Condonation of Delay under Section 119(2)(b) – CBDT Circular Cannot Override Substantive Right to Refund: HC

 

Santhana Krishnan (WP No. 21071 of 2025)

Facts:

1.  Petitioner is a Non-Resident Indian (resident of United States) who sold immovable property in FY 2022–23 and deducted & remitted tax, but failed to file return u/s 139.

2.  On 27.06.2024, the petitioner filed an application to the Principal Commissioner of Income Tax (International Taxation) under section 119(2)(b) seeking condonation of delay and permission to file the return.

3.  He explained that he was residing abroad, was not familiar with Indian procedural requirements, and that the delay was not wilful or deliberate.

4.  The Commissioner of Income Tax (International Taxation) rejected the condonation application. The rejection was primarily based on CBDT Circular No. 11/2024 dated 01.10.2024, which refers to the newly inserted section 139(9A) (Finance Act, 2024). The authority took the view that after 01.04.2024, power to condone delay was restricted and could not be exercised mechanically.

5.  The petitioner filed a writ petition under Article 226 of the Constitution of India before the Madras High Court.

Hon Madras HC held as below:

1.  The purpose of section 119(2)(b) is to ensure genuine hardship is mitigated, and the provision is intended to provide substantive justice, not to penalise a taxpayer for procedural delay.

2.  The technicalities should not defeat legitimate claims when the tax has been properly collected and deposited.

3.  CBDT Circular No. 11/2024 was intended to guide officers, not to curtail the discretion of the High Court in appropriate cases.

4.  Even if the circular imposed additional procedural conditions, it cannot override the statute or defeat a meritorious refund claim.

5.  The CBDT’s instructions cannot be applied mechanically to deny relief where the assessee’s case is genuine.

6.  The petitioner’s TDS had been properly deducted and remitted, and that the Revenue had received the tax. Since the tax liability was lower, the petitioner was entitled to the refund.

The copy of the order is as under:

WP No. 21071 of 2025