Condonation of delay in filing return of income

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October 3, 2024

SBC (30)

Summary:

This Circular addresses the condonation of delays in filing income tax returns claiming refunds and carry forward of losses under Section 119(2)(b) of the Income-tax Act, 1961 (IT Act).

The Circular supersedes all earlier guidelines issued by the Central Board of Direct Taxes (CBDT) for handling such applications.

It lays out comprehensive guidelines on the procedure to be followed by tax authorities and specifies monetary thresholds for approving or rejecting such applications. There are various instances wherein a condonation application is the only option to file a tax return wherein the original due date was missed and additionally, there are claims of relief, losses or refunds which would be available only post filing tax return in time.

Section 119(2)(b) provides for application to CBDT for claiming refund and returns claiming carry forward of loss and setoff thereof.

Condonation of Delay – Limits & Timeline

A. Circular 11/2024 issued now has revised the limits for making an application for delay in filing return leading to claim of refund or claim of carry-forward of losses.

Authority for acceptance/rejection	Revised Claim Limit	Earlier Limit
Principal Commissioners/Commissioners (Pr.CsIT/CsIT)	Up to INR 1 Crore	Up to INR 50 Lakhs
Chief Commissioners (CCsIT)	Exceeds INR 1 Crore but less than INR 3 Crores	Exceeds INR 50 lakhs but less than INR 2 Crores
Principal Chief Commissioners (Pr. CCsIT)	Above INR 3 Crores	Exceeds INR 2 Crores but less than INR 3 Crores*
Commissioner (CIT), CPC Bengaluru	Delay in verifying return via ITR-V	NA

These limits apply for each assessment year and establish clear demarcations for the acceptance or rejection of refund claims. * More than INR 3 Crores, application to CBDT was required. However, as per the revised guidelines now such application shall lie before Pr.CCsIT

B. Time Limit for filing Condonation Applications:

Condonation applications for refunds or loss carry forward claims must be filed within five years from the end of the relevant assessment year. This five-year time limit applies to applications filed on or after October 1, 2024.

C. Time Limit for disposal of Condonation Applications:

All authorities must aim to dispose of applications within six months of receipt, as far as possible.

D. Conditions for Condonation:

As per Section 139(9A) of the IT Act, if a return is filed pursuant to an order under Section 119(2)(b), the provisions of this section shall apply. While considering cases under Section 119(2)(b), tax authorities must ensure:
a) The taxpayer was prevented by reasonable cause from filing within the due date.
b) The case involves genuine hardship, and appropriate inquiries can be made by the Assessing Officer.

Claim of refund related:

A. Refund arising from a Court Order:

Refund claims arising from a court order will exclude the period during which proceedings were pending, provided the application is filed within six months of the order or the end of the financial year, whichever is later.

B. Supplementary or additional refund claims after assessment:

Supplementary refund claims (additional refund claim after completion of assessment) can be admitted if the following additional conditions are complied with:

a) Income is not assessable in another’s hands.
b) No interest will be paid on belated claims.
c) Refunds arise due to excess tax deducted/collected at source or excess payment of advance or self assessment tax.

Administrative clarifications:

A, Impact on Pending Applications:

This Circular applies to all condonation applications pending as of October 1, 2024, ensuring consistency in handling previously submitted applications.

B. Powers of the Board:

The CBDT retains the authority to intervene in case of any grievances arising from the actions or decisions of the authorities listed in thresholds. The Board may issue directions to ensure proper implementation of the Circular.

Our comments:

SBC Comments:

This Circular provides clarity on the following for the condonation applications:- Authority levels- Time limits and – Conditions for condonation of delay.

This will be ensuring a more streamlined and transparent process for taxpayers seeking relief in filing delayed returns. SBC India recommends all stakeholders review this Circular to understand its implications on pending and future refund claims.

Additionally, now condonation seeking relief in delay in verification of ITR has been categorically specified. The taxpayers prevented from completing such verification due to reasonable cause or cases of genuine hardship can make application to CIT (CPC).

It is interesting to note that the CBDT intends to entertain only grievances, while tax authorities are now empowered to handle any kind of condonation application under Section 119(2)(b) of the Income Tax Act. The threshold limits have been increased, allowing tax authorities to deal with such applications, in contrast to earlier instances where claims exceeding INR 3 crores were directly handled by the Board.

Where can we assist you?

• Filing of Condonation Application: Assistance in preparing and submitting condonation applications with proper documentation.
• Representation: Provide representation before tax authorities to ensure approval of condonation requests.
• Post Condonation Filings: Support in filing or rectifying returns once condonation is granted.
• Refund Follow-up: Help in tracking and ensuring timely processing of refund claims and adjustments.