Optra Health Private Limited v. Additional Commissioner Of Income Tax (Hq), Pune & Ors

1/10 428-aswp-15544-2023.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAYCIVIL APPELLATE JURISDICTION WRIT PETITION NO. 15544 OF 2023 Optra Health Private LimitedVersusAdditional Commissioner of Income Tax (HQ), Pune & Ors. …Petitioner …Respondents Mr. Sham Walve i/b Mr. Abhishek Khandelwal for Petitioner.Mr. Suresh Kumar for Respondents-Revenue. CORAM:K. R. SHRIRAM &DR. NEELA GOKHALE, JJ.DATED:19[th] December 2023 PC:- 1.Petitioner filed return of income for Assessment Year (“AY”)2017-2018 on 25[th] November 2017 in the name of OptraTechnologies Private Limited. By that date, the name of Petitionerhad already been changed with the approval and sanction of theMinistry of Corporate Affairs vide communication dated 31[st] January2017. The PAN number reflected in the income-tax return filed byassessee for the relevant AY was correctly mentioned. On account ofa mismatch between the PAN number reflected in the income-taxreturn and the name of the company, a communication dated 29[th]May 2018 came to be issued by the Deputy Commissioner of IncomeTax (“DCIT”), Centralised Processing Centre (“CPC”), Bangaloreasking Petitioner to rectify the defects within a period of fifteen daysfrom the date of receipt of such a communication. As Petitioner didnot do the needful within the prescribed time, the income-tax return filed by Petitioner (assessee) was declared to be invalid. 2.In order to overcome this difficulty, an application underSection 119 of the Income Tax Act, 1961 (“the Act”) was filed byPetitioner before the Principal Commissioner of Income Tax (“PCIT”)-2, Pune, which came to be rejected by an order dated 9[th] September2021 passed by the Principal Chief Commissioner of Income Tax(“PCCIT”), Pune. 3.Against the order, Petitioner filed a Writ Petition being WritPetition No. 88661 of 2022 impugning the order passed by the PCCITand one of the primary grounds raised was Petitioner’s applicationcame to be rejected without even giving a personal hearing. ThisCourt was pleased to dispose the petition vide its order dated 3[rd]October 2022 by quashing and setting aside the order dated 9[th]September 2021 and remanding the matter forde-novoconsideration. 4.The matter was considered de-novo by the PCCIT, who againrejected Petitioner’s application for condonation of delay underSection 119(2)(b) of the Act. The reason for rejection is contained inparagraph 6 of the impugned order, which reads as under : “6.Contention of the AR was duly considered.Communication by email is an established and legally acceptedand sufficient mode of communication. A company beingartificial judicial person, is always represented by an individualto discharge its legal and other obligations. The argument thatthe company's CFO was irregular in his duties and hence the 3/10 428-aswp-15544-2023.doc company could not discharge its legal obligation, is not anacceptable view. If such an argument is permitted, thecompanies can get away from very serious obligations too.Based on facts of the case, it is observed that the applicant hasfailed to prove any genuine hardship, which was beyond it'scontrol, with necessary evidence.” 5.Mr. Suresh Kumar wanted time to file an affidavit-in-reply. Inour view, no purpose will be served by filing a reply because theimpugned order speaks for itself. Moreover, the petition was servedin early November 2023 and the department had almost six weeks tofile a reply if they really wanted to oppose the petition. 6.We are not happy with the reason given in the impugned orderrejecting Petitioner’s application for condonation of delay. company could not discharge its legal obligation, is not anacceptable view. If such an argument is permitted, thecompanies can get away from very serious obligations too.Based on facts of the case, it is observed that the applicant hasfailed to prove any genuine hardship, which was beyond it'scontrol, with necessary evidence.” 5.Mr. Suresh Kumar wanted time to file an affidavit-in-reply. Inour view, no purpose will be served by filing a reply because theimpugned order speaks for itself. Moreover, the petition was servedin early November 2023 and the department had almost six weeks tofile a reply if they really wanted to oppose the petition. 6.We are not happy with the reason given in the impugned orderrejecting Petitioner’s application for condonation of delay. 7.Petitioner’s explanation for not meeting with the timeprescribed for correcting the mismatch is that, the first notice ofinvalid return under Section 139(9) of the Act was sent on registeredemail-ID of one Mr. Prasad Sathe on 30[th] May 2018 and the finalnotice of invalid return dated 19[th] June 2018 under Section 139(9) ofthe Act was also sent on the email-ID of Mr. Prasad Sathe. Mr. PrasadSathe was the Chief Operating Officer leading Petitioner’s Pune officeoperation and was heading Human Resources, Finance, InformationTechnologies and Operation teams. He was also responsible forstatutory compliance of the company. All responsibilities ofcomplying with statutory provisions were entrusted to Mr. PrasadSathe. Mr. Prasad Sathe did not deliver despite the responsibility given to him. Mr. Prasad Sathe left the organization with effect from7[th] March 2019. Prior to leaving the office, he was irregular inattending work due to his personal issues. As the notices issuedunder Section 139(9) of the Act were sent on Mr. Prasad Sathe’sofficial ID, none of the other members of the company had any accessto the same. Admittedly, no physical copy of notice was sent tocompany’s registered address. All this came to light when the newteam including one Mr. Kapil Bhakre (Director) and Mr. Dinesh Pande(Director-Finance), found out the error during the finalization ofaccounts for AY 2018-2019 and immediately took remedial action bysubmitting an application dated 5[th] November 2019 to the office ofthe DCIT, Circle-3, Pune. Petitioner immediately provided detailsabout the invalid return and requested him to activate the action onthe Income Tax Portal so as to enable Petitioner to rectify the returnof income for AY 2017-2018. It is stated that Petitioner would alsoget a refund of Rs. 13,09,230/- and only wanted to rectify the invalidreturn and comply with the Rules as per the Act. It is stated thatPetitioner had filed the return for AY 2017-2018 on 25[th] November2017 within the deadline prescribed under the Act. The Audit Reportunder Section 44AB of the Act was also filed on 25[th] November 2017.So also, Form 3CEB reporting international transactions was filed. Inshort, Petitioner has acted as a prudent assessee and carried out allcompliances on time. Petitioner declared income of Rs. 73,77,136/- for AY 2017-2018 and determined tax payable of Rs. 11,57,086/-.Petitioner had even deposited Rs. 24 lakhs as advance tax duringFinancial Year 2016-2017 pertaining to AY 2017-2018. Therefore,Petitioner has always acted as a prudent assessee with the only errorbeing Petitioner did not use the changed name in the income-taxreturns. 8.In view of this background, it is obvious that the error for themismatch was not caused due to any deliberate or culpablenegligence or any mala-fides on the part of Petitioner. for AY 2017-2018 and determined tax payable of Rs. 11,57,086/-.Petitioner had even deposited Rs. 24 lakhs as advance tax duringFinancial Year 2016-2017 pertaining to AY 2017-2018. Therefore,Petitioner has always acted as a prudent assessee with the only errorbeing Petitioner did not use the changed name in the income-taxreturns. 8.In view of this background, it is obvious that the error for themismatch was not caused due to any deliberate or culpablenegligence or any mala-fides on the part of Petitioner. 9.While considering the genuine hardship, the PCCIT was notexpected to consider a solitary ground as to whether the assessee wasprevented by any substantial cause from filing the corrections withina due time. Other factors also ought to have been taken into account.The phrase “genuine hardship” used in Section 119(2)(b) of the Actshould have been construed liberally. The Legislature has conferredthe power to condone the delay to enable the authorities to dosubstantial justice to the parties by disposing the matters on merits.The expression ‘genuine’ has received a liberal meaning in view of thelaw laid down by the Apex Court and while considering this aspect,the authorities are expected to bear in mind that ordinarily theapplicant, applying for condonation of delay, does not stand tobenefit by lodging erroneous returns. Refusing to condone the delaycan result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, whendelay is condoned, the highest that can happen is that a cause wouldbe decided on merits after hearing the parties. When substantialjustice and technical considerations are pitted against each other,cause of substantial justice deserves to be preferred, for the other sidecannot claim to have vested right in injustice being done because of anon-deliberate action. There is no presumption that a delay incorrecting an error or responding to a notice of invalid returnreceived under Section 139(9) of the Act is occasioned deliberately oron account of culpable negligence or on account of mala-fides. Alitigant does not stand to benefit by resorting to delay. In fact, heruns a serious risk. The approach of authority should be justice-oriented so as to advance cause of justice. If the case of an applicantis genuine, mere delay should not defeat the claim. We find supportfor this view in Sitaldas K. Motwani v. Director General of Income-tax(International Taxation), New Delhi[1], relied upon by Mr. Walve,where paragraph nos. 13 to 17 read as under : “13.Having heard both the parties, we must observe thatwhile considering the genuine hardship, Respondent No. 1 wasnot expected to consider a solitary ground so as to whether thepetitioner was prevented by any substantial cause from filingreturn within due time. Other factors detailed hereinbelowought to have been taken into account. 14.The Apex Court, in the case of B.M. Malani v. CIT[2008] 10 SCC 617, has explained the term "genuine" infollowing words: “16.The term ‘genuine’ as per the New CollinsConcise English Dictionary is defined as under : ‘Genuine’ means not fake or counterfeit, real, notpretending (not bogus or merely a ruse)’. 17. ****** 18.The ingredients of genuine hardship must bedetermined keeping in view the dictionary meaningthereof and the legal conspectus attending thereto. Forthe said purpose, another well-known principle,namely, a person cannot take advantage of his ownwrong, may also have to be borne in mind.....” (p. 624). The Gujarat High Court in the case of Gujarat Electric Co. Ltd.(supra) was pleased to hold as under: 14.The Apex Court, in the case of B.M. Malani v. CIT[2008] 10 SCC 617, has explained the term "genuine" infollowing words: “16.The term ‘genuine’ as per the New CollinsConcise English Dictionary is defined as under : ‘Genuine’ means not fake or counterfeit, real, notpretending (not bogus or merely a ruse)’. 17. ****** 18.The ingredients of genuine hardship must bedetermined keeping in view the dictionary meaningthereof and the legal conspectus attending thereto. Forthe said purpose, another well-known principle,namely, a person cannot take advantage of his ownwrong, may also have to be borne in mind.....” (p. 624). The Gujarat High Court in the case of Gujarat Electric Co. Ltd.(supra) was pleased to hold as under: “... The Board was not justified in rejecting the claimfor refund on the ground that a case of genuinehardship was not made out by the petitioner and delayin claiming the relief was not satisfactorily explained,more particularly when the returns could not be filed intime due to the ill health of the officer who was lookingafter the taxation matters of the petitioner....” (p. 737). The Madras High Court in the case of R. Seshammal (P.) Ltd.(supra), was pleased to observe as under: “This is hardly the manner in which the State isexpected to deal with the citizens, who in their anxietyto comply with all the requirements of the Act paymonies as advance tax to the State, even though themonies were not actually required to be paid by themand thereafter, seek refund of the monies so paid bymistake after the proceedings under the Act aredropped by the authorities concerned. The State is notentitled to plead the hypertechnical plea of limitation insuch a situation to avoid return of the amounts. Section119 of the Act vests ample power in the Board torender justice in such a situation. The Board has actedarbitrarily in rejecting the petitioner's request forrefund.” (p.187) 15.The phrase “genuine hardship” used in section 119(2)(b) should have been construed liberally even when thepetitioner has complied with all the conditions mentioned inCircular dated 12-10-1993. The Legislature has conferred thepower to condone delay to enable the authorities to dosubstantive justice to the parties by disposing of the matters onmerit. The expression “genuine” has received a liberal meaningin view of the law laid down by the Apex Court referred tohereinabove and while considering this aspect, the authoritiesare expected to bare in mind that ordinarily the applicant,applying for condonation of delay does not stand to benefit bylodging its claim late. Refusing to condone delay can result in ameritorious matter being thrown out at the very threshold andcause of justice being defeated. As against this, when delay is condoned the highest that can happen is that a cause would bedecided on merits after hearing the parties. When substantialjustice and technical considerations are pitted against eachother, cause of substantial justice deserves to be preferred forthe other side cannot claim to have vested right in injusticebeing done because of a non-deliberate delay. There is nopresumption that delay is occasioned deliberately, or onaccount of culpable negligence, or on account of mala fides. Alitigant does not stand to benefit by resorting to delay. In facthe runs a serious risk. The approach of the authorities shouldbe justice-oriented so as to advance cause of justice. If refund islegitimately due to the applicant, mere delay should not defeatthe claim for refund. condoned the highest that can happen is that a cause would bedecided on merits after hearing the parties. When substantialjustice and technical considerations are pitted against eachother, cause of substantial justice deserves to be preferred forthe other side cannot claim to have vested right in injusticebeing done because of a non-deliberate delay. There is nopresumption that delay is occasioned deliberately, or onaccount of culpable negligence, or on account of mala fides. Alitigant does not stand to benefit by resorting to delay. In facthe runs a serious risk. The approach of the authorities shouldbe justice-oriented so as to advance cause of justice. If refund islegitimately due to the applicant, mere delay should not defeatthe claim for refund. 16.Whether the refund claim is correct and genuine, theauthority must satisfy itself that the applicant has a prima faciecorrect and genuine claim, does not mean that the authorityshould examine the merits of the refund claim closely andcome to a conclusion that the applicant's claim is bound tosucceed. This would amount to prejudging the case on merits.All that the authority has to see is that on the face of it theperson applying for refund after condonation of delay has acase which needs consideration and which is not bound to failby virtue of some apparent defect. At this stage, the authority isnot expected to go deep into the niceties of law. Whiledetermining whether refund claim is correct and genuine, therelevant consideration is whether on the evidence led, it waspossible to arrive at the conclusion in question and not whetherthat was the only conclusion which could be arrived at on thatevidence. 17.Having said so, turning to the facts of the matter givingrise to the present petition, we are satisfied that respondentNo. 1 did not consider the prayer for condonation of delay inits proper perspective. As such, it needs consideration afresh.” 10.This was followed by this Court in Artist Tree (P.) Ltd. v. Central Board of Direct Taxes[2], relied upon by Mr. Walve, where paragraphnos. 19, 21 and 23 read as under : “19. The circumstance that the accounts were duly audited wayback on 14 September 1997, is not a circumstance that can beheld against the petitioner. This circumstance, on the contraryadds force to the explanation furnished by the petitioner that thedelay in filing of returns was only on account of misplacement orthe TDS Certificates, which the petitioner was advised, has to benecessarily filed alongwith the Return of Income in view of theprovisions contained in Section 139 of the said Act readalongwith Income Tax Rules, 1962 and in particular the report in the prescribed Forms of Return of Income then in vogue whichrequired an assessee to attach the TDS Certificates for the refundbeing claimed. The explanation furnished is that on account ofshifting of registered office, it is possible that TDS Certificateswhich may have been addressed to the earlier office, gotmisplaced. There is nothing counterfeit or bogus in theexplanation offered. It cannot be said that the petitioner hasobtained any undue advantage out of delay in filing of IncomeTax Returns. As observed in case of Sitaldas K. Motwani (supra),there is no presumption that delay is occasioned deliberately oron account of culpable negligence or on account of mala fides. Itcannot be said that in this case the petitioner has benefited byresorting to delay. In any case when substantial justice andtechnical consideration are pitted against each other, the cause ofsubstantial justice deserves to prevail without in any mannerdoing violence to the language of the Act. 21.We find that the impugned order dated 16 May 2006 of theCBDT also seeks to reject the application for condonation ofdelay on account of delay from the date of filing the Return ofIncome, i.e., 14 September 1999 upto 30 April 2002. This wasnot the ground mentioned in notice dated 7 February 2006 givento the petitioner by the CBDT for rejecting the application forcondonation of delay. Thus the petitioner had no occasion tomeet the same. It appears to be an afterthought. However, aspointed out in paragraph 20 hereinabove, the delay in filing ofan application if not coupled with some rights being created infavour of others, should not by itself lead to rejection of theapplication. This is ofcourse upon the Court being satisfied thatthere were good and sufficient reasons for the delay on the partof the applicant. 23.In light of the aforesaid discussion, we are of the opinionthat an acceptable explanation was offered by the petitioner anda case of genuine hardship was made out. The refusal by theCBDT to condone the delay was a result of adoption of an undulyrestrictive approach. The CBDT appears to have proceeded onthe basis that the delay was deliberate, when from explanationoffered by the petitioner, it is clear that the delay was neitherdeliberate, nor on account of culpable negligence or any malafides. Therefore, the impugned order dated 16 May 2006 madeby the CBDT refusing to condone the delay in filing the Return ofIncome for the Assessment Year 1997-98 is liable to be set aside.Consistent with the provisions of Section 119(2)(b) of the saidAct, the concerned I.T.O. or the Assessing Officer would have toconsider the Return of Income and deal with the same on meritsand in accordance with law.” 11.In the circumstances, having considered the averments in thepetition, we are satisfied that the delay in not responding to the notice is received under Section 139(9) of the Act, was neitherdeliberate nor on account of culpable negligence or any mala-fides.The issue is only of correcting the name of Petitioner in the returns sothat there is no mismatch between the PAN number and name of thecompany. 12.We, therefore, direct Respondents to permit Petitioner tocorrect its name in the returns for AY 2017-2018 from ‘OptraTechnologies Private Limited’ to ‘Optra Health Private Limited’.Therefore, we hereby quash and set aside the impugned order dated23[rd] December 2022. Within two weeks of this order being uploaded,the required portal will be opened for Petitioner to do the needful,under advice to Petitioner. 13.We hasten to add that we have not examined the contents ofthe returns filed by Petitioner or claims which have been made in thereturns. That will be subject of appropriate assessments/proceedingsunder the Act. 14.Petition disposed. No order as to costs. GITALAXMIKRISHNAKOTAWADEKARDigitally signed byGITALAXMI KRISHNAKOTAWADEKARDate: 2023.12.2215:35:24 +0545 (DR. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.)