High Court Can Condon Delay in Return Filing Despite CBDT Circular Time Limits

High Court Can Condon Delay in Return Filing Despite CBDT Circular Time Limits

Issue

• Condonation Application: The assessee filed an application under Section 119(2)(b) seeking condonation of delay in filing its income tax return.
• Rejection Order: The application for condonation of delay was rejected by the tax authority via an order dated September 8, 2025.
• CBDT Circular Limit: The rejection relied on CBDT Circular No. 16/2024 (dated November 18, 2024), which sets a maximum three-year limitation period for filing delay condonation applications before subordinate tax authorities.
• Reason for Delay: The assessee explained that the delay in filing the tax return occurred due to a delay in the submission of the statutory audit report.
• Writ Challenge: The assessee challenged the rejection order before the High Court seeking condonation of delay.

Decision

• High Court Authority Override: The High Court held that administrative circulars issued by the CBDT setting limitation periods do not restrict the constitutional power of the High Court to condone delay in appropriate cases.
• Acceptance of Reason: The Court accepted the delay in receiving the statutory audit report as a genuine and sufficient cause for delayed return filing.
• Conditional Relief: Subject to the assessee paying ₹15,000 as costs to the Adyar Cancer Institute, Chennai within two weeks, the impugned rejection order dated September 8, 2025, was set aside and the delay was condoned.
• Outcome: Decided partly in favor of the assessee.

Key Takeaways

• Judicial Review Over CBDT Circulars: CBDT circulars prescribing strict limitation periods (such as the 3-year limit in Circular 16/2024) bind subordinate administrative authorities, but they cannot curtail the High Court’s writ jurisdiction to grant equitable relief.
• Delayed Audit as Valid Cause: Delay in completing and receiving a statutory audit report constitutes a legitimate ground for condoning delay in filing income tax returns.
• Cost-Imposed Condonation: Courts can exercise discretion to condone procedural delays by compensating for delay through conditional costs paid to charitable institutions.