Introduction
In the case of Padmalochanan Radhakrishnan vs. Union of India & Ors. (WPA 29778 of 2025), the Calcutta High Court delivered a significant ruling on the interplay between statutory provisions for carry forward of loss under the Income Tax Act, 1961, and the CBDTās Circular No. 11 of 2024. The judgment, pronounced by Justice Smita Das De on May 5, 2026, addresses a recurring issue: whether a belated return filed under Section 139(4) can be condoned for the purpose of claiming carry forward of loss, especially when the delay is minimal and bonafide. The High Court quashed the Assessment Orders dated October 17, 2025, and October 30, 2025, directing the Assessing Officer to condone the 7-day delay and process the return. This commentary analyzes the legal reasoning, the application of CBDT Circular No. 11 of 2024, and the implications for taxpayers and tax authorities.
Facts of the Case
The petitioner, Padmalochanan Radhakrishnan, filed his income tax return for Assessment Year 2022-23 on August 7, 2022, which was 7 days beyond the due date of July 31, 2022. The return was filed under Section 139(4) of the Income Tax Act, 1961, as a belated return. Consequently, the system did not allow carry forward of loss under Section 80 for Assessment Year 2023-24, and an intimation under Section 143(1) was issued accordingly. The petitioner then filed an application under Section 119(2)(b) seeking condonation of the delay. However, the competent authority rejected this application, citing CBDT Circular No. 11 of 2024, which governs condonation of delay for claims of refund and carry forward of loss. The petitioner challenged both the rejection of the condonation application and the Assessment Orders before the Calcutta High Court.
Reasoning of the Court
The High Courtās reasoning centered on three key aspects: the misinterpretation of CBDT Circular No. 11 of 2024, the bonafide nature of the delay, and the binding precedent from the Madras High Court in Regan Powertech Private Ltd. (2019) 13 ITR-OL 108 (Mad).
1. Misconstruction of CBDT Circular No. 11 of 2024
The court observed that the Assessing Officer had misconstrued the intent and purport of the statutory provisions read with CBDT Circular No. 11 of 2024. The Circular, issued on October 1, 2024, supersedes all earlier instructions and provides comprehensive guidelines for condonation of delay under Section 119(2)(b). Paragraph 3 of the Circular states that no condonation application for claim of refund or loss shall be entertained beyond five years from the end of the assessment year. However, the court noted that the Circular does not empower the Assessing Officer to outrightly reject a condonation application without considering the merits of the delay. Instead, it sets a time limit for filing applications and mandates disposal within six months. The court held that the Assessing Officer erroneously treated the Circular as a bar to condonation, ignoring the fact that the petitionerās application was filed within the five-year window and the delay was merely 7 days.
2. Bonafide and Negligible Delay
The court accepted that the delay of 7 days was negligible and bonafide. The petitioner had filed the return just 7 days after the due date, and there was no evidence of mala fide intent or willful default. The court emphasized that no assessee would stand to benefit by filing a return belatedly, as held in Regan Powertech. The principle of proportionality was invoked to argue that a minor procedural lapse should not result in the denial of a substantive right, especially when the return had already been processed under Section 143(1). The court directed the Assessing Officer to condone the delay and process the return, relying on Collector Land Acquisition Vs. MST Kartiji (1987) 2 SCC 107, which supports condonation of delay in the interest of justice.
3. Precedent from Regan Powertech
The court placed heavy reliance on paragraph 8 of the Madras High Court judgment in Regan Powertech, which holds that the Boardās discretion under Section 119(2)(b) must be exercised bearing in mind the genuine hardship faced by the assessee. The Madras High Court had observed that unless the authorities have reason to believe that the assessee wantonly and purposely filed the return belatedly for mala fide reasons, the delay should be condoned. The Calcutta High Court applied this reasoning, noting that the respondent authorities failed to demonstrate any mala fide intent on the part of the petitioner. The court also rejected the respondentās argument that Section 80 does not allow carry forward if the return is filed beyond Section 139(1), as this interpretation would render Section 119(2)(b) redundant.
Conclusion
The Calcutta High Court quashed the impugned orders dated October 17, 2025, and October 30, 2025, and directed the respondent authorities to process the return filed on August 7, 2022, by condoning the 7-day delay. The judgment underscores that CBDT Circular No. 11 of 2024 does not override the statutory power of condonation under Section 119(2)(b) and that Assessing Officers must apply a pragmatic approach when the delay is minimal and bonafide. This ruling provides relief to taxpayers who face genuine hardships in meeting filing deadlines and reinforces the principle that procedural technicalities should not defeat substantive rights. Tax authorities must now ensure that condonation applications are evaluated on their merits, rather than being mechanically rejected based on a narrow reading of circulars.