The Madras High Court has set aside an order rejecting the condonation of delay application of a 91-year-old Non-Resident Indian (NRI), directing the Income Tax Department to accept and process his belated income tax return for the Assessment Year 2020-21 and consider his refund claim.
The bench of Justice Senthilkumar Ramamoorthy has observed that unless the delayed return was accepted, the petitioner would have no opportunity to pursue his refund claim of approximately ₹45.33 lakh. The Court attached significance to the petitioner’s age of 91 years and the fact that he was residing in the United States.
The petitioner, aged approximately 91 years, is presently residing in Texas, United States. Before relocating abroad, he had regularly filed his income tax returns up to the Assessment Year 2017-18. According to the petition, he did not file returns thereafter as he had no taxable income.
During the financial year 2019-20, however, he sold a residential flat for ₹4.5 crore. At the time of the transaction, the purchaser deducted tax at source (TDS) amounting to ₹1,07,64,000, approximately 23.92% of the sale consideration. The petitioner later realized that the TDS deducted substantially exceeded his actual capital gains tax liability, leaving him eligible for a refund of approximately ₹45.33 lakh.
Since the statutory time limit for filing the return had expired, he approached the Income Tax Department seeking condonation of delay under Section 119(2)(b) of the Income Tax Act so that his return could be accepted and the refund processed. The Department rejected the application through an order dated August 30, 2024, prompting the writ petition before the High Court.
The petitioner argued that denial of condonation resulted in genuine hardship because the petitioner would permanently lose a substantial refund despite having paid tax in excess of his actual liability. Considering his advanced age and overseas residence, it was submitted that the delay deserved to be condoned.
The department contended that the petitioner ought to have filed his income tax return after selling property worth ₹4.5 crore during the relevant assessment year. According to the Department, failure to do so disentitled him from claiming that genuine hardship existed.
The Court noted that both parties agreed that the Income Tax Department had not initiated any proceedings against the petitioner. It further observed that the Department itself had not alleged that any further tax remained payable by the petitioner on account of capital gains or otherwise.
Holding that these circumstances clearly established “genuine hardship,” the Court concluded that the rejection order could not be sustained.
Allowing the writ petition, the High Court set aside the impugned order rejecting the condonation application; condoned the delay in filing the income tax return for Assessment Year 2020-21; and directed the Income Tax Department to receive and process the petitioner’s return of income in accordance with law, thereby enabling consideration of his refund claim.
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
