In a strong warning to Non-Resident Indians (NRIs), the Delhi High Court has dismissed a Canadian NRI’s petition seeking condonation of delay in filing Income Tax Return (ITR) for Assessment Year (AY) 2020–21, holding that ignorance of Indian tax law is not a valid excuse.

The judgment clearly establishes that NRIs earning income in India—such as capital gains from sale of property or bank interest—must strictly comply with Indian ITR filing timelines, irrespective of foreign citizenship, overseas residence, or Covid-19 related disruptions.

Delhi High Court Judgment on NRI ITR Delay: Complete Case Summary

The petitioner was a Canada-based NRI residing in British Columbia who:

• Sold immovable property in India, resulting in capital gains
• Earned interest income from Indian bank accounts
• Failed to file Indian Income Tax Return for AY 2020–21
• Filed an application for condonation of delay only in June 2025

The application was filed under Section 119(2)(b) of the Income Tax Act, 1961, seeking relaxation of statutory deadlines.

The Commissioner of Income Tax (International Taxation) rejected the application, which was later upheld by the Delhi High Court.

Grounds Taken by the Canadian NRI for Delayed ITR Filing

The NRI taxpayer argued that the delay occurred due to:

• Ignorance of Indian income tax laws applicable to NRIs
• Medical and health-related issues
• Covid-19 travel restrictions
• Overseas residence and lack of physical presence in India

However, the Court categorically ruled that none of these constitute “genuine hardship” under the Income Tax Act.

“Ignorance of Law Is No Excuse”: Delhi HC’s Key Observations

A division bench of Justice V. Kameswar Rao and Justice Vinod Kumar made the following critical observations:

• The ITR pertained to AY 2020–21, but condonation was sought nearly five years later
• Statutory time limits under the Income Tax Act cannot be diluted
• Condonation of delay is not a matter of right
• Ignorance of law is not a legally acceptable defence
• Covid-19 disruptions do not justify prolonged inaction
• The taxpayer failed to prove extraordinary or unavoidable hardship

The Court held that:

“Statutory limits fixed have to be adhered to, as they ensure timely completion of assessments.”

Section 119(2)(b) of Income Tax Act Explained (For NRIs)

Many NRIs believe that delayed ITR filing can always be regularised later. This judgment clarifies otherwise.

Legal Position on ITR Delay Condonation:

• Section 119(2)(b) provides discretionary power, not entitlement
• Delay must be supported by documented and exceptional hardship
• Long delays (3–5 years) are rarely condoned
• High-value transactions like property sale and capital gains face stricter scrutiny

Foreign citizenship or DTAA protection does NOT waive ITR filing obligations in India.

Why This Judgment Is Critical for NRIs Selling Property in India

This ruling is especially relevant for NRIs involved in:

• Sale of residential or commercial property in India
• Long-term and short-term capital gains tax
• TDS under Section 195
• Claiming exemption under Sections 54, 54F, or 54EC
• Refund of excess TDS deducted by buyer

Failure to file ITR on time can result in:

• Loss of capital gains exemption
• Loss of TDS refund permanently
• No relief through writ petitions
• Litigation without remedy

Impact on NRIs in Canada, USA, UK, UAE & Australia

This Delhi High Court ruling will significantly impact:

• Canadian NRIs with Indian income
• US-based NRIs assuming DTAA avoids Indian filing
• UK & UAE NRIs delaying compliance
• Returning NRIs with past unfiled returns

Courts are now consistently strict on delayed ITR filings by NRIs.

Key Takeaways for NRIs on ITR Filing & Delay Condonation

• Indian-source income always requires Indian ITR filing
• Filing deadlines under Income Tax Act are mandatory
• Ignorance of tax law is not a defence
• Condonation is allowed only in rare circumstances
• Delay beyond statutory limits can permanently close relief options
• Litigation cannot replace compliance

Expert Advisory for NRIs: Avoid Irreversible Tax Damage

From an international tax and NRI advisory perspective, this judgment highlights the importance of:

• Timely tax planning before selling Indian assets
• Filing ITR even if no tax payable
• Proper DTAA and FTC planning
• Avoiding assumption-based compliance

How Dinesh Aarjav & Associates Helps NRIs

At Dinesh Aarjav & Associates, we provide end-to-end NRI taxation and cross-border advisory, including:

• ITR filing for NRIs & foreign citizens
• Capital gains tax planning on property sale
• TDS refund & exemption advisory
• India–Canada, India–US, India–UK DTAA advisory
• FEMA & repatriation compliance
• Litigation risk prevention (before deadlines lapse)

Final Verdict: Delayed ITR Filing Can Permanently Harm NRIs

The Delhi High Court has sent a clear message:

Tax compliance delayed is tax benefit denied.

For NRIs earning income in India, timely ITR filing is non-negotiable. Delay can result in permanent loss of refunds, exemptions, and legal remedies.

If you are an NRI with Indian income, delayed returns, or property transactions, seek professional review before statutory windows close forever.