Negligible Delay in Filing Returns Should Be Condoned to Prevent Hardship in Carrying Forward Losses

The petitioner filed his income tax return for Assessment Year (AY) 2022-23 on August 7, 2022, which was seven days beyond the statutory due date of July 31, 2022

Due to this delay, the return was treated as a "belated return" under Section 139(4), and the tax system automatically disallowed the carry forward of losses per Section 80 of the Income Tax Act, 1961

The petitioner filed an application under Section 119(2)(b) seeking condonation of delay, but the revenue authorities rejected the claim via orders dated 17.10.2025 and 30.10.2025, citing CBDT Circular No. 11 of 2024

The petitioner challenged these orders, asserting that the short delay was bona fide and due to unavoidable circumstances

1. Whether the revenue authorities were justified in rejecting the application for condonation of delay and the subsequent claim for carry forward of loss based on a strict interpretation of CBDT Circular No. 11 of 2024

2. Whether a negligible and bona fide delay of seven days in filing a return warrants the exercise of discretionary powers under Section 119(2)(b) to prevent genuine hardship to the assessee

Section 119(2)(b) of the Income Tax Act, 1961, which empowers the Board to condone delays for avoiding genuine hardship to an assessee

Section 80, which governs the carry forward of losses, and Section 139(3) regarding loss returns

precedent of CBDT v. Regan Powertech Private Ltd. (2019), which held that delays should be condoned unless mala fides are evident, as no assessee benefits from a belated filing

principle of proportionality and the doctrine from Collector Land Acquisition v. MST Kartiji (1987) regarding the liberal approach toward "sufficient cause" for condonation

The court found that the Assessing Officer had misconstrued the intent of CBDT Circular No. 11 of 2024 and the underlying statutory provisions

The court reasoned that a delay of only seven days is "negligible and bona fide"

Citing Regan Powertech, the court observed that unless the revenue can prove the delay was a "wanton and purposeful" act for mala fide reasons, the authorities must consider the "genuine hardship" faced by the assessee when exercising discretion under Section 119(2)(b)

The court determined that denying the carry forward of loss for a minor delay violated the principles of proportionality, as the statutory mandate for timely filing should not be applied so rigidly as to cause undue hardship for a technical lapse

The court quashed and set aside the impugned orders dated 17.10.2025 and 30.10.2025. The respondent authorities were directed to condone the seven-day delay and process the return filed on 07.08.2022 in accordance with the law, thereby allowing the claim for carry forward of loss.