Supreme Court set to examine whether Income Tax Dept. can condone ITR filed with 30-Month Delay [Read Judgement]

The Supreme Court of India is set to examine whether the income tax department can condone an Income Tax Return (ITR) which was filed with a delay of 30-months. The matter is being assessed in terms of the assessee’s inability to carry forward business loss and TDS refund due to the inability to file the ITR.

A Special Leave Petition was filed by M/s Sirez Limited, raising the question whether delay in filing a Return of Income can be condoned by the Income Tax Department under the Income Tax Act, 1961.

The case arises from an earlier writ petition before the Delhi High Court where the assessee sought setting aside of the Central Board of Direct Taxes (CBDT) order through which the petitioner’s application for condonation of delay and praying for release of TDS refund was rejected for the reason of limitation itself.

The petitioner company failed to file its Return of Income for AY 2018-19 within the extended due date of 31.10.2018 and ultimately filed the return on 20.09.2021, resulting in a delay of approximately 30 months.

Appearing for the petitioner before the High Court, Santosh Kumar, Medhurendra Sharma and Rajiv Ranjan Mishra contended that the delay occurred due to an inter se dispute among the directors of the company coupled with financial hardship.

It was submitted that the company had suffered business losses and that denial of condonation would deprive it of the benefit of carry forward under Section 72 of the Act and refund of TDS. The counsel relied on judicial precedents to argue that “genuine hardship” should be construed liberally while exercising powers under Section 119(2)(b).

Counsel for the Revenue opposed the claim stating internal disputes among directors do not constitute genuine hardship and that the company has a separate identity than that of its directors, thus having separate statutory requirements to abide by.

The Division Bench of Justice V. Kameswar Rao and Justice Madhu Jain held that internal disputes among directors could not justify a 30-month delay in statutory compliance, and further observed that no documentary evidence was produced to substantiate extraordinary circumstances and dismissed the writ petition.

In the present SLP, the Supreme Court bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan noted prima facie that there was a delay on the part of the petitioner in filing its Return of Income for Assessment Year 2018-19.

The court noted that CBDT’s refusal to condone the delay led to denial of carry forward of business loss amounting to ₹1,06,60,750 and denial of refund/credit of TDS of ₹19,73,540.

The Supreme Court noted that the question for consideration was whether delay in filing the Return of Income could be condoned under Section 119(2)(b) of the Act, and accordingly issued notice. The matter has been listed for further hearing on 09.03.2026.

The outcome of this case is sure to be an established precedent for how ITR filing delays and condonation may be treated in the future.

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