I filed my loss return late on my CA's advice and lost the carry-forward. Will the delay be condoned?
The Board could not refuse to condone the delay. A delay caused by acting on a professional's opinion is bona fide and not negligence, especially where the issue is fairly complex and unsettled, and refusing condonation would have permanently extinguished the carry forward of losses under s.139(3) read with s.80. The department loses nothing, because s.153(1B) gives the Assessing Officer twelve months from the end of the financial year of the return to assess. The delay was condoned and the assessment directed - but all contentions were kept open, so the losses themselves remain open to examination.
Decided by the High Court (Bombay High Court — Hon'ble Justice B. P. Colabawalla and Hon'ble Justice Amit Satyavan Jamsandekar) on 2025-10-14, reported as [2025] 307 Taxman 498 / 179 taxmann.com 637 (Bom.)(HC); W.P. No. 16638 of 2024. It bears on section 119(2)(b), section 139(1), section 139(3), section 80, section 72, section 153(1B) of the Income Tax Act 1961, in Refunds, Interest & Condonation matters.
The standard CBDT rejection says the assessee had ample time and shows no sufficient cause. Two answers here. First, the source of the delay is decisive — advice taken on an unsettled point is bona fide, and the hardship is concrete because a substantive entitlement is extinguished by a filing default. Second, and more useful, s.153(1B) extends the time to complete the assessment once a return is treated as filed in time, so the Revenue loses nothing by condonation; that removes the counterweight the Board usually relies on.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For assessment year 2018-19 the due date for a loss return under s.139(3) read with s.139(1) was 31 October 2018. The LLP filed on 30 March 2019, within the time allowed by s.139(4) but five months late, returning a loss of Rs. 4,47,30,811. Because s.80 requires a loss return to be filed under s.139(3) before the loss can be carried forward under s.72, the delay cost it the carry forward. The delay came about because its chartered accountant was not acquainted with the legal and accounting treatment of compensation received as Transferable Development Rights in lieu of the compulsory acquisition of immovable property, and legal opinions were obtained between May 2018 and March 2019. On 15 June 2023 the LLP applied to the Board under s.119(2)(b) to condone the delay, relying on Circular No. 9 of 2015 and filing the accountant's affidavit, the opinions and precedents. That application was itself made more than four years after the return, though within the six-year period the circular allows. The Board refused on 7 August 2024, saying the LLP had failed to exercise due diligence, had ample time, and that a delay caused by its own lack of supervision was not genuine hardship. Before the Court the department added that the claims in the return were unverified and that the time to assess had expired, so condonation would let unverified claims through.
The Board's order of 7 August 2024 was quashed, the delay in filing the return for assessment year 2018-19 was condoned, and the return filed on 30 March 2019 was directed to be treated as a return filed in accordance with s.153(1B), with the time frame in that provision applying. The department was directed to frame the assessment in accordance with law, and all rights and contentions of both sides were kept open. So the loss is not established by this order: the Assessing Officer may still examine whether the losses claimed are correct, and has until 31 March 2027 to do it. The reasoning that got the assessee there is that a delay caused by acting on a professional's opinion is not negligence. Where an assessee takes a course of action on a professional's opinion there is reasonable cause and the act is bona fide, and this assessee was not to be put at a considerable disadvantage by belated advice, particularly on an issue that was fairly complex and on which there were no well settled precedents at the time. Refusal would have meant genuine hardship, since genuine losses could not be carried forward, and the department's apprehension was answered by s.153(1B), which preserves its opportunity to assess.
The Court took the source of the delay first. It is settled that where an assessee acts on a professional's opinion there is reasonable cause and the act is bona fide; here the chartered accountant had admitted in an affidavit that his advice was inadequate, and the subject - the treatment of compensation received as development rights on a compulsory acquisition - was fairly complex with no well settled precedents at the time. The Court then used the Board's own order against it, quoting paragraph 3, in which the field authorities had accepted that the taxability of the proceeds may not have been known to the accountant or the assessee and that the accountant's seeking a legal opinion was beyond the assessee's control, adding only that a more diligent taxpayer might have obtained the opinion sooner. On hardship, the loss of the carry forward of genuine losses was treated as concrete rather than notional. Against that the Court weighed what the department stood to lose and found nothing: s.153(1B) provides that where a return is furnished in consequence of an order under s.119(2)(b), an assessment under s.143 or s.144 may be made within twelve months from the end of the financial year in which the return was furnished, so the Assessing Officer would have until 31 March 2027 and could enquire into the correctness of the losses. Finally the Court dealt separately with the delay in approaching the Board at all, which was more than four years. It accepted the explanation that the assessee had not known of the s.119(2)(b) procedure and that the profits of 2019-20 to 2021-22 were too small to absorb a loss of Rs. 4,47,30,811, so on the forecasts then held the exercise looked futile until the improved results of 2022-23 made a set-off possible.
In the present case, the Petitioner ought not to be put to a considerable disadvantage as a result of belated advice given to it by the Chartered Accountant, especially when the issue that was being grappled with is fairly complex and for which there were no well settled judicial precedents at the relevant time.
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Handle my notice → Ask a CA on WhatsAppThe Board could not refuse to condone the delay. A delay caused by acting on a professional's opinion is bona fide and not negligence, especially where the issue is fairly complex and unsettled, and refusing condonation would have permanently extinguished the carry forward of losses under s.139(3) read with s.80. The department loses nothing, because s.153(1B) gives the Assessing Officer twelve months from the end of the financial year of the return to assess. The delay was condoned and the assessment directed - but all contentions were kept open, so the losses themselves remain open to examination. This was decided by the High Court (Bombay High Court — Hon'ble Justice B. P. Colabawalla and Hon'ble Justice Amit Satyavan Jamsandekar) and bears on section 119(2)(b), section 139(1), section 139(3), section 80, section 72, section 153(1B) of the Income Tax Act 1961. It is reported as [2025] 307 Taxman 498 / 179 taxmann.com 637 (Bom.)(HC); W.P. No. 16638 of 2024. The standard CBDT rejection says the assessee had ample time and shows no sufficient cause. Two answers here. First, the source of the delay is decisive — advice taken on an unsettled point is bona fide, and the hardship is concrete because a substantive entitlement is extinguished by a filing default. Second, and more useful, s.153(1B) extends the time to complete the assessment once a return is treated as filed in time, so the Revenue loses nothing by condonation; that removes the counterweight the Board usually relies on. If it applies to you, the first step is this: Set out precisely what advice was taken, on what question, and why that question was genuinely unsettled — a bare assertion that professional advice was followed will not carry the application.
For assessment year 2018-19 the due date for a loss return under s.139(3) read with s.139(1) was 31 October 2018. The LLP filed on 30 March 2019, within the time allowed by s.139(4) but five months late, returning a loss of Rs. 4,47,30,811. Because s.80 requires a loss return to be filed under s.139(3) before the loss can be carried forward under s.72, the delay cost it the carry forward. The delay came about because its chartered accountant was not acquainted with the legal and accounting treatment of compensation received as Transferable Development Rights in lieu of the compulsory acquisition of immovable property, and legal opinions were obtained between May 2018 and March 2019. On 15 June 2023 the LLP applied to the Board under s.119(2)(b) to condone the delay, relying on Circular No. 9 of 2015 and filing the accountant's affidavit, the opinions and precedents. That application was itself made more than four years after the return, though within the six-year period the circular allows. The Board refused on 7 August 2024, saying the LLP had failed to exercise due diligence, had ample time, and that a delay caused by its own lack of supervision was not genuine hardship. Before the Court the department added that the claims in the return were unverified and that the time to assess had expired, so condonation would let unverified claims through. The matter was decided on 2025-10-14 by the High Court (Bombay High Court — Hon'ble Justice B. P. Colabawalla and Hon'ble Justice Amit Satyavan Jamsandekar). On those facts the High Court held as follows. The Board's order of 7 August 2024 was quashed, the delay in filing the return for assessment year 2018-19 was condoned, and the return filed on 30 March 2019 was directed to be treated as a return filed in accordance with s.153(1B), with the time frame in that provision applying. The department was directed to frame the assessment in accordance with law, and all rights and contentions of both sides were kept open. So the loss is not established by this order: the Assessing Officer may still examine whether the losses claimed are correct, and has until 31 March 2027 to do it. The reasoning that got the assessee there is that a delay caused by acting on a professional's opinion is not negligence. Where an assessee takes a course of action on a professional's opinion there is reasonable cause and the act is bona fide, and this assessee was not to be put at a considerable disadvantage by belated advice, particularly on an issue that was fairly complex and on which there were no well settled precedents at the time. Refusal would have meant genuine hardship, since genuine losses could not be carried forward, and the department's apprehension was answered by s.153(1B), which preserves its opportunity to assess.
The Court took the source of the delay first. It is settled that where an assessee acts on a professional's opinion there is reasonable cause and the act is bona fide; here the chartered accountant had admitted in an affidavit that his advice was inadequate, and the subject - the treatment of compensation received as development rights on a compulsory acquisition - was fairly complex with no well settled precedents at the time. The Court then used the Board's own order against it, quoting paragraph 3, in which the field authorities had accepted that the taxability of the proceeds may not have been known to the accountant or the assessee and that the accountant's seeking a legal opinion was beyond the assessee's control, adding only that a more diligent taxpayer might have obtained the opinion sooner. On hardship, the loss of the carry forward of genuine losses was treated as concrete rather than notional. Against that the Court weighed what the department stood to lose and found nothing: s.153(1B) provides that where a return is furnished in consequence of an order under s.119(2)(b), an assessment under s.143 or s.144 may be made within twelve months from the end of the financial year in which the return was furnished, so the Assessing Officer would have until 31 March 2027 and could enquire into the correctness of the losses. Finally the Court dealt separately with the delay in approaching the Board at all, which was more than four years. It accepted the explanation that the assessee had not known of the s.119(2)(b) procedure and that the profits of 2019-20 to 2021-22 were too small to absorb a loss of Rs. 4,47,30,811, so on the forecasts then held the exercise looked futile until the improved results of 2022-23 made a set-off possible. In the words reproduced by the source cited on this page: "In the present case, the Petitioner ought not to be put to a considerable disadvantage as a result of belated advice given to it by the Chartered Accountant, especially when the issue that was being grappled with is fairly complex and for which there were no well settled judicial precedents at the relevant time."
It was decided by the High Court on 2025-10-14 and is reported as [2025] 307 Taxman 498 / 179 taxmann.com 637 (Bom.)(HC); W.P. No. 16638 of 2024. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 119(2)(b), section 139(1), section 139(3), section 80, section 72, section 153(1B), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Board's order of 7 August 2024 was quashed, the delay in filing the return for assessment year 2018-19 was condoned, and the return filed on 30 March 2019 was directed to be treated as a return filed in accordance with s.153(1B), with the time frame in that provision applying. The department was directed to frame the assessment in accordance with law, and all rights and contentions of both sides were kept open. So the loss is not established by this order: the Assessing Officer may still examine whether the losses claimed are correct, and has until 31 March 2027 to do it. The reasoning that got the assessee there is that a delay caused by acting on a professional's opinion is not negligence. Where an assessee takes a course of action on a professional's opinion there is reasonable cause and the act is bona fide, and this assessee was not to be put at a considerable disadvantage by belated advice, particularly on an issue that was fairly complex and on which there were no well settled precedents at the time. Refusal would have meant genuine hardship, since genuine losses could not be carried forward, and the department's apprehension was answered by s.153(1B), which preserves its opportunity to assess. It arises in Refunds, Interest & Condonation matters, on section 119(2)(b), section 139(1), section 139(3), section 80, section 72, section 153(1B) of the Income Tax Act 1961, and was decided by Bombay High Court — Hon'ble Justice B. P. Colabawalla and Hon'ble Justice Amit Satyavan Jamsandekar. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Quantify what is lost without condonation, here the carry-forward of losses under s.72 read with s.80, so that the hardship is a figure rather than an adjective. Point to s.153(1B) to show the Revenue retains a full opportunity to examine the return, and ask expressly for a direction that the return be treated as filed in time. Do not stop at quashing the rejection — ask for condonation itself, which is what was granted here.
Validity check could not be completed. The judgment carries no later-treatment banner and no decision applying or following it was found; it is recent, having been delivered on 14 October 2025, and is now reported at [2025] 179 taxmann.com 637 and 307 Taxman 498. It is consistent with the line of authority that a rejection under s.119(2)(b) which does not properly consider the reasons and material is to be set aside, of which CBDT v. Vasudeva Adigas Fast Food (P.) Ltd. (2023) 450 ITR 4 (SC) is an example, but that speaks to the principle and is not later treatment of this decision. Whether the department has appealed is not recorded. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The judgment has now been read in full in a law report, where it is reported at [2025] 179 taxmann.com 637 and [2025] 307 Taxman 498; the entry had recorded it as unreported. The words previously carried as a quotation are a digest's paraphrase and appear nowhere in the order, and have been replaced by the Court's own sentence, which carries the two conditions that limit the principle - that the issue was fairly complex and that there were no well settled precedents at the time. Three things the entry did not have are worth knowing. The loss was Rs. 4,47,30,811 and the s.119(2)(b) application was made on 15 June 2023, more than four years after the return; the Court dealt with that delay separately and accepted the explanation that the assessee had not known of the procedure and had not expected the loss to be absorbed until the improved results of assessment year 2022-23. The order also confirms what the earlier note could not verify: the application was made within the six-year period stipulated in Circular No. 9 of 2015. And the Court used the Board's own order against it, quoting paragraph 3, where the field authorities had accepted that the accountant's seeking a legal opinion was beyond the assessee's control. Finally, the order is not the end of the matter: all rights and contentions of both sides were kept open, the department was directed to frame an assessment, and by s.153(1B) it has until 31 March 2027 to do so and may examine whether the losses claimed are correct. The order does not establish the loss. All contentions were kept open, the Assessing Officer may examine the correctness of the losses claimed and has until 31 March 2027 to do so. The Court cited no authority for the proposition that acting on professional advice is a reasonable cause, stating it as settled law, so the entry cannot point you to the cases behind it. It does not say how far the principle reaches where the professional's advice was not on a complex or unsettled point, the two features the Court expressly relied on. It does not lay down any rule about the delay in approaching the Board itself; it accepted this assessee's explanation on the facts. The terms of Circular No. 9 of 2015 beyond its six-year period, which the judgment confirms, were still not read from the circular, and whether a later circular supersedes it has not been checked. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Board's order of 7 August 2024 was quashed, the delay in filing the return for assessment year 2018-19 was condoned, and the return filed on 30 March 2019 was directed to be treated as a return filed in accordance with s.153(1B), with the time frame in that provision applying. The department was directed to frame the assessment in accordance with law, and all rights and contentions of both sides were kept open. So the loss is not established by this order: the Assessing Officer may still examine whether the losses claimed are correct, and has until 31 March 2027 to do it. The reasoning that got the assessee there is that a delay caused by acting on a professional's opinion is not negligence. Where an assessee takes a course of action on a professional's opinion there is reasonable cause and the act is bona fide, and this assessee was not to be put at a considerable disadvantage by belated advice, particularly on an issue that was fairly complex and on which there were no well settled precedents at the time. Refusal would have meant genuine hardship, since genuine losses could not be carried forward, and the department's apprehension was answered by s.153(1B), which preserves its opportunity to assess.
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