Ignorance of tax laws no excuse! Missed filing ITR on time? Why Delhi High Court refused to condone delay in this case

Delhi High Court has held that ignorance of tax laws, lack of awareness of deductions, or general assertions of hardship do not constitute “genuine hardship”. (AI image)

In a significant ruling on the scope of condonation powers under the Income Tax Act, the Delhi High Court has held that ignorance of tax laws, lack of awareness of deductions, or general assertions of hardship do not constitute “genuine hardship” warranting condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961.A Division Bench of Justice V. Kameswar Rao and Justice Vinod Kumar dismissed a writ petition filed by Manjit Singh Dhaliwal, upholding the rejection of his application seeking condonation of delay in filing his Income Tax Return (ITR) for Assessment Year 2020–21.Background And FactsThe petitioner, a Canadian citizen residing in British Columbia, claimed to be a non-resident for the relevant assessment year. He had sold an immovable property in India for a total consideration of Rs 2,00,16,550/- and had also earned interest income of Rs 19,246/- during the same period. Tax had already been deducted at source on the transaction and deposited with the Government of India.Despite this, the petitioner failed to file his ITR within the prescribed time under the Income Tax Act.On 06.06.2025, almost five years later, he moved an application under Section 119(2)(b) of the Act for condonation of delay. He claimed that he had been living outside India for several years, was unfamiliar with the Indian tax regime and did not understand the tax consequences of the property transaction, which was carried out by a Power of Attorney.He further claimed that being a senior citizen with no knowledge of tax laws, his failure to file the return was a bona fide error. He also relied on factors such as health issues, COVID-19 related travel restrictions, and lack of awareness of TDS deductions.The petitioner relied on the phrase “genuine hardship” under Section 119(2)(b), arguing that the term should be interpreted broadly and technicalities should not come in the way of substantial justice. Impugned Order of the Tax AuthorityThe Commissioner of Income Tax (International Taxation) rejected the application, holding that the petitioner had failed to establish any genuine hardship or reasonable cause for the delay.The authority observed that the reasons cited, particularly ignorance of TDS deduction, were general in nature and did not constitute a valid ground. It relied on the settled legal maxim:“ignorantia legis neminem excusat” ((ignorance of law is no excuse)The authority further noted that the petitioner’s reliance on medical issues was misplaced, as the surgeries cited had taken place in 2008 and 2011, long before the relevant assessment year. It also observed that the petitioner had executed a property transaction through a Power of Attorney, which indicated that he was capable of managing his financial affairs through representatives.The authority also rejected the COVID-related argument, and held that:“the assessee could have easily filed ITR online on Income Tax Portal from anywhere and thus there was no need to be physically present in the country.”It was also clarified that capital gains are taxable in the year of transfer of property and not in the year of receipt of consideration, thereby negating the petitioner’s understanding of tax liability.The authority concluded that:“the assessee has failed to establish a case of genuine hardship or bring out any specific reasonable cause… the application… is devoid of merits.”Court’s ConsiderationThe High Court examined the impugned order and the reasons furnished by the petitioner and found no merit in the challenge.The Court specifically rejected the submissions that the petitioner’s lack of awareness of tax laws or his alleged illiteracy could justify the delay. It held that such a plea was not tenable in law.Referring to the settled principle, the Court observed:“on the principle of ignorantia juris non excusat, i.e. ignorance of law is no excuse…”The Court relied upon its earlier decision in Puneet Rastogi v. Principal Chief Commissioner of Income-tax (International Taxation), where it had held:“This Court is of the view that ignorance of law is not an excuse… Consequently… there was no genuine hardship or reasonable cause for late filing of the return.”Scope Of Section 119(2)(b) And “Genuine Hardship”The Court also upheld the view of the tax department about the narrow ambit of condonation under Section 119(2)(b). It observed that the provision allows the tax authority to condone only genuine hardship and not as a matter of routine. The Court cited its previous decision in B.U. Bhandari Nandgude Patil Associates v. CBDT, and reiterated:“Statutory time limits fixed have to be adhered to… extension of time cannot be claimed as a vested right on mere asking and on the basis of vague assertions without proof.”The Court also took note of the principle that:“mere fact that a default occurred due to some reason is not enough to establish the claim of genuine hardship.”Requirement Of Strict Compliance With Time LimitsThe Court emphasised the importance of maintaining discipline in statutory timelines, particularly in tax matters. It observed that limitation provisions are essential to ensure orderly and timely completion of assessments. The authority’s reliance on judicial precedents was noted, including the principle laid down in Ranka & Others v. Rewa Coalfields Ltd. that:“every day of delay needs to be explained with cogent evidences.”The Court found that no such cogent explanation had been provided in the present case.The Court also rejected the argument that the petitioner’s status as a non-resident Indian or the existence of travel restrictions justified the delay. It noted that income tax returns can be filed electronically from any location and physical presence in India is not required.Relying on its decision in Sanjay Khurana v. Income Tax Department, the Court observed:“the plea… being a non-resident Indian… is not appealing as e-portal was accessible globally.”After considering the entirety of the material on record, the High Court concurred with the findings of the tax authority and held that no interference was warranted.The Court observed:“We concur with the view taken by the officer in the impugned order and find no reason to interfere with the same.”It concluded by holding:“Being bereft of any merits, the petition is dismissed.”The writ petition, along with the pending application, was accordingly dismissed.

(Vatsal Chandra is a Delhi-based Advocate practicing before the courts of Delhi NCR.)