1. Shri A.P. Shrivastava, Counsel for the petitioner. Shri Sanjay Lal, Counsel for the respondents. This order shall decide W.P.6846/09 and W.P. 6847/09 arising out of a common order passed by the Central Board of Direct Taxes, Ministry of Finance, Department of Revenue dated 18.12.2008 deciding the matter of petitioner under Section 119 (2)(b) of the Income Tax Act,1961 for the assessment year 2000-01,2001-02 and 2002-03. So far as the assessment year 2001-02 is concerned, the contention of the petitioner in respect of condonation of delay in filing return was accepted so the petitioner is satisfied with this part of the order. So far as the assessment year 2000-01 and 2002-03 are concerned delay in filing the return was not condoned so these two petitions are filed assailing the aforesaid part of the order separately. W.P.6846/09 relates to assessment year 2000-01 and W.P.6847/09 relates to assessment year 2002-03. To consider the controversy involved in this case, we have taken W.P.6846/09 for consideration firstly because it relates to accounting year 1999-00 (assessment year 2000-01) which is a crucial one for the reasons which are stated hereinafter. The petitioner M.P. State Electricity Board, Rampur, Jabalpur, is an assessee, under the Income Tax Act,1961 [hereinafter referred as 'The Act']. For the accounting year 1999-00, the petitioner filed its return under Section 139(3) of the Act on 28.3.2002 while the last date of filing the return was on 30.11.2000. As per the provisions of the Act, the petitioner was under an obligation under Section 44AB of the Act to get its accounts audited and to file audit report alongwith the return. The contention of the petitioner before the CBDT was in two folds ; i) that the return could not be filed because of the reasons stated in the application Annexure P-2 dated 15.12.2001 before the CBDT; and (ii) oral submission before the CBDT was that because of the bifurcation of the petitioner Board as per the provisions contained in the M.P. Re-organisation Act,2000, the erstwhile State of Madhya Pradesh and the Board both were bifurcated and because of this reason, return could not be filed in time. The CBDT in its order considered the contention of the petitioner and repelled it. For ready reference the relevant part of the order reads as under :-
" Asst. Year:2000-01 The due date for filing the return was 30.11.2000 whereas the return was actually filed on 28.3.2002. Originally, the petition u/s119(2)(b) was moved on 15.12.2001 and the reasons for delay in filing were stated to be multiple accounting units and complicated Government regulations and procedures. The petitioner moved reminder letters vide communications dated 8.7.2004 and 3.9.2004 requesting for condonation of delay mainly on the ground that a new state of Chhatisgarh was carved out of Madhya Pradesh with effect from 1.11.2000 leading to the bifurcation of the Board and because of this reason, the return could not be filed in time. Report was obtained from the CCIT concerned and opportunities of being heard were allowed to the petitioner. The contents of these reports and written submissions sent form time to time have duly been taken into account. An opportunity of being heard was also allowed and submissions made by Shri G.N. Gupta, Advocate and Shri R.C. Jain, CA on behalf of the petitioner at the time of hearing on 26.11.2008 have also been taken into account. The main reasons stated for delay in filing the return are multiple accounting units and division of MPEB into two Boards, The accounting year of the assessee ended on 31.3.2000 and bifurcation of MPEB into two Boards took place with effect from 1.11.2000. This obviously could not have any impact on the accounts for the assessment year 2000-01. In fact, as per the petitioner's own admission, their accounts were got prepared and compiled on 31.10.2000. In view of these facts and circumstances, there appears to be no justifiable reason for delay in filing the return of income for assessment year 2000-01. Consequently, the petition u/s119(2)(b) stands rejected."
2. Learned counsel for the petitioner reiterated the contentions which were raised before the CBDT. He also placed reliance on three judgments in the matter which are 242 ITR 539 (Madras), 218 CTR 80 (Kerala) and [2010]323 ITR 441(Delhi) and submitted that the CBDT erred in not condoning the delay in filing the return. It was further submitted by Shri Shrivastava that to condone the delay the CBDT ought to have considered whether the petitioner would suffer genuine hardship or not if the delay is not condoned, but the order is silent in this regard and without considering this aspect, prayer for condonation of delay has been declined.
3. Shri Sanjay Lal, learned counsel appearing for the respondents submitted that the CBDT has considered all the aspects. As per Section 44 AB of the Act, which has been amended w.e.f. 1.7.2000, the petitioner ought to have submitted audit report alongwith the return before due date of filing of the return but the petitioner had not got the account audited in time and ultimately the accounts were audited belatedly, a report of audit was obtained on 4.3.2002 and the return was filed on 28.3.2002 in which there was inordinate delay of nearabout 16 months and the CBDT has rightly turned down the prayer. It was further submitted by Shri Lal that the question of bifurcation of petitioner Board was also considered by the CBDT in the impugned order and as all these aspects have been duly considered by the CBDT, there is no question of interference in the order passed by the CBDT rejecting the prayer of the petitioner for condonation of delay. To appreciate the rival contentions of the parties, it would be appropriate if some facts are stated.
4. The Parliament by Act No.28 of 2000 enacted the Madhya Pradesh Re-organisation Act,2000. This Act received the assent of President on the 25th August,2000 and Act was published in Gazette of India (Extraordinary) Part II Section 1 dated 25.8.2000. As per the provisions of the Act, the erstwhile State of Madhya Pradesh was to be bifurcated in two states namely State of Madhya Pradesh and State of Chhatisgarh. In respect of M.P. State Electricity Board, a specific provision was enacted by the Parliament under Section 58 of the Act which reads as under :-
"58. Provisions as to Madhya Pradesh State Electricity Board, State Road Transport Corporation and State Warehousing Corporation, etc.
(1) The following bodies corporate constituted for the existing State of Madhya Pradesh, namely: -
(a) The State Electricity Board constituted under the Electricity Supply Act, 1948 (54 of 1948); (b) The State Road Transport Corporation established under the Road Transport Corporations Act, 1950 (64 of 1950); and
(c) The State Warehousing Corporation established under the Warehousing Corporations Act, 1962 (58 of 1962), shall, on and from the appointed day, continue to function in those areas in respect of which they were functioning immediately before that day, subject to the provisions of this section and arrangements for the functioning of such body corporates as may be mutually agreed upon between the successor States failing which to such directions as may, from time to time, be issued by the Central Government
(2) Any directions issued by the Central Government under sub-section (1) in respect of the Board or the Corporation shall include a direction that the Act under which the Board or the Corporation was constituted shall, in its application to that Board or Corporation, have effect subject to such exceptions and modifications as the Central Government thinks fit. (3) The Board or the Corporation referred to in sub-section (1) shall cease to function as from, and shall be deemed to be dissolved on such date as the Central Government may, by order, appoint; and upon such dissolution, its assets, rights and liabilities shall be apportioned between the successor States of Madhya Pradesh and Chhattisgarh in such manner as may be agreed upon between them within one year of the dissolution of the Board or the Corporation, as the case may be, or if no agreement is reached , in such manner as the Central Government may, by order, determine: Provided that any liabilities of the said Board relating to the unpaid dues of the coal supplied to the Board by any public sector coal company shall be provisionally apportioned between the successor organisations constituted respectively in the successor States of the existing State of Madhya Pradesh or after the date appointed for the dissolution of the Board under this sub-section in such manner as may be agreed upon between the Governments of the successor States within one month of such dissolution or if no agreement is reached, in such manner as the Central Government may, by order, determine subject to reconciliation and finalisation of the liabilities which shall be completed within three months from the date of such dissolution by the mutual agreement between the successor States or failing such agreement by the direction of the Central Government: Provided further that an interest at the rate of two per cent higher than the Cash Credit interest shall be paid on outstanding unpaid dues of the coal supplied to the Board by the public sector coal company till the liquidation of such dues by the concerned successor organisations constituted in the successor States on or after the date appointed for the dissolution of the Board under this sub-section.
(4) Nothing in the preceding provisions of this section shall be construed as preventing the Government of the State of Madhya Pradesh or, as the case may be, the Government of the State of Chhattisgarh from constituting, at any time on or after the appointed day, a State Electricity Board or a State Road Transport Corporation or a State Warehousing Corporation for the State under the provisions of the Act relating to such Board or Corporation for the State under the provisions of the Act relating to such Board or Corporation;and if such a Board or Corporation is so constituted in either of the States before the dissolution of the Board or the Corporation referred to in sub-section (1),- (a) Provision may be made by order of the Central Government enabling the new Board or the new Corporation to take over from the existing Board or Corporation all or any of its undertakings, assets, rights and liabilities in that State, and
(b) Upon the dissolution of existing Board or Corporation, - (i) Any assets, rights and liabilities which would otherwise have passed to that State by or under the provisions of sub- section (3) shall pass to the new Board or the new Corporation instead of to that State;
(ii) Any employee who would otherwise have been transferred to or re-employed by that State under sub-section (3), read with clause (i) of sub-section (5), shall be transferred to or re- employed by the new Board or the new Corporation instead of to or by that State
(5) An agreement entered into between the successor States under sub-section (3) and an order made by the Central Government under that sub-section or under clause (a) of sub- section (4) may provide for the transfer or re-employment of any employee of the Board or the Corporation referred to in sub-section (1), -
(i) To or by the successor States, in the case of an agreement under sub-section (4) or an order made under that sub-section; (ii) To or by the new Board or the new Corporation constituted under sub-section (4), in the case of an order made under clause (a) of that sub-section, and, subject to the provisions of section 64, also for the terms and conditions of service applicable to such employees after such transfer or re- employment"
5. Sub Section 3 of Section 58 specifically provides that the Board shall cease to function as from, and shall be deemed to be dissolved on such date as the Central Government may, by order, appoint; and upon such dissolution, its assets, rights and liabilities shall be apportioned between the successor States of Madhya Pradesh and Chhattisgarh in such manner as may be agreed upon between them within one year of the dissolution of the Board or if no agreement is reached then in such a manner as the Central Government may by order determine. Meaning thereby that for the apportionment of assets and liabilities, a period of one year was provided by the parliament to the petitioner Board. In this case as per the return filed by the petitioner, there was a loss of Rs.1500 crores in the accounting year 1999-00. If the return filed by the petitioner is not accepted by the department then the loss occurred to the Board cannot be carry forwarded and it would cause hardship to the Board in successive assessments.
6. From the perusal of the aforesaid order it is apparent that the CBDT has not considered this aspect of the matter which was having material bearing in the matter and ought to have been considered by the CBDT while considering the question of condonation of delay in filing the return. Though there is delay of nearabout 16 months in filing return by the petitioner before the department but in the peculiar facts of the case, the delay ought to have been dealt with by the CBDT in proper perspective but it appears that this aspect has escaped from the notice of the CBDT. Apart from this, it also appears that in the application filed by the petitioner seeking condonation of delay, no material particulars were furnished before the CBDT seeking condonation of delay, though aforesaid contentions were raised at the time of hearing before the CBDT which were considered by the CBDT at the time of passing of the order. Section 119(2)(b) of the Act reads thus :-
Section 119.. (2) Without prejudice to the generality of the foregoing power- (b) The Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise any income- tax authority, not being a Commissioner(Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law. The aforesaid provision empowers the CBDT to consider if it is desirable or expedient so to do for avoiding genuine hardship to an assessee to admit an application for condonation of delay. But in the present case this question was not considered by the CBDT while considering the question of condonation of delay. The order is silent in this regard. As per the return, a loss nearabout 1500 crores was stated to have been suffered by the Board and it is not a meager amount which can be ignored while considering the matter on merits. As the aforesaid facts were not duly brought into the notice of the CBDT by filing due application or an affidavit, though these facts were pressed at the time of hearing before the CBDT, we find it appropriate to allow an opportunity to the petitioner to file a supplementary application supported by an affidavit before the CBDT raising additional grounds for seeking condonation of delay in filing return and accordingly we direct so.
7. So far as the assessment year 2002-03 is concerned, delay in filing return has not been condoned but as stated herein above, we have allowed an opportunity to the petitioner to file supplementary application and affidavit before the CBDT placing additional grounds seeking condonation of delay, in these circumstances, this part of the order also deserves to be set aside and matter deserves to be remitted back to the CBDT to re-consider the matter for the assessment year 2002-03 also after considering the question of condonation of delay in filing the return for the assessment year 2000-01. In the result, these petitions are allowed. Impugned orders in so far as it relates for the assessment year 2000-01 and assessment year 2002-03 is set aside with following directions :-
1. Petitioner is allowed an opportunity to file additional grounds seeking condonation of delay by filing supplementary application supported by an affidavit and material documents, if any.
2. The aforesaid application shall be filed by the petitioner within a period of 30 days from today.
3. On filing such an application by the petitioner within the aforesaid period, the CBDT shall restore the file of case F.No.312/11/06-OT to its number and after extending an opportunity to the other side to counter the aforesaid contention, shall decide the matter of the petitioner for condonation of delay.
4. While considering the question of condonation of delay, the CBDT will also consider whether any genuine hardship would cause to the petitioner if delay is not
5. If the delay is condoned, the Board shall pass consequential orders in accordance with law.
6. No order as to cost of these petitions.