CBDT Issued New Guidelines for Processing of Application for Condonation of Delay in Filing ITR

October 28, 2024
Direct Taxation
CA. Kavit Vijay

In the suppression of all the earlier instructions or circulars, the CBDT has issued together new instructions for handling an application filed for condonation of delay in pursuance of power given under Section 119(2)(b) of the Income Tax Act. Instructions are issued through Circular No. 11/2024 dated 1st October 2024. Following is the analysis of instructions issued:

1. Which application is filed under Section 119(2)(b) of Income Tax Act:

a. Non-filing of Income Tax Return by the maximum time limit provided

As per Section 139(4) of the Income Tax Act, the end date for filing of Income Tax return is 3 months before the end of the Assessment year, i.e., 31st December of the Assessment year. However, what happens if the assessee fails to file the Income tax return by the maximum timeline available for filing of ITR? In such a case, the assessee shall not be allowed to carry forward the losses for the corresponding year, and also, no refund shall be allowed for such financial year.

In such a case, as per Section 119(2)(b), the assessee can file a petition for condonation of delay in filing a refund claim and the corresponding authority shall condone the delay wherever genuine reasons for the delay and shall pass the order accordingly. The assessee can file a return claiming a refund on the CPC portal by quoting the order number.

b. Return filed without verification

Similarly, If the assessee fails to verify the Income tax return (through electronic mode or through sending a signed copy of ITR to CPC, Bangalore) within the prescribed time then such return shall be considered as invalid, i.e., such return has not been filed. Accordingly, refund claimed in such return shall not be processed or losses claimed in such return shall not be allowed to be carried forward.

In such a case, the assessee is required to apply for condonation of delay in verification by giving an appropriate reason. Only after submission of such application, the assessee will be allowed to verify the return. However, the return will be treated as valid only if the condonation request has been approved by the competent Income Tax Authority.

2. Enhancement of monetary limit for handling applications for condonation of delay:

The CBDT has provided a relief to the taxpayer by enhancing the monetary limit to the following extent for handling applications for condonation of delay:

Competent Authority	Amount of claim involved in the application for one year(Revised Limit)	Amount of claim involved in the application for one year(Original Limit)
Principal Commissioner of Income Tax or Commissioner of Income Tax	Upto INR 1 Crores	Upto INR 50 Lacs
Chief Commissioner of Income Tax	Upto INR 1 Crore	Above INR 50 Lacs but less than INR 2 Crores
Principal Chief commissioner	Above INR 3 Crores	Above INR 2 Crores but less than INR 3 Crores
Board	–	Above INR 3 Crores

Further, the power is vested with the Commissioner of Income-tax, Central Processing Centre (CPC), Bengaluru, for condonation of delay in verification of Income tax return by sending the ITR-V to CPC, Bengaluru within the prescribed time limit.

Such monetary limits for delegation shall also apply on condonation applications pending on the date of issue of the Circular, i.e., 1st October 2024.

3. Time limit for filing application

No application for condonation of delay for claim of refund or loss shall be entertained beyond six years from the end of the Financial year for which such application/claim is made.
The time limit of 6 years will be applicable for applications filed on or after 01.10.2024.
This limit of five years shall apply to all authorities having powers to condone the delay as per the above-prescribed monetary limits.
A condonation application should be disposed of within six months from the end of the month in which the application is received by the competent authority.
Where a refund claim has arisen consequent to a Court order, while computing 6 years, the period for which any such proceedings were pending before any Court shall be excluded provided such condonation application is filed within 6 months from the end of the month in which the Court order was issued or the end of financial year whichever is later.

4. Conditions to be considered while granting condonation

The competent authority shall consider the following points while accepting or rejecting the application:

At the time of considering the case under Section 119(2)(b) of the Act, it shall be ensured that the assessee was prevented by reasonable cause from filing the return of income within the due date and that the case is of genuine hardship on merits.
The authorities dealing with the case shall be empowered to direct the jurisdictional Assessing Officer to make necessary inquiries by the provisions of the Act to ensure that the application is dealt with on merits by the law.

5. Belated application for supplementary claim of refund

Application for the additional claim of refund, after completion of assessment for the same year, can be admitted for condonation provided other conditions as referred above are fulfilled.
The powers of acceptance/rejection within the monetary limits in case of returns claiming refund and supplementary claim of refund would be subject to the following further conditions:
- The assessee’s income is not accessible to any other person under any of the provisions of the Act.
- No interest will be admissible on the belated claim of refunds.
- The refund has arisen as a result of excess TDS, TCS, Advance tax, or excess payment of self-assessment tax as per the provisions of the Act.

Conclusion

The increase in the monetary limit for applying for condonation of delay is a relief to the taxpayers. Also, the principal chief commissioner is the highest authority for accepting and rejecting the application. However, the Board was the highest authority earlier. Further, a time limit of 6 months for resolving the application will also ensure timely resolution of the matter.