Padmalochanan Radhakrishnan vs Union of India: Calcutta High Court Allows Carry Forward of Loss despite delay

Introduction

In a significant income tax ruling, the Calcutta High Court provided relief to a taxpayer whose claim for carry forward of loss was denied due to a minor delay in filing the income tax return. The judgment highlights the importance of fairness, proportionality, and genuine hardship in tax administration.

The court clarified that procedural delays should not automatically deprive taxpayers of substantive benefits, especially when the delay is negligible and bona fide. This decision is expected to have a practical impact on tax compliance, condonation applications, and interpretation of CBDT Circular No. 11 of 2024.

Case Details

Court  :-  Calcutta High Court

Case Title :-  Padmalochanan Radhakrishnan vs Union of India & Ors.

Date of Judgment  :-  5 May 2026

Bench/Judge  :- Justice Smita Das De

Background of the Case

The dispute arose after the taxpayer filed his income tax return for Assessment Year 2022–23 with a delay of only seven days. The statutory due date for filing the return under Section 139(1) of the Income-tax Act, 1961 was 31 July 2022, but the return was ultimately filed on 7 August 2022.

Although the return was accepted and processed by the income tax department, the taxpayer was denied the benefit of carrying forward losses to the subsequent assessment year. The tax department relied on Section 80 of the Income-tax Act and CBDT Circular No. 11 of 2024 to reject the claim.

The taxpayer then approached the authorities under Section 119(2)(b) seeking condonation of delay. However, the application was rejected, leading to the filing of a writ petition before the High Court.

The core grievance of the taxpayer was simple: a minor and unintentional delay should not result in denial of a substantial tax benefit.

Key Takeaways

• This tax judgment supports a liberal interpretation of condonation provisions under Section 119(2)(b)

• Minor delays in filing returns may not automatically defeat carry forward of loss claims

• CBDT Circular No. 11 of 2024 must be interpreted reasonably and not mechanically

• The ruling strengthens taxpayer rights in genuine hardship situations

• The judgment is important for tax compliance and income tax reassessment disputes

• The High Court decision emphasizes proportionality in applying penalty-like consequences

• Tax professionals handling refund claims and limitation period issues should closely study this ruling

Also read our another article on Rejection of Delay Condonation Under Section 119(2)(b)

Issue Involved

The primary legal issues before the court were:

• Whether a taxpayer can claim carry forward of loss when the return is filed belatedly under Section 139(4)

• Whether the delay of seven days could be condoned under Section 119(2)(b) of the Income-tax Act

• Whether CBDT Circular No. 11 of 2024 permits authorities to condone such delay

• Whether denying carry forward of loss for a short delay violates principles of proportionality and fairness

Parties Involved

Petitioner :- Padmalochanan Radhakrishnan

Respondents :- Union of India & Others

Arguments by the Petitioner

The petitioner argued that the delay in filing the return was minimal, genuine, and caused by unavoidable circumstances. According to the taxpayer:

• The return was delayed only by seven days

• The delay was neither intentional nor mala fide

• The tax department wrongly interpreted CBDT Circular No. 11 of 2024

• Section 119(2)(b) gives authorities the power to condone genuine hardship

• Denial of carry forward of loss for such a short delay was arbitrary and disproportionate

The petitioner also relied on the judgment of the Madras High Court in CBDT vs Regan Powertech Private Ltd., where the court observed that taxpayers ordinarily do not benefit by filing delayed returns and genuine hardship should be considered sympathetically.

The petitioner further contended that CBDT Circular No. 11 of 2024 actually provides a mechanism for condonation applications and does not prohibit relief in genuine cases.

Arguments by the Respondent

The income tax department defended its decision by relying on Section 80 of the Income-tax Act.

The respondents argued that:

• The return was filed under Section 139(4) and not within the due date prescribed under Section 139(1)

• Section 80 clearly restricts carry forward of losses if returns are filed belatedly

• The Assessing Officer cannot override statutory provisions

• CBDT Circular No. 11 of 2024 only lays down procedures for condonation and does not dilute statutory requirements

The department maintained that the rejection order was legally valid and consistent with the provisions of the Income-tax Act.

Court’s Observations

The High Court carefully examined the statutory provisions, CBDT Circular No. 11 of 2024, and earlier judicial precedents.

a. Court Found the Delay Genuine and Negligible

The court observed that the delay was only seven days and was clearly bona fide in nature. The judge emphasized that procedural provisions should not be applied mechanically when the taxpayer demonstrates genuine hardship.

b. Misinterpretation of CBDT Circular

The court held that the Assessing Officer had misconstrued the intent and scope of CBDT Circular No. 11 of 2024. According to the court, the circular was intended to facilitate consideration of condonation applications and not to create an automatic ground for rejection.

c. Reliance on Judicial Precedents

The court relied on the principles laid down in:

• CBDT vs Regan Powertech Private Ltd.

• Collector Land Acquisition vs MST Katiji

These judgments stress that courts and authorities should adopt a liberal approach in condonation matters where no mala fide intent exists.

d. Principle of Proportionality

One of the most important observations was the application of the principle of proportionality. The court implied that denying a substantial tax benefit because of a seven-day delay was excessive and unreasonable.

This interpretation is particularly important for taxpayers facing technical or procedural delays in tax compliance.

Final Judgment / Conclusion

The Calcutta High Court quashed the impugned orders dated 17 October 2025 and 30 October 2025.

The court directed the income tax authorities to:

• Condone the seven-day delay

• Process the return in accordance with law

• Allow consideration of the carry forward of loss claim

The writ petition was accordingly disposed of in favour of the taxpayer.

This income tax ruling reinforces the idea that tax administration should balance procedural compliance with substantive justice.

FAQs (Frequent Asked Question)

1. Can carry forward of loss be allowed if an income tax return is filed late?

Yes, this judgment shows that courts may allow carry forward of loss if the delay is minor, genuine, and supported by a valid condonation application.

2. What is Section 119(2)(b) of the Income-tax Act?

Section 119(2)(b) allows tax authorities to condone delays in certain cases involving genuine hardship, including delayed refund and loss claims.

3. What did the Calcutta High Court decide in this tax case?

The court condoned a seven-day delay in filing the return and directed the tax department to process the taxpayer’s carry forward of loss claim.

4. Does CBDT Circular No. 11 of 2024 prohibit condonation of delay?

No. The court clarified that the circular provides a framework for condonation applications and should not be interpreted rigidly.

5. Why is this income tax ruling important for taxpayers?

The ruling protects taxpayers from harsh consequences arising from small procedural delays and promotes fair tax compliance practices.

Why This Judgment Matters

This High Court decision is highly relevant for businesses, professionals, and individual taxpayers dealing with delayed filings and loss claims. In practice, many taxpayers face technical glitches, documentation delays, or unavoidable circumstances while filing returns.

The judgment sends a clear message that genuine and negligible delays should not lead to disproportionate tax consequences. It also encourages a more balanced and taxpayer-friendly interpretation of CBDT circulars and procedural provisions.

For tax professionals, this ruling may become an important precedent in disputes involving:

• Carry forward of losses

• Delayed return filing

• Refund claims

• Limitation period interpretation

• Tax compliance relief applications

Overall, the decision strengthens the principle that tax law should serve justice and not merely punish technical lapses.

“Section 239 of the Income Tax Act, 2025

(1) The Board may issue such orders, instructions and directions to other income-tax authorities as it considers fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions.

(2) No orders, instructions or directions under sub-section (1) shall be issued so as to—

(a) require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or

(b) interfere with the discretion of the Joint Commissioner (Appeals) or Commissioner (Appeals) in the exercise of his appellate functions.

(3) Without prejudice to the generality of the foregoing power, the Board may,—

(a) if it considers it necessary or expedient so to do for the proper and efficient management of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of sections 263, 270, 271, 279, 280, 287, 288, 298, 398(3), 406, 407, 408, 423, 424, 425, 427, 428, 439, 448, 449 or otherwise), general or special orders in respect of any class of incomes or class of cases,—

(i) setting forth directions or instructions (not being prejudicial to assesses, as to the guidelines, principles or procedures to be followed by other income-tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties; and

(ii) any such order may, if the Board is of the opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information;

(b) if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise any income-tax authority, not being a Joint Commissioner (Appeals) or a Commissioner (Appeals) to admit an application or claim any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified in this Act for making such application or claim and deal with the same on merits as per law;

(c) if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order for reasons to be specified therein, relax any requirement contained in any of the provisions of Chapter IV or VIII, where the assessee has failed to comply with any requirement specified in such provision for claiming deduction thereunder, subject to the following conditions:—

(i) the default in complying with such requirement was due to circumstances beyond the control of the assessee; and

(ii) the assessee has complied with such requirement before the completion of assessment in relation to the tax year in which such deduction is claimed.

(4) The Central Government shall cause every order issued under sub-section (3)(c) to be laid before each House of Parliament.”

Download GST Refund Limitation Case: Calcutta High Court allows Carry Forward of Loss on case of Padmalochanan Radhakrishnan vs Union of India (2026) 

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