The Karnataka High Court has condoned a delay in ITR filing due to ‘genuine hardship.’ The court highlighted that the Central Board of Direct Taxes (CBDT) has the authority to issue orders to other Income Tax Authorities in such cases.
Vasudev Adigas Fast Food, a company involved in hotel, restaurant, and catering services, experienced a change in majority shareholding during the 2012-13 financial year, leading to disputes between the former and new management.
In 2014, the promoters filed a petition before the Company Law Board (CLB) in Chennai, alleging oppression and mismanagement by the new management. During the proceedings, the CLB appointed an Administrator to oversee the company’s affairs, replacing its Board of Directors.
The Single Judge quashed the CBDT’s order and allowed the delayed filing of the income tax return for the 2014-15 assessment year. Despite the Income Tax department’s contention that the delay did not meet the criteria under Section 119(2)(b) of the Income Tax Act, the division bench of Justice Satish Kumar Sharma and Justice Natarajan Rangaswamy found that the CBDT had ignored recommendations from jurisdictional authorities to condone the delay.
The court upheld the Single Judge’s order, noting that the CBDT had sought but disregarded reports from the Principal Commissioner of Income Tax-II and the jurisdictional Additional Commissioner, both of whom recommended condoning the delay.
The Karnataka High Court’s ruling is a significant precedent in tax law, reinforcing that delays in filing Income Tax Returns (ITR) due to genuine hardships must be considered with empathy. By overturning the CBDT’s order, the court highlighted the importance of following recommendations from local tax authorities, especially when genuine hardship is evident.
Navigating complex tax regulations, especially when facing disputes or unforeseen hardships, can be challenging. Vakilsearch offers specialised support in managing tax disputes, ensuring that your business remains compliant even in difficult situations. Our experts guide you through the intricacies of tax law, helping you file ITR returns.
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