Facts of the Case

The petitioner, Manjit Singh Dhaliwal, a Canadian citizen and non-resident for Assessment Year 2020–21, sought condonation of delay in filing his income tax return for the said year under Section 119(2)(b) of the Income-tax Act, 1961. During AY 2020–21, the petitioner sold an immovable property in India for a consideration of ₹2,00,16,550 on which tax was deducted at source by the purchaser. He also earned bank interest of ₹19,246.

The petitioner did not file his return within the prescribed time and filed an application for condonation only in June 2025. The reasons cited for delay included lack of knowledge of Indian tax laws, unawareness of TDS deduction, medical issues, and COVID-related travel restrictions. The Commissioner of Income Tax (International Taxation)-01 rejected the application on 18.09.2025, holding that no genuine hardship was established. The petitioner challenged this order before the High Court.

Issues Involved

Whether the petitioner had demonstrated “genuine hardship” within the meaning of Section 119(2)(b) so as to justify condonation of delay in filing the return, whether ignorance of tax law and COVID-related travel restrictions constituted reasonable cause, and whether the Commissioner’s rejection order warranted interference under Article 226.

Petitioner’s Arguments

The petitioner contended that he was a senior citizen residing abroad with no prior exposure to Indian income tax compliance and was genuinely unaware of the tax implications arising from the sale of property executed through a power of attorney. It was argued that the delay was bona fide and that no loss was caused to the Revenue since tax had already been deducted at source. Reliance was placed on judicial precedents advocating a liberal interpretation of “genuine hardship”.

Respondent’s Arguments

The Revenue argued that ignorance of law is not an excuse and that statutory timelines cannot be relaxed routinely. It was submitted that medical issues cited by the petitioner pertained to surgeries conducted more than a decade earlier and had no nexus with the delay. The Department also contended that filing of return is an online process and COVID travel restrictions did not prevent compliance. Reliance was placed on multiple Delhi High Court judgments emphasizing strict adherence to statutory limitation.

Court Order / Findings

The Delhi High Court examined the impugned order and concurred with the reasoning adopted by the Commissioner. The Court held that the petitioner failed to establish any extraordinary circumstances or genuine hardship preventing timely filing of return. The Court reiterated the settled principle that ignorance of law does not excuse non-compliance and noted that capital gains are taxable in the year of transfer, not receipt. It was further observed that the petitioner could have complied with tax obligations through authorised representatives, as he had done for the property sale.

The Court relied on precedents including Puneet Rastogi, B.U. Bhandari Nandgude Patil Associates, Lava International Ltd., and Sanjay Khurana to hold that condonation under Section 119(2)(b) is an exceptional relief and cannot be claimed as a matter of right.

Important Clarification

The Court clarified that Section 119(2)(b) is intended to address genuine hardship arising from extraordinary and unavoidable circumstances. Mere inadvertence, negligence, ignorance of law, or generalized assertions without cogent evidence do not satisfy the statutory threshold for condonation of delay.

Final Outcome

The writ petition was dismissed. The Delhi High Court upheld the order rejecting condonation of delay in filing the income tax return for Assessment Year 2020–21, holding that the petitioner failed to establish genuine hardship under Section 119(2)(b) of the Income-tax Act.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769503272_MANJITSINGHDHALIWALVsCOMMISSIONEROFINCOMETAXINTERNATIONALTAXATION01NEWDELHI.pdf

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