8-Minute Delay Condoned: Rs. 21 Crore Business Loss Allowed to be Carried Forward

By | January 27, 2026
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8-Minute Delay Condoned: Rs. 21 Crore Business Loss Allowed to be Carried Forward

 

Issue

Whether a delay of merely eight minutes in filing the Income Tax Return (ITR) can justify the denial of the right to carry forward a substantial business loss of Rs. 21.33 crores under Section 80, and whether the CBDT was justified in rejecting the condonation application under Section 119(2)(b).

Facts

  • The Filing: The assessee-company was required to file its return by 31-10-2018.

  • The Timeline:

    • Tax Audit Report: Uploaded successfully at 11:44 PM on 31-10-2018 (before midnight).

    • ITR Form: Uploaded at 12:08 AM on 01-11-2018.

  • The Delay: The return was effectively late by just 8 minutes.

  • The Consequence: Under Section 80 of the Income-tax Act, a return must be filed by the due date to carry forward business losses. Consequently, the carry forward of Rs. 21.33 crores of business loss was denied (though unabsorbed depreciation was allowed as it is not governed by Section 80).

  • The Plea: The assessee filed an application under Section 119(2)(b) seeking condonation, citing portal slowness and the Chartered Accountant’s heavy workload on the last day.

  • The Rejection: The CBDT rejected the application, stating that “no justifiable reasons” were made out.

Decision

  • Substantial Justice: The High Court held that even assuming there was no technical glitch on the portal, a delay of eight minutes is trivial.

  • Grave Hardship: The Court emphasized the concept of “grave hardship.” Disallowing a loss of Rs. 21.33 crores—which the assessee was legally entitled to carry forward—merely because of an 8-minute lag constitutes a punishment disproportionate to the “crime.”

  • CBDT’s Role: The power under Section 119 is meant to mitigate genuine hardship. The Board’s rejection was deemed mechanical and arbitrary given the huge financial impact versus the negligible delay.

  • Outcome: The impugned order was quashed. The delay was condoned, allowing the assessee to carry forward the business losses.

Key Takeaways

  • Section 80 is Strict, but Section 119 is Curative: While Section 80 mandates timely filing for loss carry-forwards, Section 119 exists precisely to cure procedural lapses that would otherwise cause genuine hardship.

  • Minutes Matter: This judgment is a relief for taxpayers who miss the midnight deadline by a whisker due to server loads. Courts generally view 12:01 AM filings as “technical” delays rather than substantive non-compliance.

  • Unabsorbed Depreciation: Note that Unabsorbed Depreciation (under Section 32(2)) can be carried forward even if the return is filed late, unlike Business Losses which are strictly barred under Section 80.

HIGH COURT OF BOMBAY
Sikkim Ferro Alloys Ltd.
v.
Central Board of Direct Taxes*
B. P. COLABAWALLA and AMIT S. JAMSANDEKAR, JJ.
WRIT PETITION (L) NO. 39914 OF 2025
DECEMBER  16, 2025
Ms. Aasifa Khan, Adv. for the Petitioner. Akhileshwar Sharma, Adv. for the Respondent.
ORDER
1. Rule. Respondents waive service. With the consent of the parties, Rule made returnable forthwith and heard finally.
2. The above Writ Petition has been filed by the Petitioner challenging the Order dated 17th January, 2024 passed under Section 119(2) (b) of the Income Tax Act, 1961 (for short ‘IT Act’) by Respondent No. 1 (i.e. the CBDT). By the impugned order, the Petitioner’s Application for Condonation of Delay in filing its Return of Income for Assessment Year 2018-19 was rejected by holding that the Petitioner has not established any reasonable cause for delay in filing Return of Income. Such rejection has resulted in denial of benefit of carried forward loss of Rs. 21,32,55,935/-.
3. Brief facts of the case are that the Petitioner is a Limited Company which is engaged in the business of trading in all types of ferrous and non-ferrous metals. For the A.Y. 2018-19 the Petitioner computed loss under the head Profits and Gains from business and profession of Rs. 22,14,64,051/- and declared short term capital gain of Rs. 33,81,310/-. After making inter head adjustment of business loss against the short-term capital gain as per the provisions of Section 71 of the Income Tax Act, 1961, the Petitioner declared as its income as Rs. Nil, both under the normal provisions as well as under Section 115 JB of the Income Tax Act, 1961. Business loss for the A.Y. 2018-19 of Rs. 21,32,55,935/- and unabsorbed depreciation of Rs. 48,26,806/- was carried forward for set off in future years.
4. The accounts of the Petitioner are subjected to Tax Audit under Section 44AB as well as under the provisions of the Companies Act, 2013. The due date for filing the Income Tax Return for A.Y. 2018-19 as prescribed under Section 139(1) of the Income Tax Act, 1961, was 31st October 2018. The Petitioner had obtained Tax Audit Report as prescribed under Section 44AB, [for the A.Y. 2018-19] from its Auditors M/s. Pranav Bothra & Co. Chartered Accountants on 7th August 2018. The Tax Audit Report (TAR) dated 7th August 2018 was uploaded vide Acknowledgment No. 371322341311018 at 23:44 hours on 31st October 2018. However, due to technical reasons, the Petitioner was able to upload the Return of Income in Form No. 6 for A.Y. 2018-19 vide Acknowledgment No. 371464281011118 only at 00:08 hour on 1st November 2018. In the acknowledgment of Return only depreciation of Rs. 48,26,806/- was allowed to be carried forward for set off in subsequent years, and the loss of Rs. 21,32,55,935/- [for the A.Y. 2018-19] was not allowed to be carried forward.
5. Under the Provisions of Section 80 of the Income Tax Act, 1961, no loss is allowed to be carried forward and set off if the Return is not filed on or before the due date under Section 139(1)/(3) of the Income Tax Act, 1961. As the Petitioner’s claim to carry forward the business loss was rejected due to delay in filing the Return of Income for A.Y. 2018-19 by 8 minutes, the Petitioner filed an Application dated 24th June before Respondent No. 1 requesting it to condone the delay of 8 minutes in filing the Return and allow it to carry forward the loss by exercising statutory powers vested in it under Section 119(2)(b) of the Income Tax Act, 1961. The Petitioner stated that the reason for delay of 8 minutes in uploading the Return of Income was that the Chartered Accountant had given the copy of the draft Return of Income on 31st October 2018 and the same was approved by the Company Officer. The Chartered Accountant was asked to file the TAR and the Return of Income immediately and he confirmed that the same will be uploaded that day itself in time. The Petitioner stated that it being the last date for filing of the Return of Income and the TAR, the Income Tax website was very slow and every time on uploading the relevant data file, either it was showing an error in the data entry or it was getting logged out. The Petitioner Company’s Officer was continuously assisting the Chartered Accountant, who was also looking into the statutory compliance of his other clients. The TAR was finally uploaded at 11:44 p.m. on the 31st October 2018 and the Return of Income was uploaded at 12:08 a.m. on 1st November 2018.
6. Based on the reports of field authorities, Respondent No. 1 in its order held that no justifiable reasons have been given by the Petitioner in terms of parameters governing Condonation of Delay. Accordingly, Respondent No. 1 declined to condone the delay of eight minutes in filing the Return of Income for A.Y. 2018-19 and rejected the Application filed by the Petitioner under Section 119(2)(b) of the Income Tax Act, 1961.
7. At the outset, the Petitioner brought to our attention Circular No 8 of 2001 dated 16th May 2001 (Exh. – F) whereby Respondent No. 1 has the power to condone the delay in filing the Return of Income even in cases where the Returned Income is a loss. Accordingly, it was submitted that there was no justification in not condoning the delay of 8 minutes in uploading the Return of Income by the Petitioner.
8. Mr. Sharma, the learned Counsel appearing on behalf of Respondent No. 1 submitted that they have not been able to get any instructions from the CBDT on the subject matter of this Writ Petition. Despite the aforesaid, Mr. Sharma submitted that in the facts of the present case, the Petitioner has approached this Court after a period of almost one year and the delay has not been sufficiently explained for this Court to exercise its extraordinary, equitable and discretionary jurisdiction under Article 226 of the Constitution of India. Further, Mr. Sharma submitted that the Department does not admit that the Return of Income could not be uploaded due to any technical glitch on the portal of the Income Tax Department. For all these reasons, he submitted that the above Writ Petition be dismissed.
9. We have heard the learned Counsel appearing on behalf of the Petitioner as well as Mr. Sharma appearing on behalf of the Respondent/Revenue. It is not in dispute that the Tax Audit Report under Section 44AB of the Income Tax Act, 1961, was in fact uploaded within time i.e. at 11:44 p.m. on 31st October 2018. In fact, the impugned order itself notices that the Petitioner logged into the Income Tax portal at 11:39 p.m. However, for some reason the Return of Income was uploaded only at 12:08 a.m. on 1st November 2018. In other words, there was an eight minute delay in uploading the Return of Income. Despite this eight minute delay, the impugned order surprisingly records that there is no sufficient cause shown for the aforesaid delay.
10. Be that as it may, even if we assume that there was no glitch on the Income Tax Portal [as contended by Mr. Sharma], we find that the delay of eight minutes in filing the Return ought to be condoned, especially considering that grave hardship would be caused to the Petitioner if the carried forward losses to the tune of approximately Rs. 21,32,55,935/- are disallowed merely because the Return was filed eight minutes late.
11. Accordingly, we hereby quash and set aside the impugned order dated 17th January 2024 we also hereby condone the delay in filing the Income Tax Return of the Petitioner for A.Y. 2018-19.
12. Rule is made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.
13. This order will be digitally signed by the Private Secretary/Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.