CBDT Circular on Delay Condonation Applies to All Years, Not Just Specified AY: Delhi High Court

The Delhi High Court has held that beneficial circulars issued by the Central Board of Direct Taxes (CBDT) to condone delays cannot be restricted to specific assessment years (AYs) where such restriction defeats the purpose of mitigating genuine hardship. The bench of Justice Dinesh Mehta and Justice Vinod Kumar set aside an order of the Principal Commissioner of Income Tax (PCIT) that had rejected an assessee’s application for condonation of delay in filing Form 10IC for Assessment Year (AY) 2023–24. The case arose from a writ petition filed by VRG Electronics Pvt. Ltd., challenging the rejection of its application under Section 119(2)(b) of the Income Tax Act, 1961. The assessee had sought condonation of delay in filing Form 10IC, which is a mandatory requirement for opting for the concessional corporate tax regime under Section 115BAA. The petitioner submitted that due to an inadvertent lapse by its accountant, neither the income tax return nor Form 10IC was filed within the due date of 31 October 2023. However, the return was subsequently filed on 30 December 2023 within the extended timeline permitted under Section 139(4). The difficulty arose because Form 10IC is required to be filed within the due date under Section 139(1), and not within the belated return timeline. When the matter was placed before the PCIT, the application for condonation was rejected solely on the ground that CBDT Circular No. 17/2024 dated 18 November 2024, which empowers authorities to condone delays in filing prescribed forms, did not explicitly include AY 2023–24. The petitioner argued that such a narrow interpretation was erroneous, particularly when an earlier CBDT Circular dated 1 October 2024 had already empowered authorities to condone delays in certain cases. It was contended that the absence of a specific reference to AY 2023–24 in the later circular should not deprive genuine cases of relief. On the other hand, the Revenue maintained that while delay condonation for refund claims could be considered under earlier circulars, the acceptance of Form 10IC was governed strictly by Circular dated 18 November 2024. Since the benefit of the concessional tax regime under Section 115BAA is contingent upon timely filing of the form, the Revenue argued that the absence of the relevant assessment year in the circular was decisive. The High Court acknowledged that technically, the PCIT’s interpretation was consistent with the wording of the circular. However, it strongly disapproved of such a strict and mechanical approach, observing that it would result in unjust outcomes in bona fide cases. The Court emphasized that the very purpose of issuing the circular dated 18 November 2024 was to address genuine hardship faced by taxpayers. It held that limiting the applicability of such a beneficial circular to specific assessment years, without any rational justification, would undermine its objective. Importantly, the Court observed that hardship cannot be artificially confined to particular years. If the intent of the circular is to grant relief in deserving cases, then such relief must be available uniformly, unless the CBDT consciously decides otherwise with valid reasons. In a crucial interpretation, the Court held that the circular dated 18 November 2024 must be read as applicable to all assessment years, including AY 2023–24, and not merely those expressly mentioned in it. It ruled that restricting its scope would defeat the purpose for which it was issued. Accordingly, the High Court set aside the impugned order dated 12 December 2025 passed by the PCIT and directed the authority to reconsider the petitioner’s application in light of the broader interpretation of the circular. Case Details Case Title: VRG Electronics Pvt Ltd Versus PCIT Citation: JURISHOUR-774-HC-2026(DEL) Case No.: W.P.(C) 2625/2026 & CM APPL. 12771/2026 Date: 9/04/2026 Counsel For Petitioner: Shahrukh Ejaz Counsel For Respondent: Puneet Rai Click Here To Read Order Read More: Appeal Remedy Must Be Exhausted Before Invoking Writ Jurisdiction: Delhi High Court Refuses to Interfere in GST ITC Demand

CBDT Circular on Delay Condonation Applies to All Years, Not Just Specified AY: Delhi High Court

Membership Required

Latest articles

Foreign Tax Credit Can’t Be Denied on Technical Grounds: ITAT Restores Claim Despite 1,933-Day Delay

Withdrawal of S. 12AB Registration Application Doesn’t Bar CIT(E) From Recording Findings During Inquiry: ITAT

Bright Line Test Can’t Be Used for AMP Expenses: ITAT Deletes Rs. 5.19 Crore Transfer Pricing Addition

Lawyer Seeks Supreme Court’s Intervention Against Delhi Police Over CJP Protest Crackdown; Urges CJI to Take Suo Motu Cognisance

More like this

Foreign Tax Credit Can’t Be Denied on Technical Grounds: ITAT Restores Claim Despite 1,933-Day Delay

Withdrawal of S. 12AB Registration Application Doesn’t Bar CIT(E) From Recording Findings During Inquiry: ITAT

Bright Line Test Can’t Be Used for AMP Expenses: ITAT Deletes Rs. 5.19 Crore Transfer Pricing Addition

About us

Company

Categories