CBDT Delay Condonation Circular For 'Genuine Hardship' Applies Irrespective Of Assessment Year: Delhi High Court

The Delhi High Court has held that a beneficial circular issued by the Central Board of Direct Taxes (CBDT) allowing delay condonation in cases of “genuine hardship” cannot be restricted to specific assessment years and must be applied uniformly to all bona fide cases.

A Division Bench of Justices Dinesh Mehta and Vinod Kumar passed the ruling while allowing a writ petition filed by VRG Electronics Pvt. Ltd., challenging the rejection of its application for condonation of delay in filing Form 10IC for Assessment Year 2023–24.

The petitioner had sought to exercise the concessional tax regime under Section 115BAA of the Income Tax Act, 1961, but failed to file the prescribed Form 10IC within the due date, allegedly owing to a lapse on the part of its accountant.

Although the return of income was filed within the extended time under Section 139(4), the form could not be submitted within the timeline prescribed under Section 139(1).

The Principal Commissioner of Income Tax rejected the petitioner's application under Section 119(2)(b), citing CBDT Circular dated November 18, 2024, which empowered authorities to condone delay in filing prescribed forms such as Form 10IC in cases of “genuine hardship,” but expressly referred only to Assessment Years 2020–21, 2021–22 and 2022–23, and did not include Assessment Year 2023–24.

Setting aside the rejection order, the High Court observed that restricting the benefit of a remedial circular to specified years, without any rational basis, would lead to unjust and anomalous outcomes.

“We find no direct nexus of the Assessment Year vis-a-vis the purpose for which the said Circular has been issued - if the purpose is to mitigate genuine hardship, the hardship cannot be confined to particular year or years. If the advantage of a beneficial Circular is not given to all the assessees for all the years, it shall defeat the very purpose for which it was issued,” it said.

The court also noted that the specific purpose of confining the circular to the Assessment Years 2020-21, 2021-22 and 2022-23 was not given, nor was there any palatable justification for such a restriction.

As such, the court ruled that the CBDT circular dated November 18, 2024 would apply to all genuine cases, irrespective of the assessment year, unless expressly restricted through a conscious decision.

For Petitioner: Advocates Shahrukh Ejaz & Mr. Ganiul Hakim,

For Respondents: Advocates Puneet Rai, SSC with Ashvini Kumar