“(i) If delay is not condoned by the Board u/s. 119(2)(b),
such application cannot be processed u/s.139(1) or u/s.139(4). Therefore, in
order to consider belated return for refund on merits, delay has to be
necessarily condoned by the Board u/s.119(2)(b).
(ii) In S. 119(2)(b), it is stated that if the Board
considers it desirable or expedient for avoiding genuine hardship to the
assessee, it should condone the delay. In other words, what the Board should
consider is hardship to the party if delay is not condoned. The Board should
condone the delay if failure to condone the delay causes genuine hardship to
the assessee, no matter whether the delay in filing return is meticulously
explained or not.
(iii) Strangely, the Board had stated in its order that it
was not possible to investigate (scrutinise) the return of income because the
statutory time limit had already elapsed. It is not clear on what basis that
statement was made, because even in a case where a claim of refund is made,
the Assessing Officer has to examine the liability for Income-tax of the
assessee and refund is made only if tax is not payable or the amount paid is
in excess of the tax, interest, etc., payable.
(iv) The delay in audit by the auditor was not attributable
to the assessee. Besides showing sufficient cause for delay in filing the
return for refund, the assessee had also established its case of genuine
hardship inasmuch as it had suffered losses in the five succeeding years. The
genuine hardship contemplated u/s. 119(2)(b) obviously is financial hardship
caused to the assessee if delay is not condoned. If delay in the instant case
was not condoned, the assessee would be deprived of Rs.10 lakhs and odd, which
it was otherwise not liable to pay by virtue of the exemption u/s.80P.
(v) In the circumstances, impugned order was quashed
declaring the assessee’s entitlement for condonation of delay u/s.119(2)(b)
and, the Assessing Officer was directed to process assessee’s claim for refund
u/s.237 and grant refund to the extent eligible.”
