Loss return : Delay in filing : Condonation of delay : CBDT : S. 119 : Assessee a multi-state co-operative bank : Loss return filed belatedly : Delay on account of delay in appointing statutory auditor by Central Registrar and subsequent delay in completi

[Bombay Mercantile
Co-operative Bank v. CBDT, 195 Taxman 106 (Bom.)]

The assessee was a
multi-state co-operative bank. For the A.Y. 2001-02, it filed loss return after
the statutory audit was completed on 15-11-2001 and the audit u/s.44AB of the
Income-tax Act, 1961 was completed on 28-11-2001. In view of the delay in filing
the return, the assessee had filed an application u/s.119(2)(b) for condonation
of the delay in filing the return. The reason for delay was that the statutory
auditors were appointed by the Commissioner of Corporation and the Registrar of
Co-operative Societies on 3-9-2001 and the said statutory auditors were able to
complete the audit only on 15-11-2001 and the audit u/s.44AB was completed on
28-11-2001; and that the return of income was filed on the very next day. The
CBDT rejected the said application for condonation of delay on the ground that
the assessee-bank had been operating for the several years and was, therefore,
aware of its statutory obligation u/s. 44AB, so as to get its accounts audited
within specified time to file the return of income within due date.

The Bombay High Court
allowed the writ petition filed by the assessee and held as under :

“(i) The assessee was a
multi-state co-operative bank operating under the Multi-State Co-operative
Societies Act, 1984. The power to appoint the statutory auditors was that of
the Central Registrar, who was the Registrar of the Co-operative Societies,
Maharashtra State. The said authority had appointed the statutory auditors on
3-9-2001. It appeared that the said authority appointed chartered accountants
to be statutory auditors in place of the departmental auditors. That change
was made in respect of all the societies. Therefore, the assessee could not be
blamed for the delay in carrying out its audit, as the same was beyond its
control.

(ii) The contention of the
Revenue that the departmental auditors, in fact, had started the audit in the
year 2000 and it was for the assessee to get the audit expedited, could not be
accepted. Though the departmental auditors might have started the audit, it
appeared that pursuant to the said policy decision taken, the departmental
auditors were replaced by the chartered accountants to be the statutory
auditors, which was by letter dated 3-9-2001. Therefore, the said reason
mentioned by the assessee in its application deserved to be accepted.

(iii) The other reasons
cited for condonation of delay, therefore, did not need be gone into as the
assessee would be entitled to condonation of the delay on the said ground
alone.

(iv) It is well settled
that in matters of condonation of delay, a highly pedantic approach should be
eschewed and a justice-oriented approach should be adopted. A party should not
be made to suffer on account of technicalities.

(v) In that view of the
matter, the petition was required to be allowed. The impugned order was
required to be set aside and, resultantly, the delay in filing the return
would stand condoned and the assessee would be entitled to the carry forward
and set off of losses in accordance with law.”