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Introduction
Every Rule is said to have an exception.
Similarly, the Income-tax Act, 1961, contains various provisions
which are mandatory in nature and some of them attain the garb
of mandatory nature after passing of certain time limits or
orders. However, on principles of natural justice, relief should
be available to the assessees on grounds of reasonableness,
genuine hardships and exigencies beyond the control of the
assessee.
Therefore, the Central Board of Direct Taxes
(CBDT) which is the highest administrative authority for direct
taxes, is empowered by the Act u/s. 119(2), to issue general or
special order, authorising any income-tax authority, (not being
the first appellate authority) to admit an application or claim
for any exemption, deduction, refund or any other relief under
the Income-tax Act after the expiry of the period specified by
or under the Act for making such application or claim and deal
with the same on merits in accordance with law.
This paper proposes to deal with the scope of
the section, various aspects of the powers given to CBDT,
relevant circulars, notifications and press releases (Annexures
A to D) and give specimen applications to be made by the
assessees.
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Scope
The Board may exercise this power if it
considers it desirable or expedient to do so for avoiding
genuine hardship in any case or class of cases. This power is
exercisable even in circumstances where no such power is granted
to the AO or any other officer.
The very object of conferring power on the
Board is to consider the exceptional cases where a departure
from the provisions of the Act with regard to the period with
which the relief is to be sought, can be regarded as justified.
A blanket refusal to exercise the power notwithstanding the
circumstances in which it is invoked, is not an order which is
contemplated by s. 119(2)(b). The circumstances are required to
be examined and only with regard to those circumstances relief
is to be either granted or refused. The primary consideration
for granting relief under s. 119(2)(b) is undue hardship.
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"Claim" may be made through a return
The "application" or "claim" contemplated by
the provisions need not be one made separately and the same may
be contained in the return of income submitted by the assessee.
Hence where the assessee who filed a belated return, sought
directions of the Board under s. 119(2)(b) to the AO to allow
the assessee’s claim for determination of losses, depreciation
and investment allowance for the purpose of carry-forward, the
Board was held to be not justified in rejecting the assessee’s
request on the ground that s. 119(2)(b) speaks of an
"application" or a "claim" but not a "return" filed beyond time.
It was held that a claim made by the assessee in its return for
carry forward of losses etc., was "a claim" falling under s.
119(2)(b) for "any other relief" and the same could not be
rejected merely on the ground that it was not made by a separate
application.
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Board should conform to the principles of
natural justice
Sec.119(2)(b) enables the Board to direct the
admission of an application or a claim filed after the period of
limitation for avoiding genuine hardship caused in any case or
class of cases. Thus the statute makes it incumbent on the Board
to consider the case of the assessee pleaded under s. 119(2)(b).
This power has to be exercised by the Board alone and not by any
other authority. The Board is required to exercise its
discretion by taking into consideration all the relevant facts
and circumstances. The order must be informed by reasons as the
said power is not to be exercised arbitrarily. The power has all
the traits of judicial power. Hence, the power exercisable by
the Board under s. 119(2)(b) is quasi-judicial in nature, but
not a mere administrative power. When an authority discharges
its quasi-judicial function, it should conform to the principles
of natural justice. Therefore, the Board is required to afford
an opportunity of hearing to the assessee whether by way of oral
hearing or by allowing the filing of written submissions.
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Delegation of Power by the Board
Though the Act empowers the Board, looking
at the large number of cases, and the requirement of examining
the issues on a case to case basis, the Board has delegated
some of the powers to the Lower authorities.
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Applications for dealing with
applications for condonation of delay in filing returns and
claiming refunds – vide Instruction N o 12 of 2003 dt 30th
October 2003 {(2003) 185 CTR (St) 83} the Board has
delegated the powers of acceptance/rejection upto Rs. 100000
to the Commissioners and upto Rs.500000 to the Chief
Commissioners. The Board has retained the powers in respect
of claims exceeding Rs.500000 only with itself.
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Waiver of interest under sections 234A,
234B and 234C : The powers have been delegated to the Chief
Commissioners of Income Tax vide Notification F No
400/234/95-IT(B), dt. 23rd May 1996 which was further
modified by Circular No 783 {(1999) 157 CTR (St) 107}
Thus the powers remaining with the Board
are:
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dealing with applications for condonotion
of delay in filing returns and claiming refunds EXCEEDING
RS.500000, and
- relaxing the requirement contained in any provisions of
Chapter IV or Chapter VIA, which have been caused due to the
circumstances beyond the control of the assessee.
SPECIMEN OF APPLICATION FOR CONDONATION OF
DELAY IN FILING OF
RETURN CLAIMING REFUNDS EXCEEDING RS.500000
X Y Z & co
_______________________________.
_______________________________
_______________________________
The Central Board of Direct Taxes,
New Delhi.
Dear Sir,
Sub.: Petition for condonotion of delay in
filing Return and Claim of Refund. A.Y. 1999-2000.
P.A.No. : _____________
Wd. 15
We are assessed to income-tax in Ward 15,
Mumbai as per the abovementioned PAN & GIR numbers. Our Case
falls within the jurisdiction of Chief Commissioner of Income
Tax, Mumbai III
We have been assessed to Tax as a partnership
firm upto the A Y 1998-99. During the previous year relevant to
A Y 1999-2000 there was a dispute amongst the partners and a
retirement deed and new partnership deed was drawn up. However,
the retiring partner was reluctant to sign the partnership deed
and as a result one of the continuing partners had a reservation
in signing the new deed. Further some of the TDS Certificates
and Advance Tax Challans required to be filed with the return of
Income were in the possession of the retiring partner. The
return of income could therefore not be filed as per the
provisions of the Act.
The entire dispute was a subject matter
Arbitration, before Justice ABC retired judge of the Mumbai High
Court. The arbitration award has been now given and the relevant
documents are available for filing the return.
The total refund due to the firm is Rs.
550000. We understand that as the prescribed time limits have
long been passed, the jurisdiction for admitting the return and
the claim of refund, now rests only with the Board, Hence this
application.
It may further be appreciated that we were
prevented from filing the return and claiming the refund within
the prescribed time limit, due to reasonable cause and the non
acceptance will cause genuine hardship to the firm.
Anticipating a fovourable response.
Yours truly,
For X Y Z & Co
Partner.
SPECIMEN OF PETITION RELAXING THE REQUIREMENT
CONTAINED IN ANY PROVISIONS OF CHAPTER IV
The Central Board of Direct Taxes,
New Delhi.
Dear Sir,
Re: Petition for relaxing the requirement
contained in Chapter IV of the Income Tax Act 1961 – A Y 2003-04
We are assessed to income-tax in Ward 1,
Mumbai as per the abovementioned PAN & GIR numbers. Our Case
falls within the jurisdiction of Chief Commissioner of Income
Tax, Mumbai III
We have made a donation in the previous year
relevant to A Y 2003-04 to ABC Trust, of Rs 1000000. The said
trust had applied to the Finance Ministry for approval u/s 35AC.
The approval of the relevant authority has been received by the
said Trust only on 31st December 2004, w e f 1-4-2003. We had
however not claimed the deduction u/s 35AC since the approval
had not been received.
Our Assessment for the year under
consideration is in progress and the necessary certificate is
now in our possessuion. We understand that the power for
allowing the deduction now rests with the Board and hence this
petition.
Your honour will appreciate that we were
prevented from making the claim under Chapter IV for reasons
beyond our control and hence this situation.
We request your honour to consider the case
on merits and pass the necessary orders to the Assessing
Officer, for allowing our claim u/s 35AC for A Y 2003-04.
Thanking You,
Yours truly,
For X Y Z & Co.
