My AY 2020-21 return was 72 days late because of Covid and the short-term capital loss was refused. Four years on I want to set that loss off against this year's gains. Can I argue the delay in the current year's appeal?
No. The Delhi Tribunal dismissed the appeal, holding that s.80 makes it mandatory to file the return of loss in terms of s.139(3), and that where the carry forward was denied when the loss year's return was processed under s.143(1), the remedy against that denial does not lie in an appeal for the later set-off year. Kulu Valley Transport was distinguished on its facts.
Decided by the ITAT (Shri Vikas Awasthy, Judicial Member (SMC Bench)) on 2026-06-15, reported as ITA No. 920/Del/2026 (ITAT Delhi, SMC Bench); Assessment Year 2024-25. It bears on section 80, section 139(1), section 139(3), section 139(4), section 74, section 70, section 143(1), section 119(2)(b), section 72, section 73, section 74A of the Income Tax Act 1961, in Assessment & Scrutiny, Capital Gains and Appeals matters.
This is the Revenue side of the s.80 line and it is the answer a practitioner will actually meet at the Central Processing Centre. Three things in it are worth carrying. First, the cause of action against denial of carry forward arises when the LOSS year's return is processed and the carry forward is refused; letting that intimation go unchallenged is fatal, and the later year's appeal is the wrong forum. Second, a reasonable cause for the delay — here the Covid-19 pandemic — is not by itself an answer, because s.80 is not framed as a discretion: what the Tribunal looked for and did not find was an application to the appropriate authority for extension of time or for condonation of the delay under s.119(2)(b). Third, Kulu Valley Transport Co. (P) Ltd. does not do the work practitioners often ask of it. What the Supreme Court held there, on ss.22(1) and 22(3) of the 1922 Act, was that a return filed within the s.22(3) time (corresponding to s.139(4)) satisfies s.22(1); the Tribunal read that as leaving the present case untouched because the assessee was not seeking to validate the loss year's return at all but to reopen, in the set-off year, a refusal made in the loss year. There is a tension here worth naming: the Supreme Court in CIT v. Manmohan Das (Deceased) held that the officer's determination in the loss year is not binding on the assessee in the set-off year. Manmohan Das was not cited to this Bench, and a practitioner in this position should consider it — the answer may be that Manmohan Das goes to the quantification of the loss and not to the s.80 eligibility gate.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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For Assessment Year 2020-21 the assessee filed a return declaring a short-term capital loss of Rs 62,74,635. The due date under s.139(1) for that year was 10 January 2021; the return was filed on 23 March 2021, a delay of 72 days. The carry forward of the loss was denied by the Central Processing Centre by intimation under s.143(1) dated 25 November 2021. In the return for Assessment Year 2024-25 the assessee claimed set-off of that carried-forward short-term capital loss against capital gains of the year, and the claim was denied while processing the return under s.143(1). The Commissioner (Appeals) dismissed the appeal. Before the Tribunal the assessee explained the delay in the loss year by the Covid-19 pandemic and relied on CIT v. Kulu Valley Transport Co. (P) Ltd., 77 ITR 518, for the proposition that a return filed under s.139(4) can be treated as a valid return for the purpose of carry forward of losses. The Departmental Representative relied on s.80.
The appeal was dismissed (para 9). Section 80 makes it clear that a loss shall not be allowed to be carried forward and set off unless it is determined in pursuance of a return filed in compliance with s.139(3), so timely filing in terms of s.139(3) is mandatory for the benefit of carry forward; the assessee had at no point applied for extension of time or for condonation of the delay in filing the return for Assessment Year 2020-21; and in Assessment Year 2024-25 the assessee cannot be allowed the set-off, because the remedy against denial of carry forward of the losses of Assessment Year 2020-21 does not lie in an appeal for Assessment Year 2024-25 (para 7).
The Tribunal began from the admitted fact that the loss year's return was beyond the s.139(1) date, and that the carry forward had been refused when that return was processed under s.143(1) (para 6). It then set out s.80 and read it as making a return in terms of s.139(3) a mandatory condition of carry forward, adding that the record disclosed no application for extension of time and no application for condonation of the delay (para 7). On Kulu Valley Transport the Bench held the decision distinguishable on facts: what the Supreme Court decided there was that where a return has been filed within the time specified in s.22(3) of the 1922 Act (corresponding to s.139(4)), compliance with s.22(1) must also be held to have been made; whereas the present assessee was seeking, in proceedings for Assessment Year 2024-25, the benefit of a carry forward pertaining to Assessment Year 2020-21, the cause of action for which arose when that year's return was processed and the benefit refused (para 8).
The remedy against denial of carry forward of losses of AY 2020-21 does not lie in appeal for AY 2024-25.
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Handle my notice → Ask a CA on WhatsAppNo. The Delhi Tribunal dismissed the appeal, holding that s.80 makes it mandatory to file the return of loss in terms of s.139(3), and that where the carry forward was denied when the loss year's return was processed under s.143(1), the remedy against that denial does not lie in an appeal for the later set-off year. Kulu Valley Transport was distinguished on its facts. This was decided by the ITAT (Shri Vikas Awasthy, Judicial Member (SMC Bench)) and bears on section 80, section 139(1), section 139(3), section 139(4), section 74, section 70, section 143(1), section 119(2)(b), section 72, section 73, section 74A of the Income Tax Act 1961. It is reported as ITA No. 920/Del/2026 (ITAT Delhi, SMC Bench); Assessment Year 2024-25. This is the Revenue side of the s.80 line and it is the answer a practitioner will actually meet at the Central Processing Centre. Three things in it are worth carrying. First, the cause of action against denial of carry forward arises when the LOSS year's return is processed and the carry forward is refused; letting that intimation go unchallenged is fatal, and the later year's appeal is the wrong forum. Second, a reasonable cause for the delay — here the Covid-19 pandemic — is not by itself an answer, because s.80 is not framed as a discretion: what the Tribunal looked for and did not find was an application to the appropriate authority for extension of time or for condonation of the delay under s.119(2)(b). Third, Kulu Valley Transport Co. (P) Ltd. does not do the work practitioners often ask of it. What the Supreme Court held there, on ss.22(1) and 22(3) of the 1922 Act, was that a return filed within the s.22(3) time (corresponding to s.139(4)) satisfies s.22(1); the Tribunal read that as leaving the present case untouched because the assessee was not seeking to validate the loss year's return at all but to reopen, in the set-off year, a refusal made in the loss year. There is a tension here worth naming: the Supreme Court in CIT v. Manmohan Das (Deceased) held that the officer's determination in the loss year is not binding on the assessee in the set-off year. Manmohan Das was not cited to this Bench, and a practitioner in this position should consider it — the answer may be that Manmohan Das goes to the quantification of the loss and not to the s.80 eligibility gate. If it applies to you, the first step is this: Challenge the refusal in the year the loss arises, against the s.143(1) intimation for THAT year. Do not let it pass in the expectation of arguing it when the set-off is claimed.
For Assessment Year 2020-21 the assessee filed a return declaring a short-term capital loss of Rs 62,74,635. The due date under s.139(1) for that year was 10 January 2021; the return was filed on 23 March 2021, a delay of 72 days. The carry forward of the loss was denied by the Central Processing Centre by intimation under s.143(1) dated 25 November 2021. In the return for Assessment Year 2024-25 the assessee claimed set-off of that carried-forward short-term capital loss against capital gains of the year, and the claim was denied while processing the return under s.143(1). The Commissioner (Appeals) dismissed the appeal. Before the Tribunal the assessee explained the delay in the loss year by the Covid-19 pandemic and relied on CIT v. Kulu Valley Transport Co. (P) Ltd., 77 ITR 518, for the proposition that a return filed under s.139(4) can be treated as a valid return for the purpose of carry forward of losses. The Departmental Representative relied on s.80. The matter was decided on 2026-06-15 by the ITAT (Shri Vikas Awasthy, Judicial Member (SMC Bench)). On those facts the ITAT held as follows. The appeal was dismissed (para 9). Section 80 makes it clear that a loss shall not be allowed to be carried forward and set off unless it is determined in pursuance of a return filed in compliance with s.139(3), so timely filing in terms of s.139(3) is mandatory for the benefit of carry forward; the assessee had at no point applied for extension of time or for condonation of the delay in filing the return for Assessment Year 2020-21; and in Assessment Year 2024-25 the assessee cannot be allowed the set-off, because the remedy against denial of carry forward of the losses of Assessment Year 2020-21 does not lie in an appeal for Assessment Year 2024-25 (para 7).
The Tribunal began from the admitted fact that the loss year's return was beyond the s.139(1) date, and that the carry forward had been refused when that return was processed under s.143(1) (para 6). It then set out s.80 and read it as making a return in terms of s.139(3) a mandatory condition of carry forward, adding that the record disclosed no application for extension of time and no application for condonation of the delay (para 7). On Kulu Valley Transport the Bench held the decision distinguishable on facts: what the Supreme Court decided there was that where a return has been filed within the time specified in s.22(3) of the 1922 Act (corresponding to s.139(4)), compliance with s.22(1) must also be held to have been made; whereas the present assessee was seeking, in proceedings for Assessment Year 2024-25, the benefit of a carry forward pertaining to Assessment Year 2020-21, the cause of action for which arose when that year's return was processed and the benefit refused (para 8). In the words reproduced by the source cited on this page: "The remedy against denial of carry forward of losses of AY 2020-21 does not lie in appeal for AY 2024-25." The decision followed or applied CIT v. Kulu Valley Transport Co. (P) Ltd., 77 ITR 518 (SC) — distinguished on facts.
It was decided by the ITAT on 2026-06-15 and is reported as ITA No. 920/Del/2026 (ITAT Delhi, SMC Bench); Assessment Year 2024-25. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 80, section 139(1), section 139(3), section 139(4), section 74, section 70, section 143(1), section 119(2)(b), section 72, section 73, section 74A, 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 department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The appeal was dismissed (para 9). Section 80 makes it clear that a loss shall not be allowed to be carried forward and set off unless it is determined in pursuance of a return filed in compliance with s.139(3), so timely filing in terms of s.139(3) is mandatory for the benefit of carry forward; the assessee had at no point applied for extension of time or for condonation of the delay in filing the return for Assessment Year 2020-21; and in Assessment Year 2024-25 the assessee cannot be allowed the set-off, because the remedy against denial of carry forward of the losses of Assessment Year 2020-21 does not lie in an appeal for Assessment Year 2024-25 (para 7). It arises in Assessment & Scrutiny, Capital Gains and Appeals matters, on section 80, section 139(1), section 139(3), section 139(4), section 74, section 70, section 143(1), section 119(2)(b), section 72, section 73, section 74A of the Income Tax Act 1961, and was decided by Shri Vikas Awasthy, Judicial Member (SMC Bench). 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. Where the loss year's return was late, apply under s.119(2)(b) for condonation of the delay in filing that return — the Tribunal's stated reason for refusing relief included the absence of any such application. Do not rely on Kulu Valley Transport Co. (P) Ltd. for the proposition that a belated return always preserves the carry forward; check what the return was belated in relation to, and note that s.139(3) has since been amended to tie the return of loss to the s.139(1) time. Where the point is genuinely one of quantification of a loss already determined rather than eligibility to carry it forward, consider CIT v. Manmohan Das (Deceased) — it was not before this Bench. Verify the due date actually applicable to the loss year before conceding delay; for AY 2020-21 the Tribunal took 10 January 2021 as the s.139(1) due date, and extended dates for that year varied by class of assessee.
Searched for later treatment; none was found. That is not the same as a source affirming it. A `citedby:` citator search on this order's Indian Kanoon id returns no later decision citing it. A second, differently worded probe - the assessee's name restricted to documents from 15 June 2026 onward, across all courts including the High Courts and the Supreme Court - turned up no judicial treatment either. In particular no appeal under section 260A, and so no High Court reversal, could be traced, and no later Bench was found taking the opposite view. This is a June 2026 order, so the silence reflects its age rather than any doubt about it: a practitioner may cite it as the only direct authority on the point but should not expect it to be treated as settled. 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.
Two cautions on the text. First, the order's reproduction of s.80 at paragraph 7 is not a complete reproduction of the section: it omits the words 'or sub-section (2) of section 73A' and the words 'or sub-section (3)' before 'of Section 74', and it prints 'a return filed under Section 139(3)' where the section reads 'a return filed in accordance with the provisions of sub-section (3) of section 139'. The substance on the point decided is unaffected but the extract must not be quoted as the section. Second, the transcription of the document returns a block numbered '1' consisting only of the appeal number and the assessee's name (a running header), and then continues at paragraph 3; paragraph 2 was not returned and nothing is said about it here. The last numbered paragraph is 9 and is the disposal. Paragraph 7 was confirmed word for word on a separate docfragment pass and again on a print-view pass. The order's extract was checked against the current text of s.80, read on 8 September 2026 from the departmental section pages /w/section-80-64, /w/section-80-65 and /w/section-80-66, all carrying the heading 'Submission of return for losses' and stamped Year 2024 (No. 1), Year 2024 (No. 2) and Year 2025 respectively, all printing identical text and no amendment footnote. 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 appeal was dismissed (para 9). Section 80 makes it clear that a loss shall not be allowed to be carried forward and set off unless it is determined in pursuance of a return filed in compliance with s.139(3), so timely filing in terms of s.139(3) is mandatory for the benefit of carry forward; the assessee had at no point applied for extension of time or for condonation of the delay in filing the return for Assessment Year 2020-21; and in Assessment Year 2024-25 the assessee cannot be allowed the set-off, because the remedy against denial of carry forward of the losses of Assessment Year 2020-21 does not lie in an appeal for Assessment Year 2024-25 (para 7).
TaxSphere, “Tanisha Chaudhary v Income-tax Officer, Ward 5(2)(4), Noida”, https://taxnotice.vittsphere.com/caselaw/case/tanisha-chaudhary-carry-forward-denied-the-remedy-lies-in-the-loss-year/ (validity last checked 2026-09-08)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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