December 19, 2023

Processing of ITR Filed electronically with refund claim under section 143(1) beyond the prescribed limit in non- Scrutiny cases

After filing of Income tax return, processing of Income tax return under section 143(1) is the first step wherein return is electronically processed by the Department system and action is taken as per the prima facie validations such as TDS is granted as per information available in Form 26AS irrespective of amount claimed in ITR, computation of interest etc. Refund claimed in Income tax return is processed only after processing under Section 143(1) of Income Tax Act.

However, there have been certain cases of Assesment Year 2018-19, 2019-20 and 2020-23 wherein return was filed correctly and also valid under Section 139 or Section 142(1) of Section 119 of Income Tax Act. However, such returns could not be processed due to technical issues or other reasons which has nothing to do with assessee. Therefore, Intimation of processing of ITR could not be sent within the timeframe prescribed under Section 143(1) of Income Tax Act. Consequently, taxpayers were unable to get their legitimate refund in accordance with provisions of the Act even through there is no error at their end.

Department is actively taking action to resolve such issues and orders and instructions are issued on a time to time basis to suggest the way ahead. To resolve the issue, the department has issued Order No. F. NO.225/132/2023/ITA-II, DATED 1-12-2023.

1. Processing of Income tax returns pertaining to AY 2018-19, 2019-20 and 2020-23

a. Processing of Return

In view of pending grievances of taxpayers related to issue of refund for AYs 2018-19, 2019-20 and 2020-21 and To mitigate genuine hardship being faced by the taxpayers, the Board relaxed the time-frame prescribed under Section 143(1).
Therefore, all ITRs validly filed electronically with refund claims for AYs 2018-19, 2019-20 and 2020-21, for which time limit of processing has been expired, can now be processed with prior administrative approval of Pr.CCIT/CCIT concerned.
The intimation of such processing under Section 143(1) of the Act can be sent to the assessee concerned by 31st January, 2024.
All subsequent effects under the Act including refund shall also follow as per the prescribed procedures.
To ensure safeguards, once administrative approval is accorded by the Pr.CCIT/CCIT, the Pr.CIT/CIT concerned would make a reference to the DG1T (Systems) to provide necessary enablement to the Assessing Officer on a case to case basis.
The progress of disposal of such cases shall be monitored by the Pr.CIT/CIT concerned.

b. Returns not covered for delayed processing

However, The relaxation of processing given above shall not be applicable to the following returns:

Returns selected for Scrutiny
returns remain unprocessed, where either demand is shown as payable in the return or is likely to arise after processing it
returns pending for processing for any reason attributable to the assessee

2. Processing of Income tax returns pertaining to AY 2017-18

Valid Income tax returns pending for processing under Section 143(1) of Income Tax act has been dealt by the department vide ORDER F.NO. 225/132/2023/ITA-II, dated 16th October, 2013. As per order, the CBDT has extended the time limit of processing of valid ITR till 31st January, 2023.

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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