Belated ITR Filing: HC Directs Condonation of Delay for Carry Forward Loss Claim

The High Court on 5 May held that a mere 7-day delay in filing the return of income cannot deprive an assessee of the benefit of carry forward of losses under the Income Tax Act, 1961. A Single Bench of Justice Smita Das De quashed the orders passed by the income tax authorities rejecting the assessee’s application for condonation of delay under Section 119(2)(b) and directed the department to process the return after condoning the delay.

The dispute arose after Padmalochanan Radhakrishnan filed the return for AY 2022-23 beyond the due date prescribed under Section 139(1). Since the return was treated as a belated return under Section 139(4), the system did not permit carry forward of losses under Section 80 of the Act. The assessee thereafter filed an application under Section 119(2)(b) seeking condonation of delay, which was rejected by relying upon CBDT Circular No. 11 of 2024.

Before the High Court, the petitioner contended that the authorities had misconstrued the scope of the Circular and failed to consider the genuine hardship caused due to the short delay of only seven days. Reliance was placed on the decision of the Madras High Court in Regan Powertech Private Ltd., wherein it was held that delay in filing returns should ordinarily be condoned unless mala fide intention is established.

The Revenue argued that Section 80 permits carry forward of losses only when the return is filed within the time prescribed under Section 139(1), and since the petitioner filed the return under Section 139(4), the claim was rightly rejected. It was further submitted that the Assessing Officer had no authority to override the statutory mandate.

The High Court observed that the Assessing Officer had misconstrued the intent of the statutory provisions as well as CBDT Circular No. 11 of 2024. It held that the circular itself provides for condonation applications relating to returns claiming carry forward of losses and that the authorities ought to have considered the bona fide nature of the delay. The High Court mentions 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.”

Applying the principles of proportionality and relying upon the decisions in Regan Powertech Private Ltd. and Collector Land Acquisition vs. MST Katiji, the Court directed the authorities to condone the 7-day delay and process the return filed on 07.08.2022 in accordance with law. Accordingly, the impugned orders dated 17.10.2025 and 30.10.2025 were quashed and the writ petition was disposed of.

To Read Full Judgment, Download PDF Given Below.