Madras High Court directs CBDT to allow carry forward losses for return filed after due date midnight due to heavy rush, snag at e-filing website

In a recent judgment, the Madras High Court has directed CBDT to accept the e-return filed by the appellant company after midnight due to heavy rush and snag at the income tax e-filing website, as within due date and give benefit of carry forward of loss under Section 139(3).

Case law Details:
W.P. No. 5137 o f 2015 and MP. No. 1 of 2015
M/s.Regen Infrastructure & Services Pvt. Ltd. vs. CBDT, CIT and Income Tax Officer
Coram: Justice M. Duraiswamy
Date of Judgment: 14/03/2016

Prayer made to the High Court:
Petition was filed under Article 226 of The Constitution of India praying to issue a writ of Certiorarified Mandamus, calling for the records of the first respondent in F.No.312/19/2014-OT dated 05.05.2014 and to quash the same and consequently, direct CBDT to accept the return of income filed by the petitioner Company for the assessment year 2010-11 under Section 139(1) of the Act after affording a reasonable opportunity and personal hearing.

Brief Facts of the Case:
The petitioner assessee was a company incorporated under the provisions of the Companies Act and engaged in the business of execution and commissioning of Wind Turbine Generators. As per Section 139 of the Income Tax Act, 1961, the due date for filing of returns was 30th September 2010. However, CBDT had extended the last date for filing of income tax returns from 30.09.2010 to 15.10.2010 on account of disturbance caused by floods.

The company uploaded its return on income by midnight of the extended due date. However, the date of ITR filing was reckoned by the Income Tax Department as 16.10.2010 and the assessment was completed u/s 143(3) not treating the return filed as belated.  However CIT using his revisonary powers u/s 263 issued a notice stating that the carry forward losses allowed to the Petitioner Company was erroneous and prejudicial to the interest of revenue as the it has filed return beyond the last date of filing i.e., 15.10.2010.

Thereafter, the petitioner company filed an application dated 12.11.2013, before CBDT requesting them to consider the hardships faced by them in filing the original return on 15.10.2010 which was wrongly reckoned as filed on 16.10.2010 and therefore, to condone the delay of 2 hours in filing their returns and thereby, treat the return filed by them as return under Section 139(1) of the Act to enable the Petitioner Company to claim the carry forward loss under Section 139(3) of the Act. However, CBDT rejected the prayer made by the petitioner stating that there was no justifiable reason to condone the delay in filing the return.

Contentions of the Company:

The petitioner company contended that for the assessment year 2010-11 they were awaiting certain details of Tax Deducted at Source (TDS) by their bankers and customers etc., and hence, decided to file their returns on 15.10.2010 i.e., on the last date as extended for filing of its return. However, they had tried to upload their returns on the e-filing website of the Income Tax Department since 7.00 P.M. However, due to the last hour rush and due to technical snags in the website of the Income Tax Department, the said return could not be uploaded on 15.10.2010 but only in the midnight of 15.10.2010 and hence, the date of filing had been reckoned by the Income Tax Department as 16.10.2010.

The petitioner submitted that in similar circumstances, the High Court of Bombay and High Court of Delhi had condoned the delay and held that the assessee was entitled to carry forward loss under Section 139(3) of the Act.

The assessee relied on the judgments in the following cases:
Cosme Matias Menezes (P) Ltd., V. Commissioner of Income Tax, Goa 2015 (379) ITR 31 (Bombay)
Artist Tree (P) Ltd., V. Central Board of Direct Taxes 2014 (3690 ITR 691 (Bombay),
Lodhi Property Company Ltd., Vs. Under Secretary, Department of Revenue 2010 (323) ITR 441

Excerpts from the High Court Judgment:

the petitioner has satisfactorily explained the delay in filing the return on 16.10.2010 instead of 15.10.2010. Further, it is not the case of the respondents that the petitioner is not entitled to claim the carry forward loss under Section 139(3) of the Act. When the petitioner is entitled to claim the carry forward loss under Section 139(3) of the Income Tax Act, it cannot be stated that the delay in filing the return had occurred deliberately or on account of culpable negligence or on account of mala-fides. Further, the petitioner do not stand to benefit by resorting to delay as held by the High Court of Bombay. In fact, they runs a serious risk. Moreover, when the petitioner had satisfactorily explained the delay in filing the said return, the approach of the first respondent should be justice oriented so as to advance the cause of justice. In this case, when the petitioner as a litigant is entitled to claim carry forward loss, mere delay should not defeat the claim of the petitioner. The judgments relied on by the learned counsel for the petitioner squarely applies to the facts and circumstances of the present case. In these circumstances, I am of the view that the first respondent should have condoned the delay of one day in filing the return by the petitioner.

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