By TIOL News Service

NEW DELHI, MAY 02, 2017: THE ISSUE BEFORE THE COURT IS - Whether a direction to admit the revised return through the process of condonation, can be equated with a direction to accept the contents of the revised return, within the scope of CBDT's power u/s 119(1) of the I-T Act. NO is the verdict.

Facts of the case:

The assessee, an individual had disclosed certain amounts claiming them to be agricultural income and other income. This led to an ex parte assessment resulting in additions. The petitioner had then approached this Court by filing a Writ Petition claiming that on account of the bipolar disorder and mental condition of the petitioner, the returns had not been filed properly disclosing the relevant particulars. The Court realised the CBDT's power under Section 119 (2) (b) of the Act, relegated the matter to the AO to consider the matter afresh. Subsequently, petitioner approached the CBDT seeking condonation of delay in the filing of the revised return which according to her would have clarified the irregularities pointed out in the ex parte assessment that resulted in the additions. The application preferred pursuant to the Court's order, u/s 119(1)(a) of the Income Tax Act (Act) for condoning the delay in filing a revised return, was turned down not on the merits but on the interpretation of proviso to Section 119(1) (a) i.e. that the relief sought would amount to interference with the powers and jurisdiction of a quasi-judicial authority.

On appeal, the HC held that,

++ it is seen that the assessee's request was limited, and uncontroversial and that the CBDT was merely asked to condone the delay in the filing of the revised return having regard to her mental health. The CBDT, misunderstood the scope of the proviso (a) to Section 119(1) of the Act when it said that granting the relief would amount to directing the AO to a particular course of action. The discretion, if exercised, would merely result in enabling the assessee to file a revised return, no more, no less. As to the merits of the returns, the AO would have the sole authority to rule on the claims made by the assessee. In denying the power to admit the revised return through the process of condonation, a direction to act on and accept the contents of the revised return, the CBDT, in our opinion, fell into error of law.

(See 2017-TIOL-820-HC-DEL-IT)