S. 119 : Central Board of Direct Taxes- Circular-Condonation of delay -Filing of return of loss-Genuine hardship – Delay of 5 months in filing return due to bona fide professional advice by Chartered Accountant – Assessee should not suffer grave hardship for a professional’s mistake – Circular No. 9 of 2015 – Delay was condoned – CBDT’s rejection order set aside- Directed that the return filed on 30th March 2019 be treated as filed in time, and permitted assessment to be completed under section 153(1B) of the Act. [S. 72, 80, 119(2)(b), 139(1), 139(3), 153(1B), Art. 226]
The assessee filed its return of income for AY 2018-19 declaring a loss on 30th March 2019, beyond the due date of 31st October 2018, but within the extended period under section 139(4). Since the delay of five months prevented carry forward of losses under sections 72 and 80, the assessee sought condonation of delay under section 119(2)(b) as per CBDT Circular No. 9/2015. The delay was explained to be due to the Chartered Accountant’s uncertainty regarding the tax treatment of compensation received in the form of TDRs for compulsory acquisition of property, for which legal opinions were sought. The CBDT rejected the application citing lack of diligence. The Bombay High Court observed that the delay was neither deliberate nor negligent but occasioned by bona fide reliance on professional advice regarding a complex issue. It held that denial of condonation would cause genuine hardship as the assessee would lose the benefit of carry-forward losses, which satisfies the condition of “genuine hardship” under section 119(2)(b). The Court further held that section 153(1B) adequately protects the Revenue’s interests by extending the assessment period in cases where condonation is granted. Accordingly, the Court quashed the CBDT’s order, condoned the delay, directed that the return filed on 30th March 2019 be treated as filed in time, and permitted assessment to be completed under section 153(1B). (AY. 2018 -19) (W.P. No. 16638 of 2024, dt. 14th October 2025.)
Balaji Landmarks LLP v. CBDT (Bom)(HC) www.itatonline.org.
[Coram : Hon’ble Shri Justice B. P. Colabawalla,
Hon’ble Shri Justice Amit Satyavan Jamsandekar]