Compliances

Condonation of Delay under Different Legislations

calendar07 Mar, 2022
timeReading Time: 3 Minutes
Condonation of delay

Condonation of delay is primarily applied for the deferred applications or suits in honorable courts in India. It is also applied to the last date of filing an IT return has passed, and the taxpayer intends to file those preceding returns. The concept of Condonation of delay has been adopted by various legislations in India.

Applying for Condonation of delay

Condonation of delay implies the Act of condoning the delay in submitting an appeal or application by concerned courts. Each statute facilitates a time frame within which any appeal is to be filed under them to respective courts or authorities. The time frame prescribed is called the limited period of the suit or appeal. A delay occurs when the application or suit is not filed within the limitation duration prescribed in the statute.

The concerned court(s) or authority shall not accept the application or suit beyond the limited duration. Condonation of delay is an exception to such limitation duration. It acts as a remedy accessible to an individual if he/she fails to approach the court/concerned authority within the time duration prescribed under the law.

The concerned statutes provide for Condonation of delay for appeals, suits under specific circumstances. If the individual filing the appeal or suit can submit an adequate cause for the delay, leading to the expiration of the limited duration, the court/concerned authority can, with discretionary jurisdiction, condone/forgive the delay by accepting the application/suit.

Different Schemes launched by the Central Government

The Central Government, under the powers available to it as per section 460, has also launched various schemes such as Companies Fresh Start Scheme, 2020, Company Law Settlement Scheme, 2014, LLP Settlement Scheme, 2020, and Condonation of Delay Scheme, 2018 for condoning the delay of the companies.

These schemes seek to condone the delay and permit companies to file annual documentation beyond the given time frame without much or nil penalty or fine for the delay.

But, these schemes came to effect for a limited duration, typically for the duration of one year under which the company could leverage of the concerned schemes and file the belated documentation to the Registrar.

Norms for Condonation of Delay under Companies Act, 2013

Section 460 under the Companies Act, 2013 provides for Condonation of the delay of application to be filed by the applicant. As per Section 460(a), where an application is required to be filed with the Central Government given any provisions of the Act, and if it is not filed within the prescribed time frame, the Central Government can forgive/condone the delay in the grounds recorded in writing.

Section 460(b) describes that where any documentation is required to be filed to the Registrar under any regulation of the Act, and it is not filed within a prescribed time frame, the Central Government can forgive/condone the delay on the grounds recorded in writing.

Condonation of Delay under Income Tax Act, 1961

Section 119(2)(b) of the IT Act, 1961 provides for the Condonation of delay of any claims or application filed under the Act. It states that the CBDT, i.e. Central Board of Direct Taxes, can vest any income-tax authority with authority to furnish an application relating to the exemption, deduction, refund, or any other relief under IT Act, post the expiration of the duration cited under the Act.

The CBDT[1] shall vest income tax authorities with the power to accept any claim or application if it considers it viable to do so to avert nuisance for the party.

The IT authority shall permit the deferred claim, provided, making a claim within the given due date was practically out of the taxpayer’s control.

Procedure relating to the Condonation of delay

If a company fails to make the timely filing of any application or document, then it needs to apply to the Central Government requesting Condonation of delay u/s 460 to accept its delayed document or application.

The procedure is as follows-

  1. The company is required to hold a board meeting & pass a resolution to sanction the application relating to Condonation of delay to be filed to the Central Government.
  2. Authorize a CS or CFO or any Director of the company to file an application with the Central Government.
  3. The company needs to file an application for Condonation of delay via Form CG 1 with the Central Government. The application should accompany a copy of the Board resolution approving the filing of the application and documents attested thereto.
  4. The application shall undergo a scrutiny process. After this, the Central Government issues an order of rejection or acceptance of the application.
  5. The order is to be filed via form INC 28 with the Registrar, along with the mandatory documentation and standard fees.
  6. The documentation for which the delay is condoned is required to be filed with SRN of Form INC-28 and standard fees.

Conclusion

Condonation of Delay acts as a viable instrument for companies that often have trouble managing returns and filing related requirements. In the business landscape, it allows companies to seek remedy from concerned authorities for extinguishing charges or fines against delay filing. Besides, it helps overcome significant penalties in case of delayed in income tax return filing.

Read our Article:Register of Members under the Companies Act, 2013

Pankaj Tyagi

Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.

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