Law:

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Section 237, read with section 119, of the Income-tax Act, 1961 - Refunds - General - Assessment year 1997-98 - Whether in order to consider belated return for refund on merits, delay has to be necessarily condoned by Board under section 119(2)(b) - Held, yes - Whether Board should condone delay if failure to condone delay causes genuine hardship to assessee, no matter whether delay in filing return is meticulously explained or not - Held, yes FACTS The assessee, a co-operative society was engaged in marketing agricultural produce of its members. Even, though the assessee was entitled to exemption under section 80P, it remitted an advance tax of Rs. 10 lakhs during the accounting year relevant to assessment year 1997-98. Owing to delay in audit, the assessee filed belatedly its return claiming refund of advance tax and TDS remitted by the others. The Assessing Officer rejected the return as time-barred and, consequently, declined refund. The assessee's application under section 119(2)(b) for condonation of delay in filing the refund claim was also rejected by the Board. On writ : HELD If delay is not condoned by the Board under section 119(2)(b), such application cannot be processed under section 139 (1) or 139(4). Therefore, in order to consider belated return for refund on merits, delay has to be necessarily condoned by the Board under section 119(2)(b).[Para 2] In section 119(2)(b ), it is stated that if the Board considers it desirable or expedient for avoiding genuine hardship to the assessee, it should condone the delay. In other words, what the Board should consider is hardship to the party if delay is not condoned. The Board should condone the delay if failure to condone the delay causes genuine hardship to the assessee, no matter whether the delay in filing return is meticulously explained or not. Strangely, the Board had stated in its order that it was not possible to investigate (scrutinize) the return of income because the statutory time-limit had already elapsed. It was not clear on what basis that statement was made because even in a case where claim of refund is made, the Assessing Officer has to examine the liability for income-tax of the…

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