Direct Taxes for condonation of delay in filing the return of income for the assessment year 2009-10 in exercise of powers under section 119(2)(b) of the Act. By the impugned order dated May 30, 2018, the Central Board of Direct Taxes has rejected the application made by the petitioner, which has given rise to the present petition.
(3.) Mr. Tushar Hemani, learned advocate for the petitioner invited the attention of the court to the provisions of section 119(2)(b) of the Act, to submit that there is a distinction between clause (b) and clause (c) of sub-section (2) of section 119 of the Act, inasmuch as, clause (b) contemplates only hardship but does not contemplate circumstances beyond the control of the assessee. Reference was made to Circular No. 9 of 2015 :- ([2015] 374 ITR (St.) 25) issued by the Central Board of Direct Taxes, to submit that the same contemplates only one condition that is, genuine hardship and there is no condition of circumstances beyond his control. Referring to the impugned order, it was submitted that the Central Board of Direct Taxes has rejected the application only on the ground that the petitioner has not been able to make out a case of genuine hardship and has not brought on record the circumstances beyond its control. In so far as the aspect of genuine hardship is concerned, the learned advocate placed reliance upon the decision of the Supreme Court in the case of B.M. Malani v. CIT [2008] 306 ITR 196 (SC), wherein the court held that the ingredients of genuine hardship must be determined keeping in view the dictionary meaning thereof and the legal conspectus attending thereto. The court held that compulsion to pay any unjust dues per se would cause hardship. 3.1. The decision of the Bombay High Court in the case of Artist Tree P. Ltd. v. Central Board of Direct Taxes[2014] 369 ITR 691 (Bom), was cited for a similar proposition of law. 3.2. Reliance was also placed upon the decision of the Bombay High Court in the case of Sitaldas K. Motwani v. DGIT [2010] 323 ITR 223 (Bom), wherein the court has held that the phrase "genuine hardship" used in section 119(2)(b) should have been construed liberally even when the petitioner has complied with all the conditions mentioned in Circular dated October 12, 1993. The Legislature has conferred the power to condone the delay to enable the authorities to do substantive justice to the parties by disposing of the matters on the merits. 3.3. Mr. Hemani submitted that unless the petitioner is permitted to carry forward the losses incurred by it in the assessment year under consideration, it would lose such amount for all times to come and that such loss cannot be denied on account of technicalities. Therefore, this is a case where the petitioner would suffer from genuine hardship and therefore, the Central Board of Direct Taxes was not correct in not exercising discretion under section 119(2)(b) reasonably and judiciously and rejecting the application made by the petitioner. ;