A negligible and bonafide delay in filing a return of income should be condoned under Section 119(2)(b) of the Income Tax Act, 1961, to allow the carry forward of losses, applying the principles of proportionality and genuine hardship.

1. In the instant case the petitioner challenges inter alia, the legality, validity and the sustainability of the Orders dated 17.10.2025 and 30.10.2025. The said Order reject the claim for carry forward of loss on the ground that the assessee filed a belated return under Section 139(4) of the Income Tax Act, 1961(hereinafter referred to as the said Act). Although the return has been duly processed the assessing Officer declined to entertain the claim for carry forward of loss at the stage, by relying on Circular No. 11 of 2024. It is contended that the said Circular does not empower the Assessing Officer to condone the delay for permit revision of the process return for incorporating the claim for carry forward of loss.

2. The learned counsel appearing for the petitioner submits that due date for filing of the return of income for the Assessment Year 2022-23 has been 31st July 2022. Due to unavoidable circumstances the return, has been filed beyond 7 days from the due date. On account of such short delay, the system did not allow carry forward of loss under Section 80 of the said Act for the Assessment Year 2023-24. The intimation under Section 143(1) of the said Act has been issued accordingly.

3. The petitioner has filed an application under Section 119(2)(b) of the said Act before the authority concerned seeking condonation of delay in filing the return of income for Assessment Year 2022-23. However, the said application has been rejected in light of CBDT Circular No. 11 of 2024 and the authority declined to accept the application for condonation of delay.

4. The petitioner places reliance on paragraph 8 of the Division Bench Judgement of Madras High Court in Central Board of Direct Taxes and Anr. Vs. Regan Powertech Private Ltd. reported in (2019) 13 ITR-OL 108 (Mad), which is reproduced below:

“We have also seen the reasons assigned by the respondent for belatedly filing the return. As rightly pointed out by the learned writ court, no assessee would stand to benefit by filing the return belatedly. Unless the appellants have reason to believe that the assess had wantonly and purposely filed the return belatedly for certain mala fide reasons, the delay in filing the return under normal circumstances should be condoned. It is true that the Board has power to exercise its discretion. However, exercise of such discretion should be in terms of section 119 (2) 9B) of the Act. While exercising the power, the Board should bear in mind the genuine hardship faced by the assess. More importantly, the hardship faced by the assessee for making an application or claim any exemption/deduction or refund or any other relief under the provisions of the Act has to be the basis for taking a decision as to whether the delay has to be condoned or not.”

5. The petitioner further places reliance upon Section 139(3) and 139(4) of the said Act along with Clause 3 of Circular 11 of 24. Paragraph 3 of the said Circular is reproduced below:-

“3. No condonation application for claim of refund loss shall be entertained beyond five years from the end of the assessment year for which such application/claim is made. The time limit for filing of such application within five years from the end of assessment year will be applicable for applications filed on or after 01.10.2024. this limit of five years shall be applicable to all authorities having powers to condone the delay as per the above prescribed monetary limits. A condonation application should be disposed of, as far as possible, within six months from the end of the month in which th