I paid tax on a receipt that was never taxable and the deadline has passed. Is that genuine hardship?
Yes. Genuine hardship under s.119(2)(b) is not confined to financial distress — where an assessee feels he has paid more tax than he was liable to pay, that is hardship enough to warrant condonation. The rejection was set aside and the authority directed to condone the delay and decide the matter on its substantive merits.
Decided by the High Court (Bombay High Court — K.R. Shriram and Dr. Neela Gokhale JJ) on 2024-01-16, reported as [2024] 158 taxmann.com 658 (Bombay); [2024] 297 Taxman 464 (Bombay); [2024] 463 ITR 766 (Bombay); Writ Petition (L) No. 32261 of 2023. It bears on section 119(2)(b), section 143(1) of the Income Tax Act 1961, in Refunds, Interest & Condonation matters.
Condonation applications are refused every day on the footing that an over-payment is not 'hardship'. This is the direct answer, and the court's balance is worth borrowing: condoning delay only lets the claim be decided, while refusing it may defeat a claim that is right. Be clear about the limit — the court did not decide whether the compensation was taxable, only that the application had to be heard.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The assessee is in the business of acquiring and developing plots of land for resale. For assessment year 2022-23 land of 300 square metres was compulsorily acquired by the Collector, Dadra and Nagar Haveli, Silvassa under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013, and an award of Rs 39,07,595 was made. Through oversight the assessee added the compensation to its other receipts and declared a total profit of Rs 75,66,345. The return was filed on 30 July 2022 and processed under s.143(1), the intimation issuing on 6 April 2023. The assessee later took the view, relying on s.96 of that Act, that no tax was payable on an award made under it, and on about 4 August 2023 sought leave to file a revised return; the time for a revised return had expired on 31 December 2022. Its application under s.119(2)(b) was rejected on 22 September 2023, the sole reason given being that no genuine hardship caused by the delay had been shown.
The rejection was set aside. There is no straitjacket formula for genuine hardship, and the fact that an assessee feels he has paid more tax than he was liable to pay will certainly cause hardship and is certainly genuine hardship (para 4). The phrase in s.119(2)(b) is to be construed liberally: the power to condone exists so that authorities can do substantial justice by deciding matters on merits, no applicant benefits by filing late, refusing condonation can throw out a meritorious matter at the threshold, while condoning it does no more than let the cause be decided on merits after hearing (para 5). Where the assessee strongly feels the award need not have been offered to tax, the authority should have condoned the delay and considered the matter on merits (para 6). The Court itself condoned the delay, directed the department to open the portal within two weeks so that a revised return could be filed, and left the concerned authority to pass such order as it deems fit in accordance with law (para 7). All rights and contentions were kept open (para 8), and the Court clarified in terms that it had not considered whether the compensation is taxable — that is for the authority to decide (para 9).
The Court fixed on the single reason given for rejection — that no genuine hardship had been shown — and held that the test had been applied too narrowly. It adopted the reasoning of its own recent decision in Optra Health, which it set out at length and which in turn draws on Sitaldas K. Motwani and Artist Tree: genuine hardship is not confined to severe financial distress, 'genuine' bears the liberal meaning given to it by the Supreme Court in B.M. Malani, and the authority should weigh the asymmetry between the two possible errors. Refusing condonation can defeat a meritorious claim at the threshold; condoning it costs nothing more than a hearing on merits. There is no presumption that delay is deliberate or the product of culpable negligence, and an applicant does not benefit by delay — he runs a risk. Applying that, an assessee who believes he has overpaid has shown hardship enough to get the door opened, and the Court was careful to separate that question from the merits of the claim, which it left untouched (paras 4 to 6 and 9).
certainly the fact that an assessee feels he has paid more tax than what he was liable to pay will certainly cause hardship and that will be certainly a 'genuine hardship'
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Handle my notice → Ask a CA on WhatsAppYes. Genuine hardship under s.119(2)(b) is not confined to financial distress — where an assessee feels he has paid more tax than he was liable to pay, that is hardship enough to warrant condonation. The rejection was set aside and the authority directed to condone the delay and decide the matter on its substantive merits. This was decided by the High Court (Bombay High Court — K.R. Shriram and Dr. Neela Gokhale JJ) and bears on section 119(2)(b), section 143(1) of the Income Tax Act 1961. It is reported as [2024] 158 taxmann.com 658 (Bombay); [2024] 297 Taxman 464 (Bombay); [2024] 463 ITR 766 (Bombay); Writ Petition (L) No. 32261 of 2023. Condonation applications are refused every day on the footing that an over-payment is not 'hardship'. This is the direct answer, and the court's balance is worth borrowing: condoning delay only lets the claim be decided, while refusing it may defeat a claim that is right. Be clear about the limit — the court did not decide whether the compensation was taxable, only that the application had to be heard. If it applies to you, the first step is this: Quantify the over-payment in the s.119(2)(b) application and explain why the receipt was not taxable, with the computation; hardship here is the excess tax, so it has to be shown as a number.
The assessee is in the business of acquiring and developing plots of land for resale. For assessment year 2022-23 land of 300 square metres was compulsorily acquired by the Collector, Dadra and Nagar Haveli, Silvassa under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013, and an award of Rs 39,07,595 was made. Through oversight the assessee added the compensation to its other receipts and declared a total profit of Rs 75,66,345. The return was filed on 30 July 2022 and processed under s.143(1), the intimation issuing on 6 April 2023. The assessee later took the view, relying on s.96 of that Act, that no tax was payable on an award made under it, and on about 4 August 2023 sought leave to file a revised return; the time for a revised return had expired on 31 December 2022. Its application under s.119(2)(b) was rejected on 22 September 2023, the sole reason given being that no genuine hardship caused by the delay had been shown. The matter was decided on 2024-01-16 by the High Court (Bombay High Court — K.R. Shriram and Dr. Neela Gokhale JJ). On those facts the High Court held as follows. The rejection was set aside. There is no straitjacket formula for genuine hardship, and the fact that an assessee feels he has paid more tax than he was liable to pay will certainly cause hardship and is certainly genuine hardship (para 4). The phrase in s.119(2)(b) is to be construed liberally: the power to condone exists so that authorities can do substantial justice by deciding matters on merits, no applicant benefits by filing late, refusing condonation can throw out a meritorious matter at the threshold, while condoning it does no more than let the cause be decided on merits after hearing (para 5). Where the assessee strongly feels the award need not have been offered to tax, the authority should have condoned the delay and considered the matter on merits (para 6). The Court itself condoned the delay, directed the department to open the portal within two weeks so that a revised return could be filed, and left the concerned authority to pass such order as it deems fit in accordance with law (para 7). All rights and contentions were kept open (para 8), and the Court clarified in terms that it had not considered whether the compensation is taxable — that is for the authority to decide (para 9).
The Court fixed on the single reason given for rejection — that no genuine hardship had been shown — and held that the test had been applied too narrowly. It adopted the reasoning of its own recent decision in Optra Health, which it set out at length and which in turn draws on Sitaldas K. Motwani and Artist Tree: genuine hardship is not confined to severe financial distress, 'genuine' bears the liberal meaning given to it by the Supreme Court in B.M. Malani, and the authority should weigh the asymmetry between the two possible errors. Refusing condonation can defeat a meritorious claim at the threshold; condoning it costs nothing more than a hearing on merits. There is no presumption that delay is deliberate or the product of culpable negligence, and an applicant does not benefit by delay — he runs a risk. Applying that, an assessee who believes he has overpaid has shown hardship enough to get the door opened, and the Court was careful to separate that question from the merits of the claim, which it left untouched (paras 4 to 6 and 9). In the words reproduced by the source cited on this page: "certainly the fact that an assessee feels he has paid more tax than what he was liable to pay will certainly cause hardship and that will be certainly a 'genuine hardship'" The decision followed or applied Optra Health (P.) Ltd. v. Addl. CIT (HQ), Writ Petition No. 15544 of 2023 (Bom.), 19 December 2023.
It was decided by the High Court on 2024-01-16 and is reported as [2024] 158 taxmann.com 658 (Bombay); [2024] 297 Taxman 464 (Bombay); [2024] 463 ITR 766 (Bombay); Writ Petition (L) No. 32261 of 2023. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 119(2)(b), section 143(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The rejection was set aside. There is no straitjacket formula for genuine hardship, and the fact that an assessee feels he has paid more tax than he was liable to pay will certainly cause hardship and is certainly genuine hardship (para 4). The phrase in s.119(2)(b) is to be construed liberally: the power to condone exists so that authorities can do substantial justice by deciding matters on merits, no applicant benefits by filing late, refusing condonation can throw out a meritorious matter at the threshold, while condoning it does no more than let the cause be decided on merits after hearing (para 5). Where the assessee strongly feels the award need not have been offered to tax, the authority should have condoned the delay and considered the matter on merits (para 6). The Court itself condoned the delay, directed the department to open the portal within two weeks so that a revised return could be filed, and left the concerned authority to pass such order as it deems fit in accordance with law (para 7). All rights and contentions were kept open (para 8), and the Court clarified in terms that it had not considered whether the compensation is taxable — that is for the authority to decide (para 9). It arises in Refunds, Interest & Condonation matters, on section 119(2)(b), section 143(1) of the Income Tax Act 1961, and was decided by Bombay High Court — K.R. Shriram and Dr. Neela Gokhale JJ. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Answer a 'no financial hardship' rejection on its own terms: the test applied was that more tax was paid than was due, not that the assessee is in distress. Plan for the merits stage — condonation only opens the door, and the substantive claim still has to be argued before the authority.
Still good law. Applied by the Bombay High Court in Pankaj Kailash Agarwal v. Asstt. CIT [2024] 161 taxmann.com 383 / [2024] 464 ITR 65 (Bom.), decided 8 April 2024, which reproduces para 4 of this judgment in full and carries it across to a different setting — a claim for deduction under s.80-IC lost because Form 10CCB had not been uploaded — holding that an assessee who feels he would pay more tax if he does not get the deduction suffers genuine hardship. Two qualifications. That decision was delivered by the same Bench, K.R. Shriram and Dr. Neela Gokhale JJ, so it is the same judges applying their own reasoning rather than an independent court adopting it. And the report of that decision carries a note that a special leave petition against it was disposed of by the Supreme Court at [2025] 175 taxmann.com 749 (SC); the effect of that order was not examined on this read, so check it before relying on the follower. This judgment's own report carries no later-treatment note and nothing was found about an appeal against it. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The date, the judges and the petition number are now recorded from the judgment, so the case can be cited fully. Two limits matter in practice. The Court condoned the delay itself and directed the portal to be opened within two weeks; it did not remit the condonation question. And it clarified at para 9 that it had not considered whether the compensation received under the Right to Fair Compensation Act is taxable, expressly leaving that to the authority — so the case decides that a belief in overpayment is genuine hardship, not that the receipt was exempt. The reasoning is adopted from the same Court's decision in Optra Health, which in turn rests on Sitaldas K. Motwani and on the Supreme Court's treatment of the word 'genuine' in B.M. Malani. The one decision found applying this judgment, Pankaj Kailash Agarwal, was delivered by the same Bench, and a special leave petition against that decision was disposed of by the Supreme Court at [2025] 175 taxmann.com 749 (SC); the effect of that order was not examined. Whether any court outside Bombay has adopted this reasoning was not established. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The rejection was set aside. There is no straitjacket formula for genuine hardship, and the fact that an assessee feels he has paid more tax than he was liable to pay will certainly cause hardship and is certainly genuine hardship (para 4). The phrase in s.119(2)(b) is to be construed liberally: the power to condone exists so that authorities can do substantial justice by deciding matters on merits, no applicant benefits by filing late, refusing condonation can throw out a meritorious matter at the threshold, while condoning it does no more than let the cause be decided on merits after hearing (para 5). Where the assessee strongly feels the award need not have been offered to tax, the authority should have condoned the delay and considered the matter on merits (para 6). The Court itself condoned the delay, directed the department to open the portal within two weeks so that a revised return could be filed, and left the concerned authority to pass such order as it deems fit in accordance with law (para 7). All rights and contentions were kept open (para 8), and the Court clarified in terms that it had not considered whether the compensation is taxable — that is for the authority to decide (para 9).
TaxSphere, “K S Bilawala v PCIT”, https://taxnotice.vittsphere.com/caselaw/case/ks-bilawala-v-pcit-119-2b-genuine-hardship/ (validity last checked 2026-08-19)
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