The Gujarat High Court has granted condonation of a 29-day delay by a co-operative housing society in filing its income-tax return, recognizing that the delay arose from genuine hardship. The society had failed to submit its audited accounts in time because its auditor had not been appointed until late, which prevented the society from completing the statutory audit necessary for filing the return. This delay was not due to negligence or indifference; rather, the court accepted that it resulted from circumstances beyond the society’s control, namely the late appointment of the sub-auditor.
In its judgment, the High Court emphasized that the concept of “genuine hardship” under the relevant tax provisions must be applied liberally. The court noted that the power to condone delay is intended to permit substantive justice, allowing claims to be decided on their merits rather than being dismissed on purely technical grounds. The court criticized a rigid application of procedural timelines, stressing that when a taxpayer faces real difficulty in meeting a deadline due to factors outside their control, the income-tax authority should use its discretion to forgive a modest delay.
The court found that the society’s explanation for the late audit report was credible: the auditor’s appointment was delayed through no fault of its own, and the society had acted promptly once the situation became clear. There was no evidence of mala fide conduct or a deliberate attempt to gain an unfair advantage. Accordingly, the court viewed the hardship as genuine and held that insisting strictly on the original due date would unfairly prejudice the society.
By setting aside the refusal of the tax authorities to condone the delay, the High Court allowed the society to proceed with filing its return for the assessment year in question. This action restores the society’s ability to regularize its tax affairs and claim any deductions or refunds it was eligible for.
In reaching its conclusion, the court reaffirmed a well-established judicial principle: when procedural deadlines clash with substantive rights, justice demands that discretion be exercised in favor of the latter, where the applicant shows a good and honest reason for delay. The High Court made it clear that tax authorities should not adopt a narrow or overly technical approach in rejecting condonation applications if a taxpayer demonstrates “genuine hardship.” Rather, authorities should interpret provisions in a justice-oriented manner, enabling deserving taxpayers to secure their rights even where compliance has been impeded by circumstances outside their control.
Thus, in this case, the High Court balanced the requirement of adhering to procedural timelines with the equitable need to allow relief where there is real, non-negligent delay, reinforcing the principle that discretion in tax matters should be exercised generously when genuine hardship is established.
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