Case Law Details
Suresh Velu Ellathukalathil Vs PCIT (Kerala High Court)
The Kerala High Court considered an appeal arising from the rejection of a request for condonation of delay in filing an Income Tax Return for Assessment Year 2018-19.
The appellant admitted that he had failed to file his return for AY 2018-19. He stated that he was under the impression that, under CBDT Circular No. 9/2015, he had a six-year period within which he could seek condonation and file the return. Accordingly, he filed a petition dated 19.03.2025 before the Commissioner of Income Tax seeking condonation of delay.
The Commissioner rejected the request through an order dated 31.10.2025. The rejection was based solely on CBDT Circular No. 11/2024 dated 01.10.2024, which reduced the period for seeking condonation from six years to five years.
The appellant challenged the rejection. It was argued that under Circular No. 9/2015, he was entitled to seek condonation up to 31.03.2025 and that his application dated 19.03.2025 was therefore within the permissible period. The appellant contended that reliance on the later circular to reject the application was unlawful.
The Revenue argued that Circular No. 11/2024 had been issued in supersession of all earlier CBDT instructions, circulars and guidelines, and therefore the authorities had correctly applied the later circular.
The High Court observed that the dispute centered on Section 119(2)(b) of the Income Tax Act, under which the competent authority may condone delay in filing returns to avoid genuine hardship based on orders or circulars issued for classes of assessees.
The Court noted that Circular No. 9/2015 granted taxpayers the benefit of seeking condonation of delay up to six years. Since the appellant’s return related to AY 2018-19, he was entitled under that circular to seek condonation until 31.03.2025.
The Court further observed that Circular No. 11/2024, issued on 01.10.2024, reduced the condonable period from six years to five years. At the time the new circular came into effect, the appellant still had a few months remaining to seek condonation under the earlier circular. However, under the new circular, his opportunity had already expired on 31.03.2024.
The Court held that this prima facie created a situation prejudicial to the appellant because he could have applied for condonation at any time before Circular No. 11/2024 came into force. The Court found that the Commissioner had not considered this aspect and had rejected the application solely by relying on Circular No. 11/2024.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The appellant concedes that he had omitted to file his Income Tax Returns for the assessment year 2018-19, but was under the impression that he had a six year period to do so, as per Circular No.9/2015, issued by the Central Board of Direct Taxes (CBDT). He says that, therefore, he moved the Commissioner of Income Tax, through a petition dated 19.03.2025, requesting that the delay in filing the returns be condoned, so as to enable him to file the same; but that it has been rejected through Ext.P6 order, dated 31.10.2025, solely relying upon a subsequent Circular, bearing No.11/2024 dated 01.10.2024, whereby, the period for filing such returns has been reduced to five years.
2. Smt.Preetha S. Nair — learned counsel for the appellant, explained that her client, had, in the afore circumstances, no other option but to approach this Court through the Writ Petition; but which has now been rejected by the learned Single Judge, again relying upon the latter circular and finding Ext.P6 to be without error. She contended that her client had the right, as per the circular No.9/2015, to file his return until 31.03.2025; and it is, therefore, that he moved the application on 19.03.2025, seeking condonation. She submitted that, in such scenario, the impugned order of the Commissioner of Income Tax, relying upon the subsequent Circular dated 01.10.2024, is illegal and unlawful.
3. Sri. Jose Joseph — learned Standing Counsel for the respondents, refuted the afore submissions of Smt.Preetha S. Nair, saying that, when the circular dated 01.10.2024, bearing No.11/2024, was issued in supercession of all earlier instructions/circulars/guidelines of the CBDT, the Authorities could have done nothing more than to have issued Ext.P6. He asserted that the learned Single Judge has acted without error; and prayed that this Appeal be dismissed.
4. Incontrovertibly, the controversy in this case revolves around the provisions of Section 119(2)(b) of the Income Tax Act (hereinafter referred to as ‘the Act’ for short). As per its provision, the competent Authority can condone delay in filing returns, to avoid genuine hardship, on the basis of orders or circulars to be issued for any class of persons/assessees. It is also without contest that Circular No.9/2015 was issued in terms of the afore provision, which gave benefit to the assessees to seek condonation of delay upto six years in filing the returns.
5. Again, without dispute, the appellant’s returns relates to the assessment year 2018-19; and he was, therefore, entitled to seek condonation till 31.03.2025, as per the afore circular.
6. However, on 10.2024, the CBDT issued Circular, bearing No.11/2024, reducing the period that can be condoned from six years to five years. At the time when the second circular came into force, the appellant still had a few more months’ time to seek condonation; while, as per the said circular, his time to do so had expired a few months earlier on 31.03.2024.
7. Prima fade, this certainly presents a scenario prejudicial to the appellant because, he could have made an application for condonation any time prior to circular No.11/2024 — which is admitted by the respondents; but the moment it came into effect, the argument is that he lost every such opportunity in future. This is when — as said above, as per the first circular, the period for seeking condonation of delay would have expired only on 31.03.2025.
8. We notice that, in Ext.P6, the Commissioner has not considered this aspect at all, but has proceeded to reject the appellant’s plea solely relying upon circular No.11/2024. We do not propose to speak on the merits of the matter yet, since we are of the view that the Commissioner must reconsider the request, adverting to the afore contentions and our observations.
In the afore circumstances, this Appeal is allowed and the impugned judgment of the learned Single Judge, as also Ext.P6, are set aside; with a consequential direction to the 1″ respondent — Principal Commissioner of Income Tax, to reconsider the application of the appellant, as expeditiously as is possible, but not later than three months from the date of receipt of a copy of this judgment.
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