Negligible seven-day delay in filing a loss return is condonable under Section 119(2)(b) to allow the carry forward of losses.

By | June 19, 2026
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Negligible seven-day delay in filing a loss return is condonable under Section 119(2)(b) to allow the carry forward of losses.

Negligible seven-day delay in filing a loss return is condonable under Section 119(2)(b) to allow the carry forward of losses.

Issue

Whether the tax authorities are justified in rigidly rejecting an application under Section 119(2)(b) for condonation of a negligible seven-day delay in filing a loss return, thereby denying the statutory benefit of carrying forward business losses.

Facts

  • Delay in Filing: For the Assessment Year 2022-23, the assessee filed its return of income seven days after the prescribed statutory due date under Section 139(4).

  • Denial of Carry Forward: When the subsequent return for Assessment Year 2023-24 was processed, the Section 143(1) intimation disallowed the carry forward of the previous year’s loss, strictly citing Section 80 and the restrictions in CBDT Circular No. 11 of 2024.

  • Condonation Application: To rectify this, the assessee filed a formal application under Section 119(2)(b) seeking condonation of the seven-day delay. The concerned authority rejected the application, strictly applying the guidelines of the aforementioned CBDT Circular.

  • Appellate Challenge: The assessee challenged this rejection, arguing that the micro-delay was entirely inadvertent and bona fide.

Decision

  • Negligible Delay Deserves Condonation: Held in favour of assessee. A delay of merely seven days is minor and negligible. Since the delay was bona fide and not a deliberate attempt to evade or bypass rules, the revenue authorities ought to exercise their administrative discretion compassionately.

  • Direction to Process Claims: Held in favour of assessee. The authority’s rigid rejection was set aside. The Assessing Officer was directed to condone the seven-day delay and process the return of income on its merits so that the assessee’s claim for carrying forward the loss can be properly considered.

Key Takeaways

  • Substance Over Rigid Timelines: Section 119(2)(b) is an equity-based provision designed to prevent genuine hardships. The tax department should not use minor, single-digit day delays as a technical trap to wipe out substantial, legitimate tax reliefs like the carry forward of business losses.

  • CBDT Circulars are Guides, Not Handcuffs: While CBDT circulars (such as Circular No. 11 of 2024) provide structural frameworks for processing delays, they cannot be interpreted so mechanically by tax officials as to defeat the principal intent of justice when a taxpayer shows a clear, bona fide reason.

HIGH COURT OF CALCUTTA
Padmalochanan Radhakrishnan
v.
Union of India
Smita Das De, J.
WPA No. 29778 of 2025
MAY  5, 2026
Ms. S. Datta, Sakshi Singhi, Pratysh Jhunjhynwala and Ms. Sakshi Singhi for the Petitioner. Taraknath Jaiswal for the Respondent.
ORDER
1. In the instant case the petitioner challenges inter alia, the legality, validity and the sustainability of the Orders dated 17.10.2025 and 30.10.2025. The said Order reject the claim for carry forward of loss on the ground that the assessee filed a belated return under Section 139(4) of the Income Tax Act, 1961(hereinafter referred to as the said Act). Although the return has been duly processed the assessing Officer declined to entertain the claim for carry forward of loss at the stage, by relying on Circular No. 11 of 2024. It is contended that the said Circular does not empower the Assessing Officer to condone the delay for permit revision of the process return for incorporating the claim for carry forward of loss.
2. The learned counsel appearing for the petitioner submits that due date for filing of the return of income for the Assessment Year 2022-23 has been 31st July 2022. Due to unavoidable circumstances the return, has been filed beyond 7 days from the due date. On account of such short delay, the system did not allow carry forward of loss under Section 80 of the said Act for the Assessment Year 2023-24. The intimation under Section 143(1) of the said Act has been issued accordingly.
3. The petitioner has filed an application under Section 119(2)(b) of the said Act before the authority concerned seeking condonation of delay in filing the return of income for Assessment Year 2022-23. However, the said application has been rejected in light of CBDT Circular No. 11 of 2024 and the authority declined to accept the application for condonation of delay.
4. The petitioner places reliance on paragraph 8 of the Division Bench Judgement of Madras High Court in CBDT v. Regan Powertech (P.) Ltd. (2019) 13 ITR-OL 108 (Mad), which is reproduced below:
“We have also seen the reasons assigned by the respondent for belatedly filing the return. As rightly pointed out by the learned writ court, no assessee would stand to benefit by filing the return belatedly. Unless the appellants have reason to believe that the assess had wantonly and purposely filed the return belatedly for certain mala fide reasons, the delay in filing the return under normal circumstances should be condoned. It is true that the Board has power to exercise its discretion. However, exercise of such discretion should be in terms of section 119 (2) 9B) of the Act. While exercising the power, the Board should bear in mind the genuine hardship faced by the assess. More importantly, the hardship faced by the assessee for making an application or claim any exemption/deduction or refund or any other relief under the provisions of the Act has to be the basis for taking a decision as to whether the delay has to be condoned or not.”
5. The petitioner further places reliance upon Section 139(3) and 139(4) of the said Act along with Clause 3 of Circular 11 of 24. Paragraph 3 of the said Circular is reproduced below:-
“3. No condonation application for claim of refund loss shall be entertained beyond five years from the end of the assessment year for which such application/claim is made. The time limit for filing of such application within five years from the end of assessment year will be applicable for applications filed on or after 01.10.2024. this limit of five years shall be applicable to all authorities having powers to condone the delay as per the above prescribed monetary limits. A condonation application should be disposed of, as far as possible, within six months from the end of the month in which the application is received by the competent authority.”
6. The Learned counsel for the respondent authorities submits that since the assessee has filed the return under Section 139(4) instead of 139(1) of the said Act the claim for carry forward of capital loss under Section 80 cannot be allowed. The Section 80 of the said Act does not allow carry forward if the return is filed beyond Section 139(1) of the said Act. Since Section 139 (4) permits belated return but does not confer the benefit of carry forward, the authorities has rightly passed the order of rejection as per law.
7. The Learned counsel for the respondents draws the attention of this court to paragraph No. 1 of the Circular No. 11 of 2024 which is reproduced below:
“In supersesssion of all earlier instructions/Circulars/Guidelines issued by the Central Board of Direct Taxes (the Board) from time to time to deal with the applications for condonation of delay in filing returns claiming refund and returns claiming carry forward of loss and set off thereof under Section 119 (2) (b) of the Income-tax Act, 1961 (the Act), the present Circular is being issued to deal with the applications for condonation of delay in filling returns claiming refund and returns claiming carry forward of loss and set off thereof containing comprehensive guidelines on the conditions for condonation and the procedures to be followed for deciding such matters.”
8. It is submitted that as per the Circular an application for condonation of delay in filing returns claiming refund and returns under Section 119(2) Clause (b) of the said Act is required to be filed.
9. The assessing officer has no power to override the statutory mandate. The claim has been rightly rejected by the authorities concerned.
10. After hearing the rival contentions of the parties and upon perusing the records this court is prima facie satisfied with the submission made by the petitioners. Accordingly, interference is warranted at this stage. I find that the assessing officer has misconstrued and misconceived the intent and the purport of the relevant statutory provisions read with CBDT Circular No. 11 of 2024 dated 1st October 2024.
11. This court has accepted that the delay of 7 days is negligible and bona fide. In view of the Regan Powertech Private Ltd. (supra) and the principles of proportionality the Assessing Officer is directed to condone the delay and process the return as held in Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 (SC)/(1987) 2 SCC 107 .
12. The impugned order dated 17.10.2025 and 30.10.2025 are accordingly quashed and set aside. The respondent authorities are directed to process the return filed on 07.08.2022 in accordance with law by condoning the delay of 7 days.
13. In view of the above, the Writ Petition No. 29778 of 2025 stands disposed of.
14. Since no affidavit has been called for the allegations contained in the Writ Petition shall not be deemed to have been admitted by the respondent authorities.
15. Urgent photostat certified copy of this order, if applied for, be given to the learned counsel for the parties on usual undertakings.