2025 (11) TMI 979 - AT - Income Tax

Late return by 10 days bars carry-forward and set-off under s.80 read with s.139(1) and s.139(3), medical emergency irrelevant

ITAT, Mumbai upheld denial of carry-forward and set-off where the return for AY 2023-24 was filed 10 days late. Citing the statutory requirement of s.80 ... Denial of carry forward and set-off of such loss - return for assessment year 2023-24 was filed belatedly by 10 days - HELD THAT:- In the present case, there is no dispute that the return for assessment year 2023-24 was filed belatedly by 10 days. The statutory language of section 80 read with section 139(3) is clear, categorical, and admits of no exception. As long as the return of loss is not filed within the time prescribed u/s 139(1), the assessee forfeits the right to claim carry forward and set-off of such loss. The binding authority of the Hon'ble Supreme Court in Wipro Ltd. [2022 (7) TMI 560 - SUPREME COURT] squarely governs the field and leaves no scope for equitable considerations to override the statutory mandate. We are not unmindful of the medical exigency pleaded by the assessee, which undoubtedly deserves sympathy. However, fiscal statutes are to be interpreted strictly, and neither equity nor hardship can be a ground to ignore the express command of the statute. As observed by the Hon'ble Supreme Court in Wipro Ltd. (supra), such a requirement is a condition precedent and not a mere procedural formality. Accordingly, the denial of set-off by the CPC and its affirmation by the CIT(A) is in accordance with law. We accordingly uphold the order of CIT(A) on the issue in dispute. The grounds of appeal of the assessee are accordingly dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether a return of loss filed beyond the time prescribed under section 139(1) can be treated as a valid return under section 139(3) to enable carry forward and set-off of business losses under section 80 and related provisions. 2. Whether delay in filing a return of loss can be condoned by appellate authorities (CIT(A) / Tribunal) or by invoking equitable/medical hardship grounds, in the absence of specific statutory provision authorising such condonation. ISSUE-WISE DETAILED ANALYSIS - 1. Validity of belated return for claiming carry forward and set-off of losses Legal framework: Section 139(1) prescribes the time for filing a return. Section 139(3) requires that, to claim carry forward of business/capital losses, a return of loss must be furnished within the time allowed under sub-section (1). Section 80 provides that no loss not determined in pursuance of a return filed in accordance with section 139(3) shall be carried forward and set off under the specified provisions (including section 72 and related sub-sections). Precedent treatment: The Court treated the higher-court pronouncement holding the time limit in section 139(3)/section 80 as mandatory and not directory as binding and dispositive. High Court decisions addressing condonation under separate statutory power (section empowering CBDT) were considered but distinguished on jurisdictional grounds. Interpretation and reasoning: The Tribunal interpreted the statutory language of sections 139(1), 139(3) and 80 as clear and unambiguous: filing the return of loss within the period prescribed is a condition precedent to the statutory entitlement to carry forward and set-off losses. A belated filing cannot be converted into a timely return for the purpose of claiming carry-forward relief; a revised return filed under the general revision provision cannot transform a later return into one within the statutory window required by section 139(3). The Tribunal rejected equitable arguments (medical exigency) as not capable of overriding the statutory mandate, observing that fiscal statutes must be strictly construed and that the requirement is not a mere procedural formality but a substantive precondition. Ratio vs. Obiter: Ratio - The statutory requirement that returns of loss must be filed within the time prescribed by section 139(1) to avail carry forward/set-off under section 80 is mandatory; a belated return does not satisfy section 139(3) and forfeits the right to carry forward losses. Obiter - Expressions of sympathy for medical hardship and general remarks on strict construction of fiscal statutes. Conclusions: The Tribunal upheld disallowance of set-off of brought forward losses where the return for the year in which the loss arose was filed ten days after the section 139(1) due date. The claim to carry forward the loss was barred by the statutory scheme. ISSUE-WISE DETAILED ANALYSIS - 2. Power to condone delay and relevance of equitable/medical grounds Legal framework: The Act contains a specific administrative power vested in the Central Board (statutory provision empowering the Board to condone delay in appropriate cases). There is no express provision in the Act authorising the CIT(A) or the Tribunal to condone delay in filing returns for purposes of section 139(3)/section 80. Precedent treatment: Decisions of the High Court which condoned delay under the Board's delegated power or in contexts invoking that power were considered in submissions but were distinguished because those authorities either relied on or addressed the statutory power of the Board; such powers are not available to appellate authorities. The binding higher-court decision treating the time limit as mandatory was applied to preclude reliance on equitable relief. Interpretation and reasoning: The Tribunal reasoned that appellate authorities lack jurisdiction to condone statutory time limits where the statute itself does not confer that power on them; invocation of equitable considerations before such authorities cannot supplant an explicit legislative condition precedent. Where a separate statutory channel exists for condonation (administrative power of the Board), the correct remedy for the assessee would have been to seek relief through that channel; failure to do so does not entitle appellate authorities to exercise a similar function. Ratio vs. Obiter: Ratio - Appellate authorities (CIT(A)/Tribunal) cannot condone delay in filing returns for the purpose of claiming carry forward/set-off in the absence of express statutory power; equitable hardship cannot displace the statutory mandate. Obiter - Reference to the appropriateness of invoking the Board's power (where available) as the proper remedy; sympathetic tone regarding individual medical hardship. Conclusions: The Tribunal rejected the plea for condonation of a ten-day delay based on medical exigency and held that the absence of statutory authority for the appellate forum to condone such delay, together with the mandatory nature of section 139(3)/section 80, precludes allowance of the carry forward claim. The assessment view disallowing the set-off was affirmed.