If assessee does not file the return before due date then belated Income Tax Return under section 139(4) can be filed until the end of the assessment year. But if, assessee missed the Income Tax Return filing deadline (both Normal & belated due date) and Income Tax Refund claim was due, Central Board of Direct Taxes has given the powers to income tax authorities to accept the income tax return for a financial year even after the expiry of due date of the same by using its powers as laid down under section 119(2)(b) of the Income Tax Act. In other words, if assessee wants to file income tax returns for a financial year, whose due date of filing income tax return and due date of filing belated income tax return has elapsed, he needs to file income tax return under section 119(2)(b).
Text of Section 119(2)(b)
(b) the Board may, if it
considers it desirable or expedient so to do for avoiding genuine hardship in
any case or class of cases, by general or special order, authorise any
income-tax authority, not being a Commissioner (Appeals) to admit an
application or claim for any exemption, deduction, refund or any other relief
under this Act after the expiry of the period specified by or under this Act
for making such application or claim and deal with the same on merits in
accordance with law;
The provisions of Section 119(2)(b) allow admitting the claim
submitted after the expiry of the period for:
(a) Exemption
(b) Deduction
(c) Refund,
or
(d) Other
relief under the Act
‘Genuine hardship’ as occurring in section 119(2)(b) of the Income tax Act, 1961
The word ‘genuine hardship’
used in section 119(2)(b) is to be construed liberally and the expression
'genuine' means not fake or counterfeit, real, not pretending (not bogus or
merely a ruse). This is dictionary meaning of the word ‘genuine’. However, when
the delay is deliberate or on account of culpable negligence or on account of
mala fides, the authority can reject the application. Similar view was
expressed by Madhya Pradesh High Court in Dilip Buildcon Ltd. v. UOI (2016)
290 CTR 577 : (2017) 81 taxmann.com 290 (MP).
CBDT Instruction No. 13 of 2006 dated 22.12.2006 issued by the CBDT
which prescribes that at the time of considering an application for condonation
of delay in filing a claim for refund under Section 119(2)(b) of the Act, it is
necessary for the authorities to consider that the income declared and refund
claimed are correct and genuine and that the case is of “genuine hardship” on
the merits and correctness of the refund claim. It was observed that the
Legislature has conferred the power to condone delay to enable the authorities
to do substantive justice to the parties by disposing of the matters on the
merits.
The expression “genuine” has received a liberal meaning in view of the
law laid down by the Supreme Court. There is no presumption that delay is
occasioned deliberately, or on account of culpable negligence, or on account of
mala fides. A litigant did not stand to benefit by resorting to delay. If refund
is legitimately due to the applicant, mere delay should not defeat the claim
for refund. At this stage, the authority is not expected to go deep into the
niceties of law. While determining whether a refund claim is correct and
genuine, the relevant consideration is whether on the evidence led, it was
possible to arrive at the conclusion in question and not whether that was the
only conclusion which could be arrived at on that evidence. Similar view was
expressed by Bombay High Court in Artist Tree (P) Ltd v. CBDT (2014) 369 ITR
691 : 273 CTR 14 : 52 taxmann.com 152 (2015) 228 Taxman 108 (Bom.).
The Statutory provision provides that the Board has power to admit the
application after condoning the delay for avoiding genuine hardship in any case
or class of cases. The word genuine hardship has been interpreted by the
different High Courts in various judgments in the context of Section119(2)(b).
A Division Bench of Bombay High Court in the matter of Sitaldas K.
Motwani v. DGIT (2010) 323 ITR 223 : 187 Taxman 44 (Bom.), has held as under in regard to genuine
hardship:
“15. The phrase genuine
hardship used in Section 119(2)(b) should have been construed liberally even
when the petitioner has complied with all the conditions mentioned in Circular
dated 12.10.1993. The Legislature has conferred the power to condone delay to
enable the authorities to do substantive justice to the parties by disposing of
the matters on merit. The expression genuine has received a liberal meaning in
view of the law laid down by the Apex Court referred to hereinabove and while
considering this aspect, the authorities are expected to bare in mind that
ordinarily the applicant, applying for condonation of delay does not stand to
benefit by lodging its claim late. Refusing to condone delay can result in a
meritorious matter being thrown out at the very threshold and cause of justice
being defeated. As against this, when delay is condoned the highest that can
happen is that a cause would be decided on merits after hearing the parties.
When substantial justice and technical considerations are pitted against each
other, cause of substantial justice deserves to be preferred for the other side
cannot claim to have vested right in injustice being done because of a
non-deliberate delay. There is no presumption that delay is occasioned
deliberately, or on account of culpable negligence, or on account of mala
fides. A litigant does not stand to benefit by resorting to delay. In fact he
runs a serious risk. The approach of the authorities should be justice-oriented
so as to advance cause of justice. If refund is legitimately due to the
applicant, mere delay should not defeat the claim of refund.”
From the above,
the legal principle is that the word genuine hardship used in Section 119(2)(b)
of the Act of 1961 is to be construed liberally and the expression genuine
means not fake or counterfeit, real, not pretending (not bogus or merely a
ruse).
Procedure to claim the refunds
In exercise of the powers under section 119(2)(b) of the Income-tax Act,
1961, the Central Board of Direct Taxes (CBDT) issued Circular No. 9/2015,
dated 09.06.2015 under which an assessee can apply to the appropriate authority
for the condonation of delay in filing the returns to claim the following
reliefs in case of genuine reasons for the delay:
(a) Claiming of refund(s)
for any relevant Assessment Year; and
(b)
Claiming of carry forward of loss and set-off thereof for any relevant
Assessment Year.
Authorities who can grant or reject such condonation applications
Applications for claim of refund or carry forward of losses can be
accepted beyond the due date according to Section 119. However, certain
guidelines for accepting or rejecting these applications have been set out by
the CBDT vide its Circular No. 9/2015, dated 09.06.2015. The
following authorities empowered on the basis of limit of claims made by the
assessee by application addressed to these authorities:
|
S. No. |
Monetary Limit of claims
made by the Assessee (in Rs.) |
Authorities to which have
been empowered or to whom application to be made |
|
(i) |
Where the amount of claim
is not more than Rs. 10,00,000 |
Principal Commissioners
of Income-tax/ Commissioners of Income-tax |
|
(ii) |
Where the amount of claim
is more than Rs. 10,00,000 but less than Rs. 50,00,000 |
Principal Chief
Commissioners of Income-tax/ Chief Commissioners of Income-tax |
|
(iii) |
Where the amount of claim
is more than Rs. 50,00,000 |
CBDT itself |
Conditions prescribed for Acceptance/Rejection of Income Tax Refund Claim
The powers of acceptance/rejection of the application within the
monetary limits delegated to the Principal Chief Commissioners of Income-tax or
Chief Commissioners of Income-tax or Principal Commissioners of Income-tax or
Commissioners of Income-tax in case of such claims will be subject to following
conditions:
(i) INCOME/ LOSS DECLARED AND/ OR REFUND CLAIMED IS CORRECT
AND GENUINE
At the time of considering the case under Section
119(2)(b), it shall be ensured that the income/loss declared and/or refund
claimed is correct and genuine and also that the case is of genuine hardship on
merits.
(ii) The case is of
genuine hardship on merits i.e. the delay in filing was due to reasonable
cause.
(iii) The Principal Chief Commissioners of
Income-tax or Chief Commissioners of Income-tax or Principal Commissioners of
Income-tax or Commissioners of Income-tax dealing with the case shall be
empowered to direct the jurisdictional assessing officer to make necessary
inquiries or scrutinize the case in accordance with the provisions of the Act to
ascertain the correctness of the claim.
Supplementary (Additional) Claim of Income Tax Refund after completion
of assessment
A belated application for supplementary claim of refund (claim of
additional amount 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
delegated to the The Principal Chief Commissioners of Income-tax or Chief
Commissioners of Income-tax or Principal Commissioners of Income-tax or
Commissioners of Income-tax in case of returns claiming refund and supplementary
claim of refund would be subject to the following further conditions:
(i) Income of the assessee not assessable in
hands of any other person,
(ii) No interest under section 244A will be admissible
on belated claim of refunds; and
(iii) Such refund has
arisen as a result of excess tax deducted/collected at source (TDS/ TCS) or
excess Advance Tax payment and or excess payment of Self-assessment Tax
payments as per the provisions of the Act.
Remedy to an assessee against order under section 119(2)(b)
The only remedy an assessee has against the order of the Board under
section 119(2)(b) of the Act is to approach the respective High Court under
article 226 of the Constitution of India, 1950.
Time limit for filing Application
The assessees to file an application for making a claim of refund or
carry forward of loss within next 6 years from the end of the relevant
assessment year. In other words, no condonation application for claim of
refund or carry forwarded of loss shall be entertained beyond six years from
the end of the assessment year for which such application/claim is made. This
limit of six years shall be applicable to all authorities having powers to
condone the delay as per the above prescribed monetary limits, including the
Board.
For example : Mr ‘A’ wants to claim a refund which he failed to claim by not filing his return due to his health conditions in Financial year 2017-18 (Assessment year 2018-19) for Rs. 3,50,000 and decided to files an application to Principal Commissioner of Income Tax for allowing him to file his income tax return for the relevant assessment year. He will be able to file this application anytime on or before 31 March 2025.
Time limit for processing Application [CBDT Circular No. 9/2015, Dated
09.06.2015]
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, as far as possible.
For example : Mr ‘A’ files the application for relief on 21st January, 2022 the concerned authority shall accept and close or reject the application by 31st July, 2022.
Extended Time limit for Filing Application
In a case where refund
claim has arisen consequent to a Court order, the period for which any such
proceedings were pending before any Court of Law shall be ignored while
calculating the said period of six years, provided such condonation application
is filed within six months from the end of the month in which the Court order
was issued or the end of financial year whichever is later.
In other words, if any refund is given to any person on the basis of any such relief by the court, then the period for which court case was pending will not be considered for calculating 6 years of time. This period is ignored only where an application has been filed within 6 months from the end of the month of the court’s order or end of the relevant financial year – whichever is later.
Where to file return under section 119(2)(b)
Return under section 119(2)(b) can be filed electronically by the
taxpayer on the website www.incometaxindiaefiling.gov.in by log in using E
filing User ID and Password.
Procedure of Condonation Request for filing ITR after time-barred
Step 1: Log in to the e-Filing portal using your user ID
and password.
Step 2: On your Dashboard, click Services > Condonation
Request.
Step 3: On the Condonation Request page, select Allow ITR filing after time-barred option and
click Continue.
Step 4: On the Filing after time-barred [under
section 119(2)(b)] page, click Create Condonation Request.
Step 5: On Enter Details & Upload ITR page, enter the following
details and click Submit:
Select the Request Category, Assessment Year, ITR, Claim Value, Filing
Type, Reason for Delay & ITR Type from the options
Upload your ITR (PDF / XLS) for which you want to submit condonation of
delay request by clicking Upload ITR option (The maximum size should be 5 MB)
Upload supporting documents (PDF /XLS) for which you want to submit
condonation of delay request by clicking Upload documents option and select the
Document Description (Maximum 5 files can be uploaded each of which should not
be more than 5 MB)
Step 6: After successful submission, select your preferred option
on the e-Verify page.
Specimen of Application for condonation of delay in filing of
return claiming refunds exceeding Rs. 50,00,000
To
The
....................,
............................
Sir,
Subject : Petition for condonotion of delay in filing Return A.Y. ……..
We
are assessed to income-tax in Ward ……. as per the above mentioned PAN numbers.
Our Case falls within the jurisdiction of Chief Commissioner of Income Tax,
……….
We
have been assessed to Tax as a partnership firm upto the A Y …….. During the
previous year relevant to A Y ….. there was a dispute amongst the partners and
a retirement deed and new partnership deed was drawn up. However, the retiring
partner was reluctant to sign the partnership deed and as a result one of the
continuing partners had a reservation in signing the new deed. Further some of
the TDS Certificates and Advance Tax Challans required to be filed with the
return of Income were in the possession of the retiring partner. The return of
income could therefore not be filed as per the provisions of the Income Tax
Act.
The
entire dispute was a subject matter Arbitration, before Justice ABC retired
judge of the …… High Court. The arbitration award has been now given and the
relevant documents are available for filing the return.
The
total refund due to the firm is Rs. …... We understand that as the prescribed
time limits have long been passed, the jurisdiction for admitting the return
and the claim of refund, now rests only with the Board, Hence this application
is filed.
It
may further be appreciated that we were prevented from filing the return and
claiming the refund within the prescribed time limit, due to reasonable cause
and the non acceptance will cause genuine hardship to the firm.
Anticipating
a fovourable response.
CBDT Circular No. 9/2015, Dated 09.06.2015
Subject : Section 119 of The Income-Tax Act, 1961 -
Income-Tax Authorities - Instructions to Subordinate Authorities - Condonation of
Delay in Filing Refund Claim and Claim of Carry Forward Losses under Section 119(2)(b)
2. The Principal Commissioners of Income-tax/Commissioners of Income-tax (Pr.CsIT/CsIT) shall be vested with the powers of acceptance/rejection of such applications/claims if the amount of such claims is not more than Rs. 10 lakhs for any one assessment year. The Principal Chief Commissioners of Income-tax/Chief Commissioners of Income-tax (Pr.CCsIT/CCsIT) shall be vested with the powers of acceptance/rejection of such applications/claims if the amount of such claims exceeds Rs. 10 lakhs but is not more than Rs. 50 lakhs for any one assessment year. The applications/claims for amount exceeding Rs.50 lakhs shall be considered by the Board.
3. No condonation application for claim of refund/loss shall be entertained beyond six years from the end of the assessment year for which such application/claim is made.This limit of six years shall be applicable to all authorities having powers to condone the delay as per the above prescribed monetary limits, including the Board. 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, as far as possible.
4. In a case where refund claim has arisen consequent to a Court order, the period for which any such proceedings were pending before any Court of Law shall be ignored while calculating the said period of six years, provided such condonation application is filed within six months from the end of the month in which the Court order was issued or the end of financial year whichever is later.
5. The powers of acceptance/rejection of the application within the monetary limits delegated to the Pr.CCsIT/CCsIT/Pr.CsIT/CsIT in case of such claims will be subject to Following conditions:
(i) At the time of considering the case under Section 119(2)(b), it shall be ensured that the income/loss declared and/or refund claimed is correct and genuine and also that the case is of genuine hardship on merits.
(ii)
The
Pr.CCIT/CCIT/Pr.CIT/CIT dealing with the case shall be empowered to direct the
jurisdictional assessing officer to make necessary inquiries or scrutinize the
case in accordance with the provisions of the Act to ascertain the correctness
of the claim.
(i)
The income of the
assessee is not assessable in the hands of any other person under any of the
provisions of the Act.
(ii)
No interest will be
admissible on belated claim of refunds.
(iii)
The refund has arisen as
a result of excess tax deducted/collected at source and/or excess advance tax
payment and/or excess payment of self-assessment tax as per the provisions of
the Act.
7. In the case of an applicant who has made investment in 8% Savings (Taxable) Bonds, 2003 issued by Government of India opting for scheme of cumulative interest on maturity but has accounted interest earned on mercantile basis and the intermediary bank at the time of maturity has deducted tax at source on the entire amount of interest paid without apportioning the accrued interest/TDS, over various financial years involved, the time limit of six years for making such refund claims will not be applicable.
8. This circular will cover all such applications/claims for condonation of delay under section 119(2)(b) which are pending as on the date of issue of the Circular.
9. The Board reserves the power to examine any grievance arising out of an order passed or not passed by the authorities mentioned in para 2 above and issue suitable directions to them for proper implementation of this Circular. However, no review of or appeal against the orders of such authorities would be entertained by the Board.
CBDT Instruction No. 13/2006, Dated 22.12.2006
1. The procedure for dealing with the applications for condonation of delay in filing returns and claiming refund is presently governed by the Board’s earlier Orders/Circulars issued under section 119(2)(b) of the Income-tax Act, 1961, namely, F. No. 225/208/93-ITA-II, dated 12.10.1993, read with Board’s Circular No. 670, dated 26.10.1993 issued from F. No. 225/208/93-ITA-II, Circular No. 8/2001, dated 16.05.2001 issued from F. No. 212/35/99-ITA-II and also Instruction No. 12/2003, dated 30.10.2003 issued from F. No. 212/338/2002-ITA-II.
2. In modification to earlier Instructions/Circulars, this Instruction vests the Chief Commissioners of Income-tax (CCsIT) with powers for acceptance/rejection of applications/claims under section 119(2)(b) for condonation of delay in filing return involving refund claims above Rs. 10,00,000 and up to Rs. 50,00,000. It also vests the Commissioners of Income-tax (CsIT) with powers of acceptance/rejection of applications/claims under section 119(2)(b) for condonation of delay in filing return involving refund claims up to Rs. 10,00,000.
3. The applications/claims under section 119(2)(b) for condonation of delay involving refund claims exceeding Rs. 50,00,000 would continue to be processed by Central Board of Direct Taxes, both for acceptance and rejection.
4. No fresh application for claim of refund will be entertained beyond six years from the end of the assessment year for which the application/claim is made.
5. The powers of acceptance/rejection within the monetary limits delegated to the CCsIT/CsIT would be subject to the following conditions:—
(a ) The refund has arisen as a result of excess
tax deducted/collected at source and payments of advance tax under the
provisions of Chapters XVII-B, XVII-BB and XVII-C respectively and the amount
of refund does not exceed Rs. 50,00,000 in respect of CCsIT and Rs. 10,00,000 in respect of CsIT for any one
assessment year;
(b ) The income of the assessee is not assessable
in the hands of any other person under any of the provisions of the Act; and
(c ) No interest will be admissible on the belated
refund claims.
6. At the time of considering the case under the provisions of section 119(2)(b), it should be ensured that the income declared and refund claimed are correct and genuine and also that the case is of genuine hardship on merits.
7. The CCsIT/CsIT are empowered to direct the Assessing Officer to make necessary enquiries or scrutinize the case in accordance with provisions of the Income-tax Act to ascertain the correctness of the claim.
8. This instruction will also cover those applications/claims for condonation of delay under section 119(2)(b) which are pending as on the date of issue of this instruction.
CBDT Instruction No. 12/2003, Dated 30.10.2003
Subject : Section 119 of the Income-Tax Act, 1961 - Income-Tax Authorities - Instructions to Subordinate Authorities
1. The procedure for dealing with the applications for condonation of delay in filing returns and claiming refund is presently governed by the Board's earlier orders/circulars issued under section119(2)(b) of the Income-tax Act, 1961, namely, F. No. 225/208/93-ITA-II, dated 12-10-1993, read with Board's Circular No. 670, dated 26-10-1993 issued from F. No. 225/208/93-ITA-II and also Circular No. 8/2001, dated 16-5-2001 issued from F. No. 212/35/99-ITA-II. As per the existing procedure laid down by the aforesaid Order/Circulars, the powers of condonation of delay are exercisable by Commissioners of Income-tax if the claim is below Rs. 10,000, and by the Chief Commissioners of Income-tax if it is above Rs. 10,000 and up to Rs. 1,00,000. In respect of cases where amount involved is more than Rs. 1,00,000, the applications/requests are dealt with and decided by the Board in accordance with the powers vested in the Board.
2. The matter regarding delegation of powers for acceptance/rejection of applications, requests for condonation of delay under section 119(2)(b) of the Income-tax Act, 1961 has been receiving the attention of the Board. In modification of the aforesaid Orders/Circulars, the Board has decided to vest the CCIT with the powers of acceptance/rejection of such applications/requests involving refund claims upto Rs. 5,00,000, and the decision of the CCIT would be final. The CIT will have the powers of acceptance/rejection in cases involving refund claims up to Rs. 1,00,000. However, cases involving refund claims exceeding Rs. 5,00,000 would continue to be processed by the Central Board of Direct Taxes, both for acceptance and rejection.
3. It has also been decided that cases where delayed claims of refunds are being considered would be taken up for scrutiny.
4. The powers of acceptance/rejection within the monetary limits delegated to the CCIT as above would be subject to the following conditions :
(i) the refund has
arisen as a result of excess tax deducted/collected at source and payments of
advance tax under the provisions of Chapters XVIIB, XVIIBB and XVIIC,
respectively and the amount of refund does not exceed Rs. 5,00,000 for any one
assessment year;
(ii) the income of
the assessee is not assessable in the hands of any other person under any of
the provisions of the Act;
(iii) no interest
will be admissible on the belated refund claims;
(iv) if the refund
arises from the return of income filed for the first time, then the CCIT will
be empowered to direct the Assessing Officer to make a regular assessment under
section 143(3) and then issue the refund, if any;
(v) no claims under
this provision will be entertained where a period of more than 6 assessment
years prior to the current assessment year has elapsed;
(vi) these
instructions will cover the requests for condonation of delay under
section119(2)(b) where such requests have been filed in the Board, or have been
forwarded to the Board by CCIT/DGIT.
CBDT Circular No. 8/2001, Dated 16.05.2001
Subject : Instructions to Subordinate Authorities - Authorisation Regarding Condonation of delay in filing Refund Claim
1. The Board's order under section 119(2)(b), dated 12th October, 1993 and Circular No. 670, dated 26th October, 1993 [F. No. 225/208/93/IT(A-II)] lay down procedure for condonation of delay in belated claims of refunds. These provide that CIT has power to condone delay in case of genuine hardship of refund claims upto Rs. 10,000 and CCIT upto Rs. 1,00,000. The power of condonation in cases of refund claims of more than Rs. 1,00,000 as well as power of rejection in all cases lie with the Board.
2. Under the existing circular, apart from the conditions
prescribed under earlier orders dated 05.02.1988 and 17.08.1988, issued from
[F. No. 225/201/87/IT(A-II)], the following additional conditions are required
to be fulfilled before the condonation of delay in filing belated refund claims
can be considered :
(i) the refund
arises as a result of excess tax deducted at source, collected at source and
payments of advance tax under the provisions of Chapters XVII-B, XVII-BB and
XVII-C, respectively and the amount of refund does not exceed Rs. 1 lakh for
any assessment year;
(ii) the returned
income is not a loss where the assessee claims the benefit of carry forward of
the loss;
(iii) the refund
claimed is not supplementary in nature, i.e., claim for additional amount of
refund is made after the completion of the original assessment for the same
assessment year; and
(iv) the income of
the assessee is not assessable in the hands of any other person under any of
the provisions of the Act.
3. Subsequently the Karnataka High Court in the case of Associated
Electro Ceramics v. Chairman, CBDT (1993) 201 ITR 501 held that the Board
have power to condone the delay in cases having claim of carry forward of
losses. The department did not file special leave petition against this order.
Subsequently the matter was taken up with the Ministry of Law who also agreed with
the view that the Board have power to condone the delay in filing the return
under section119(2)(b) of the Income-tax Act, 1961, in a case having claim of
carry forward of losses.
4. Hence, conditions at Serial No. (ii) of order under section 119(2)(b), dated 12th October, 1993 stipulating that the delay cannot be condoned in cases where returned income is a loss and assessee claims benefit of carry forward of the loss, is not legally tenable.
5. In view of above, the board, hereby, clarify that delay in making refund claim as well as claim of carry forward of losses, both, can be condoned in cases where returned income is a loss, provided other conditions are satisfied. The monetary limits prescribed for condonation of delay in making refund claims, by different IT authorities, will apply to condonation of delay in cases of claim of carry forward of losses as well.
CBDT Circular No. 670, Dated 26.10.1993
Subject : Instructions to subordinate authorities - Authorisation regarding condonation of delay in filing refund claim
1. I am directed to forward herewith the order contained in F. No. 225/208/93-IT(A-II), dated 12th October, 1993, passed by the CBDT in exercise of the powers conferred on it under section 119(2)(b) of the Income-tax Act. By virtue of this order the Assessing Officers can admit belated refund claims under section 237 of the Income-tax Act in cases where refunds may arise as a result of tax deducted/collected at source and advance tax payments where the amount of such refund does not exceed Rs. 1 lakh for any assessment year.
2. Board have also decided that in such cases -
(i) where the refund does not exceed Rs. 10,000
for any assessment year the Assessing Officer shall obtain the prior approval
of the CIT before entertaining a belated refund claim; and
(ii) where the refund exceeds Rs. 10,000 but does
not exceed Rs. 1,00,000 for any assessment year the Assessing Officer shall
obtain the prior approval of CCIT or DGIT before entertaining a belated refund
claim.
3. The CCIT/DGIT/CIT, as the case may be, shall ensure that
the conditions laid down under Board’s order under section 119(2)(b) referred
to above are fulfilled.
4. Where a Chief Commissioner of Income-tax/Director General of Income-tax/Commissioner of Income-tax/Director of Income-tax finds that the four conditions laid down in the order under section 119(2)(b), dated 12.10.1993 are satisfied but still it is not a case of “genuine hardship”, he should refer the belated refund application to the Board for final decision.
5. This order is effective from 01.11.1993 and will apply to all claims of refund pending as on that date and also in respect of all refund claims filed on or after that date.
CBDT Order [F. NO. 225/208/93-IT(A-II)], Dated 26.10.1993
Subject : Section 119 of the Income-Tax Act, 1961 - Income-Tax Authorities - Instructions to Subordinate Authorities
1. I am directed to enclose a copy of the order under section 119(2)(b) from file of even number dated 12.10.1993 (see Annex One) and also the Circular No. 670 (Annex Three) of even date from the same file.
2. In this context, I have been directed to draw your attention to Instruction No. 1867, dated 30.11.1990 (see Annex Two) and to inform you that paras 2, 3 and 4 of the said Instruction shall continue to be applicable. The Chief Commissioner/Director General/Commissioner of Income-tax/Director of Income-tax should not only see that the conditions laid down by the various Circulars of the Board are satisfied, but should also look further into the facts of the case and examine other aspects such as the source of income, whether the income returned is reasonable considering the extent of profits disclosed, whether books of account had been maintained and whether there was any manipulation of accounts in the course of the delayed filing of the claim of refund, etc., for deciding the genuineness of the claims.
3. The powers delegated under section 119(2)(b) should be invoked only in suitable cases after scrutiny as suggested above and the claim should not be disposed of in a routine manner.
ANNEX ONE
CBDT Order [F. No. 225/208/93-IT(A-II)], Dated 12.10.1993
1. In continuation of earlier orders dated 05.02.1988 and 17.08.1988 issued from F. No. 225/201/87-IT(A-II), the Central Board of Direct Taxes, in exercise of the powers conferred by clause (b) of sub-section (2) of section 119 of the Income-tax Act, 1961, hereby order that, in all cases where an otherwise valid refund claim under section 237 of the Income-tax Act, 1961, is filed by an assessee after the expiry of the statutory time limit prescribed under section 239 of the Act, the Assessing Officer, having jurisdiction over the case, may admit the said refund claim and dispose of the same on merits and in accordance with law provided the following conditions are satisfied :
(iii) the refund claimed is not supplementary in nature, i.e., claim for additional amount of refund after the completion of the original assessment for the same assessment year; and
This order will be effective from 01.11.1993.
ANNEX ONE
Order [F. No. 225/208/93-IT(A-II)], Dated 12.10.1993
1. In continuation of earlier orders dated 05.02.1988 and 17.08.1988 issued from F. No. 225/201/87-IT(A-II), the Central Board of Direct Taxes, in exercise of the powers conferred by clause (b) of sub-section (2) of section 119 of the Income-tax Act, 1961, hereby order that, in all cases where an otherwise valid refund claim under section 237 of the Income-tax Act, 1961, is filed by an assessee after the expiry of the statutory time limit prescribed under section 239 of the Act, the Assessing Officer, having jurisdiction over the case, may admit the said refund claim and dispose of the same on merits and in accordance with law provided the following conditions are satisfied :
(ii) the returned income is not a loss where the assessee claims the benefit of carry forward of the loss;
(iii) the refund claimed is not supplementary in nature, i.e., claim for additional amount of refund after the completion of the original assessment for the same assessment year; and
(iv) the income of the assessee is not assessable in the hands of any other person under any of the provisions of the Act.
This order will be effective from 01.11.1993.
ANNEX TWO
CBDT Instruction No. 1867, Dated 30.11.1990
1. Reference is invited to the earlier instructions/circulars issued by the Board regarding condonation of delays in claiming refunds, etc., by invoking the provisions of section 119(2)(b) of the Income-tax Act, specifically the following :
(i) Instruction No. 1795, dated 17th August, 1988 and Letter No. 225/263/88-IT(A-II), dated 23rd January, 1989 stating that the Assessing Officer shall, before entertaining a belated refund claim, obtain the prior approval of the Commissioner of Income-tax where the refund claim does not exceed Rs. 1,000 and of the Chief Commissioner of Income-tax/Director General of Income-tax where the refund exceeds Rs. 1,000 but does not exceed Rs. 10,000; and
(ii) Order No. 225/201/87-IT(A-II), dated 05.12.1988 clarifying that the Board has delegated the power to condone the delay in case the refund does not exceed Rs. 10,000, provided the Chief Commissioner of Income-tax/Director General of Income-tax or the Commissioner of Income-tax as the case may be, is satisfied that the conditions laid down in the various instructions/circulars on the subject are satisfied. However, such delegation was restricted to condonation of delay and not rejection thereof.
2. Some Chief Commissioners have recommended the cases of contractors and other persons engaged in business, who had made applications under section 119(2)(b) of the Income-tax Act for the purpose of claiming refunds of income-tax deducted at source from contract receipts, etc., for rejection as they were not satisfied that the income returned by the said persons was full and true or even reasonable considering the extent of profit disclosed. It was also noticed that such persons were not maintaining any books of account and, therefore, the possibility of purposely delaying the filing of the returns so as to avoid scrutiny by the Department could not be ruled out. Needless to say that such cases were not found to be of genuine hardship.
3. The Board has been accepting such recommendations as it would be against public policy to condone such delays thereby giving an extended time to such assessees to manipulate their accounts so as to evade taxes.
4. The Board now desire that the Chief Commissioners/Directors General/Commissioners should not only see that the conditions laid down by the various Boards circulars are satisfied, but also look further into the facts of the case and examine the source of income, whether the income has been reflected in other years or not whether there is any scope for manipulation of accounts due to the delay in filing the claim of refund, etc., before applying the provision of section 119(2)(b) of the Income-tax Act. It is desired that only genuine cases should be considered for the purpose of applying the provisions of section 119(2)(b) of the Act and the applications should not be disposed of in a routine manner.
ANNEX THREE
CBDT Circular No. 670, Dated 26.10.1993
1. I am directed to forward herewith the order contained in F. No. 225/208/93-IT(A-II), dated 12th October, 1993, passed by the CBDT in exercise of the powers conferred on it under section 119(2)(b) of the Income-tax Act. By virtue of this order the Assessing Officers can admit belated refund claims under section 237 of the Income-tax Act in cases where refunds may arise as a result of tax deducted/collected at source and advance tax payments where the amount of such refund does not exceed Rs. 1 lakh for any assessment year.
2. Board have also decided that in such cases
(ii) where the refund exceeds Rs. 10,000 but does
not exceed Rs. 1,00,000 for any assessment year the Assessing Officer shall
obtain the prior approval of CCIT or DGIT before entertaining a belated refund
claim.
3. The CCIT/DGIT/CIT, as the case may be, shall ensure that the conditions laid down under Boards order under section 119(2)(b) referred to above are fulfilled.
4. Where a Chief Commissioner of Income-tax/Director General of Income-tax/Commissioner of Income-tax/Director of Income-tax finds that the four conditions laid down in the order under section 119(2)(b), dated 12.10.1993 are satisfied but still it is not a case of genuine hardship, he should refer the belated refund application to the Board for final decision.
5. This order is effective from 01.11.1993 and will apply to all claims of refund pending as on that date and also in respect of all refund claims filed on or after that date.
CBDT Instruction No. 1795, Dated 17.08.1988
Subject : Section 119 of the Income-Tax Act, 1961 - Income-Tax Authorities - Instructions to Subordinate Authorities
2. Board have decided that in such cases
(i)
where the refund is less
than Rs. 1,000/- the Assessing Officer shall obtain prior approval of
Commissioner of Income-tax before entertaining a belated refund claim.
(ii)
where the refund exceeds
Rs. 1000 but does not exceed Rs. 10,000, the Assessing Officer shall obtain
prior approval of Chief Commissioner or Director General of Income-tax before
entertaining a belated refund claim.
3. The above instructions may please be brought to the notice of the officers working under you.
4. Hindi version of this letter follows shortly.
Clarification 1 – CBDT Circular No. 521, Dated 17.08.1988
1. Attention is invited to Board’s order under section119(2)(b) of the Income-tax Act [F.No. 225/201/87-IT(A-II)], dated 17.08.1988 whereby the Board, in exercise of the powers conferred by clause (b) of sub-section (2) of section 119 of the Income-tax Act, 1961, have authorised the Income-tax Officer to admit belated refund claims under section 237 of the Income-tax Act, 1961 arising as a result of excess advance tax paid.
2. With a view to avoid genuine hardship to the taxpayers, Assessing Officers have now been authorised to admit belated refund claims in respect of amounts up to Rs. 10,000 provided the conditions laid down in the said order are fulfilled. These conditions are as follows :—
(ii) the returned income is not a loss, where the assessee claims the benefit of carry forward of the loss;
(iii) the refund claimed is not supplementary in nature i.e., a claim for additional amount of refund after the completion of the original assessment for the same assessment year; and
3. This order will be effective from 01.08.1988.
Clarification 2 – CBDT Circular No. 503, Dated 06.02.1988.
1. Attention is invited to the Board’s Order under section119(2)(b) [F. No. 225/201/87-IT(A-II)], dated 05.02.1988 whereby the Board, in exercise of the powers conferred by clause (b) of sub-section (2) of section 119, have raised the monetary limit of cases in which the ITO is authorised to admit belated refund claims under section 237.
2. With a view to avoid hardship to the taxpayers, the Income-tax Officers have now been authorised to admit belated refund claims in respect of amounts up to Rs. 10,000 provided the conditions laid down in the said order are fulfilled. These conditions are as follows :
(i) the refund arising as a result of tax deducted at source in respect of assessment year under the provisions of sections 192, 193, 194, 194A, 194B, 194C, 194D and 195 does not exceed Rs. 10,000;
(ii) the returned income is not a loss where the assessee claims the benefit of carry forward of the loss;
(iii) the refund claimed is not supplementary in nature, i.e., a claim for additional amount of refund after the completion of the original assessment for the same assessment year; and
(iv) the income of assessee is not assessable in the hands of any other person under any provisions of the Act.
3. This order will be effective from 10.02.1988.
CBDT Instruction No. 1782, Dated 05.02.1988
Subject : Section 119 of the Income-Tax Act, 1961 - Income-Tax Authorities - Instructions to Subordinate Authorities
I am directed to refer to the general order passed by the Board in exercise of the powers under section 119(2)(b) of the Income Tax Act by Board's F. No.225/201/87/ITA.II dated 05.02.1988 by which the monetary limit has been raised in respect of cases in which Income-tax officers can admit belated refund claims under section 237 of the Income-Tax Act. This order is effective from 10.02.1988.
2. Board have decided that in the cases referred to above, where the amount of refund exceeding Rs.1000/- but does not exceed Rs. 10,000/- the Income-Tax Officers shall obtain the prior approval of the Chief Commissioner of Income-Tax who will have administrative control over such cases and ensure that the conditions laid down under Board's order under section 119(2)(b) referred to above are fulfilled. It may be added that cases where the refund claim is upto Rs. 1,000/- the Income-Tax Officer will continue to obtain the approval of the Commissioner of Income-Tax as per Board's instruction No. 1557 dated 24.03.1984 and Instruction No. 1679 dated 31.12.1985 issued from F. No.225/105/83-ITA. II.
3. The above instructions may please be brought to the notice of the officers working under you.
Clarification 4 – CBDT Circular No. 446, Dated 31.12.1985.
1. Attention is invited to Board’s Order F. No. 225/105/83-IT (A-II), dated 24.03.1984 whereby the Board, in exercise of the powers conferred by clause (b) of sub-section (2) of section 119 authorised the Income-tax Officers to admit belated refund claims under section 237 in respect of amount up to Rs. 1,000 in cases where refund arose as a result of tax deducted at source under sections 192 to 194, section 194A, and section 195 provided the conditions laid down in the said order were fulfilled. This order was effective from 02.04.-1984. The order, however, did not cover cases where refunds arose as a result of tax deducted at source under section 194C, i.e., the cases of contractors and sub-contractors.
2. With a view to avoiding hardship to the taxpayers, the Board vide their Order F. No. 225/105/83-IT (A-II), dated 31.12.1985 have further authorised the ITOs to admit a belated application/claim for refund in cases where refund arises as a result of tax deducted at source under section 194C provided the following conditions are satisfied :
(i) the amount of refund arising as a result of tax deducted at source under the provisions of section 194C, in respect of the assessment year, does not exceed Rs. 1,000;
(ii) the returned income is not a loss where the assessee claims benefit of carry forward and set off of loss;
(iii) the refund claim is not supplementary in nature, e.g., a claim for additional amount of refund after the completion of the original assessment for the same assessment year; and
(iv) the income of the assessee is not assessable in the hands of any other person under any provisions of the Act.
3. This order will be effective from 01.01.1986.
Clarification 3 – CBDT Circular No. 379, Dated 10.04.1984
1. Attention is invited to Board’s order under section 119(2)(b) [F. No. 225/105/83-IT (A-II)], dated 24.03.1984 [Annex] wherein the Board, in exercise of the powers conferred by clause (b) of sub-section (2) of section119, have condoned the delay in filing returns of income in cases where an otherwise valid refund claim under section 237 is filed by the assessee after the expiry of the statutory time limit under section 239 and the Income-tax Officer, having jurisdiction over the case, has been empowered to admit the said claim and dispose of the same merits and in accordance with law provided the following conditions are satisfied :
(i) the refund arising as a result of tax deducted at source in respect of the assessment year under the provisions of sections 192, 193, 194, 194A, 194B, 194C, 194D and 195 does not exceed Rs. 1,000;
(ii) the refund income is not a loss where the assessee claims the benefit of carry forward of the loss;
(iii) the refund claimed is not supplementary in nature, e.g., a claim for additional amount of refund after the completion of the original assessment for the same assessment year; and
(iv) the income of the assessee if not assessable in the hands of any other person under any provisions of the Act.
2. This order has been made effective from April 2, 1984.
3. You are requested to bring to the contents of the aforesaid order, which has already been communicated to you vide the Board’s endorsement of even number dated 24.03.1984 to the notice of all the officers working under you. It is also requested that this authorisation may be given wide publicity.
ANNEX - ORDER, DATED 24.03.1984 REFERRED TO IN CLARIFICATION
In exercise of the powers conferred by clause (b) of sub-section (2) of section119 of the Income-tax Act, 1961, the Central Board of Direct Taxes hereby order that, in all cases an otherwise valid refund claim under section 237 of the Income-tax Act, 1961 is filed by an assessee after the expiry of the statutory time limit as prescribed under section 239 of the Act, the Income-tax Officer, having jurisdiction over the case, may admit the said refund claim and dispose of the same on merits and in accordance with law provided the following conditions are satisfied :
(i) the refund arising as a result of tax deducted at source in respect of the assessment year under the provisions of sections 192, 193, 194, 194A, 194B, 194D and 195 does not exceed Rs. 1,000;
(ii) the returned income is not a loss where the assessee claims the benefit of carry forward of the loss;
(iii) the refund claimed is not supplementary in nature, i.e., a claim for additional amount of refund after the completion of the original assessment for the same assessment year; and
(iv) the income of the assessee is not assessable in the hands of any other person under any provisions of the Act.
2. This order will be effective from April 2, 1984
Condonation of delay in filing returns - Reasonable cause
Where assessee an NRI could
not file return in time due to financial criss in USA and sustaining injuiries
by her in accident and also old age problems, the delay of 1232 days was to be
condoned.--Assessee, an NRI, residing permanently at USA filed petition for
condonation of delay of 1,232 days in filing returns under section 119(2)(b)
before CCIT on grounds that there was severe financial criss in USA and
injuiries sustained by her in accident as well as age-related problems. CCIT
rejected the application on ground that medical certificate did not support the
case of assessee to condone the inordinate delay of 1,232 days in filing
returns. Assessee filed a writ petition challenging the order passed by
CCIT. Held: It was the case of assessee that she was entitled
for refund, being a non-resident owing to the recession at U. S. and the
accidental injuries suffered, no returns were filed within the period
prescribed. In the circumstances, it could not be held that the assessee had
obtained any undue advantage of the delay in filing the income tax returns. It
is trite law that rendering substantial justice shall be paramount
consideration of the Courts as well as the Authorities rather than rejecting on
hyper-technicalities. Sufficient cause shown by the assessee for condoning the
delay was acceptable and the same could not be rejected out-rightly on
technicalities. Considering the overall circumstances, the delay of 1,232 days
in filing the returns for the relevant assessment years in question was
condoned subject to denial of interest for the delayed period if found to be
entitled for refund. Respondent No. 3 was permitted to scrutinize the returns
in accordance with law, subject to the condition that assessee gave an undertaking
before this Court that she would not raise objections on the aspect of
limitation in the event any demand had to be made by the department rather than
making refund, as claimed, if found so, on concluding the assessments. Such
undertaking would be filed before this Court within a period of six weeks from
date of order. (Related Assessment years : 2010-11 to 2012-13 – [Dr.
Sudha Krishnaswamy v. Chief CIT (2019) 414 ITR 144 : (2018) 255 Taxman 46 (Karn.)]
High Court allowed
condonation of delay as refund of TDS was not claimed due to mistake of auditor
In return of income for
relevant assessment year, assessee due to inadvertent mistake of its Chartered
Accountant could not claim refund of TDS. It filed an application for refund of
TDS amount after period of seeking refund had expired and also applied to Chief
Commissioner under section 119(2)(b) for condonation of delay in filing refund application.
It stated that Chartered Accountant had inadvertently overlooked TDS amount, as
a consequence it could not have sought appropriate refund at first instance or
even claimed it before period of seeking refund had expired. Chief Commissioner
rejected application on ground that plea of omission by auditor was not
substantiated.
The statute or period of limitation prescribed in provisions of law meant to attach finality and in that sense are statutes of repose. However, wherever the legislature intends relief against hardship in cases where such statutes lead to hardships, the concerned authorities including Revenue Authorities have to construe them in a reasonable manner. That was the effect and purport of the Delhi High Court’s decision in the case of Indglonal Investment & Finance Ltd. v. ITO (2011) 343 ITR 44 : 200 Taxman 271 : 12 taxmann.com 108 (Del.). The Court is of the opinion that a similar approach is to be adopted in the circumstances of the case.
In view of the aforesaid, the impugned order rejecting the assessee’s application under section 119(2)(b) deserved to be set aside. Assessee had shown bona fide reasons why refund claim could not be made in time. The application for condonation of delay required to be allowed. The assessee is permitted to prefer its refund claim. In such event, the concerned Assessing Officer shall verify the claim and pass the order in accordance with law. Any amount due to the assessee shall also be remitted to it. [In favour of assessee] (Related Assessment year : 2013-14) – [G. V. Infosutions (P) Ltd. v. DCIT (2019) 261 Taxman 482 : 102 taxmann.com 397 (Del.)]
General direction for extending due date for filing returns under section 139(1) could not be issued as that would be contrary to scheme of Act, however, CBDT was to consider applications under section 119(2)(a)/(b) by assessees in Kerala towards claim of deductions/ exemptions/ refunds or waiver of interest/penalty, taking note of flood situation that affected State of Kerala
CBDT had suo motu
extended return filing due date in State of Kerala from 30.09.2018 to 31.10.2018
taking note of floods. Assessees however, submitted that mere extension by one
month was not sufficient and department ought to have extended time for filing
returns to at least 31.12.2018. A general direction for extending due date for
filing returns under section 139(1) could not have been issued to Income-tax
Department as that would be contrary to scheme of Act. However, assessees who
had not been able to file a return making a claim for deductions, exemptions or
refunds, they were to be directed to make an application under section 119(2)(b)
seeking extension for filing return, which was to be considered by CBDT within 2
months taking note of flood situation. Likewise, in case of assessees aggrieved
by interest accrued on delayed payment of tax and who had already filed their
returns either before 31.10.2018 or belatedly thereafter, they were to make an
application under section 119(2)(a) seeking waiver of interest / penalty which
again shall be considered by CBDT within two months. Thus, specific grievances
of assessees in individual cases could be dealt with by CBDT through a consideration
of applications filed by assessees concerned in terms of section 119(2)(a)/119(2)(b).
[Partly in favour of revenue] (Related Assessment year : 2018-19) –
[Alwaye
Chartered Accountants Association v. Union of India (2019) 261 Taxman
4 : (2018) 100 taxmann.com 458 (Ker.)]
Where assessee had miserably failed to convince that he had any ‘genuine hadrship’ in filing his income-tax return late by 30 months, no benefit of section 119(2)(b) could be given to him to claim any refund
Assessee filed return of
income and claimed refund on account of tax deducted at source. Since there was
delay in filing return, assessee filed an application for condonation of delay
under section 119(2)(b) pleading that there was reasonable cause as his family
life had remained disturbed on account of his field duty, being a distributor
of ‘Cable Master’ in State of Haryana; and that his TDS certificates had got
misplaced. Application was dismissed resulting in rejection of claim of refund.
Facts revealed that assessee had no
field duty after 31.03.2009 and resultantly, question of disturbance of his
family life did not arise at all. Regarding misplacement of TDS certificates
also, assessee could not produce any corroborative evidence. Since assessee had
miserably failed to convince that he had any ‘genuine hardship’ in filing his
income-tax return late by 30 months, no benefit under section 119(2)(b) could
be given to him. Therefore, his application for condonation of delay in filing
return of income was rightly rejected. [In favour of revenue] (Related Assessment
year : 2009-10) - [Shyam Sunder Nirankari v. CIT, Karnal (2016) 236 Taxman
591 : 65 taxmann.com 104 (P&H)]
Where assessee filed an application to condone delay in filing claim of refund for advance tax paid, what was required to be examined in terms of section 119(2)(b) was whether to avoid genuine hardship to assessee it was necessary to condone delay in making application
The assessee’s
application for condonation of delay in filing claim for refund of advance tax
paid was rejected by the revenue on the ground that delay was not properly
explained.
Held that in the light
of the provision of section 119(2)(b) when applications were filed by the
assessee, what was required to be examined was whether to avoid genuine
hardship to the assessee, it was necessary to condone the delay in making the
application for refund. The order does not show that the Commissioner has examined
applications in the manner as is required under section 119(2)(b). On the other
hand, the Commissioner has discussed on the merits of the application and held
that the delay has not been properly explained and that when the returns are
filed in response to the notices issued under section 148, the assessee will
not be entitled to claim refund of advance tax paid. Such an order does not
reflect a proper exercise of power under section 119(2)(b) and for that reason,
impugned order is unsustainable.
In this case, according to the Court, when impugned order was passed in an improper manner, the Single Judge ought to have directed reconsideration of application for delay instead of condoning the delay by himself. Therefore, the proper consequential order to be passed is to direct reconsideration of application for delay with a direction to pass fresh orders in the matter. [Partly in favour of assessee](Related Assessment years : 1996-97 and 1997-98) – [DCIT v. Vasco Sales & Marketing Corporation (2015) 377 ITR 318 : (2016) 66 taxmann.com 366 (Ker.)]
The expression ‘genuine hardship’ should be construed liberally, particularly in matters of entertaining of applications seeking condonation of delay under section 119(2)(b)
(i) The expression ‘genuine hardship’ came up for consideration of the Supreme Court in case of B.M. Malani v. CIT 306 ITR 196 (SC), wherein, by reference to New Collins Concise English Dictionary, the Supreme Court accepted the position that ‘genuine’ means not fake or counterfeit, real, not pretending (not bogus or merely a ruse). Further, a genuine hardship would, inter alia, mean a genuine difficulty. The ingredients of genuine hardship must be determined keeping in view the dictionary meaning thereof and legal conspectus attending thereto. For the said purpose another well known principle, namely, that a person cannot take advantage of his own wrong, may also have to be borne in mind. Compulsion to pay any unjust dues per se would cause hardship. But a question as to whether the default in payment of the amount was due to circumstances beyond the control of assessee, also bears consideration.
(ii) In case of Sitaldas K. Motwani v. DGIT (2010) 323 ITR 223 : 187 Taxman 44 (Bom.), this Court has held that the expression 'genuine hardship' used in Section 119(2)(b) of the said Act should be construed liberally, particularly in matters of entertaining of applications seeking condonation of delay. This Court was pleased to observe as under:
The phrase “genuine hardship” used in section 119(2)(b) should have been construed liberally even when the petitioner has complied with all the conditions mentioned in Circular dated 12.10.1993. The Legislature has conferred the power to condone delay to enable the authorities to do substantive justice to the parties by disposing of the matters on the merits. The expression “genuine” has received a liberal meaning in view of the law laid down by the apex court referred to hereinabove and while considering this aspect, the authorities are expected to bear in mind that ordinarily the applicant, applying for condonation of delay does not stand to benefit by lodging its claim late. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold an cause of justice being defeated. As against this, when delay is condoned the highest that can happen is that a cause would be decided on the merits after hearing the parties. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. The approach of the authorities should be justice oriented so as to advance the cause of justice. (Related Assessment year : 1997-98) – [Artist Tree (P) Ltd v. CBDT (2014) 369 ITR 691 : 273 CTR 14 : 52 taxmann.com 152 (2015) 228 Taxman 108 (Bom.)]
Commissioner’s order under section 119(2)(b) being administrative was held not appealable before Tribunal, Tribunal’s order did not call for rectification by Tribunal
Order under section
119(2)(b) rejecting application for condonation of delay in filing return being
an administrative order, neither any appeal nor any rectification application
thereof is maintainable
The respondent-assessee
was a workman. For the assessment year 2001-02, he filed his return which was
done beyond the time limit specified under section 139(1) of the Income-tax
Act, 1961 (“the Act” for short). In such return, which he filed on November 17,
2003, he had claimed a refund of Rs. 16,589. It seems that almost
simultaneously he had also filed an application under section119(2) of the Act
before the Commissioner seeking condonation of delay in filing the return. For
many years the return with the refund claim as well as his application for
condonation of delay in filing the return remained pending before the
Commissioner. He, therefore, sent a reminder on August 29, 2008, and stated as
under :
“I have filed an application for condonation of delay in filing the return of income for the assessment year 2001-02 which was beyond the time limits of section 139(1) of the Income-tax Act 1961. Simultaneously the return of income was also filed in Ward-4, Nadiad claiming a refund of Rs. 16,589 relevant to Acknowledgment No. 2241011266, dated November 17, 2003. The matter is pending till date only because the application under section 119(2)(b) filed on November 16, 2003 is pending with the Commissioner of Income-tax-II, Baroda.
I am a poor illiterate villager knowing nothing on income-tax matters and it would be an act of kindness if the matter is disposed of in my case with necessary directions to the Income-tax Officer concerned considering the fact that refund is pending for more than four years.”
The Commissioner finally passed an order on 21.02.2009, and rejected the petitione’s application under section 119(2)(b) of the Act. He observed that the petitioner’s application of ignorance of law was not a valid excuse. No genuine hardship was also demonstrated.
The respondent thereupon approached the Income-tax Ombudsman taking up the issue of rejection of his application for condonation of delay. The Ombudsman disposed of such application by an order dated December 5, 2012. In such order, while upholding the order of the Commissioner, the Ombudsman disapproved the stand adopted by the Commissioner before the Ombudsman. The relevant portion of the order reads as under :
The respondent thereupon filed an appeal before the Income-tax Appellate Tribunal. The Tribunal, by an order dated May 15, 2012, dismissed such appeal holding that the same was not maintainable since the order passed by the Commissioner under section 119(2)(b) of the Act was an administrative order.
The respondent filed application for rectification before the Tribunal. The Tribunal on such application referring to the decision of this court dated 02.05.2013, in CIT v. Patel Maheshbhai Dahyabhai (2014) 222 Taxman 153 : (2013) 36 taxmann.com 307 (Guj.) allowed the rectification application in part. Miscellaneous application is accordingly allowed. It is this order of the Tribunal which the Department has challenged in the present petition. As pointed out by the counsel for the Revenue under very similar circumstances, this court in the above referred order dated May 2, 2013, in case of Patel Maheshbhai Dahyabhai (supra) though found that the Tribunal ought not to have exercised the power of rectification in facts of the case refused to entertain the writ petition.
Where Tribunal dismissed appeal of assessee against order passed by Commissioner under section 119(2)(b) holding that same was not maintainable since order passed by Commissioner under section 119(2)(b) was an administrative order, such order did not call for rectification by Tribunal. Before closing however, we cannot lose sight of one important aspect of the matter, viz., despite our earlier order dated May 2, 2013, being pointed out to the Tribunal in this case, the Tribunal still exercised its power of rectification and remanded the proceedings to the Commissioner. This, in our opinion, was a serious error. When this court had, in the order dated May 2, 2013, portion of which is reproduced in this order, had held that the Tribunal was correct in first order holding that the Commissioner's order under section119(2)(b) was not appealable before the Tribunal and that, therefore, such order did not call for rectification. The Tribunal referring to and relying on the same judgment of the respondent could not have repeated the same error in law. The writ petition is disposed of accordingly. [Partly in favour of revenue] (Related Assessment year : 2001-02) – [CIT v. Shah Ravindra Derogarh (2014) 367 ITR 223 : 52 taxmann.com 64 (Guj.)]
Delay in filing of
application of refund even though due to fault of assessee should liberally be
condoned
Petitioner filed its
returns of income much belatedly only in response to notice under section 148. While assessee's returned income for two years
were either very nominal or loss, it had paid substantial amount of advance tax.
Petitioner also filed belated application of refund of tax which was rejected
by Commissioner. Delay in filing of application of refund even though due to
fault of petitioner, should liberally be condoned. [In favour of assessee] (Related
Assessment years : 1996-97 and 1997-98) – [Vasco Sales &
Marketing Corporation v. DCIT (2014) 360 ITR 578 : (2013) 216 Taxman 250 : 34
taxmann.com 229 (Ker.)]
In absence of sufficient
reasons for condonation of delay in filing returns of income, assessee’s claim
for refund of TDS could not be allowed
Assessees were co-owners
of a building. For relevant assessment years, assessees failed to file returns
of income accrued on leasing out said building in time. Returns were filed
belatedly in year 2005 wherein refund of tax deducted at source on lease rent
was sought. Assessees also filed an application for condonation of delay in filing
belated returns citing two reasons, firstly, they were abroad and one of
co-owners, who was dealing with bank for obtaining TDS certificate, died, in
year 2004 after prolonged illness and, secondly, bank issued a consolidated TDS
certificate and in absence of break up of amounts, each co-owner could not file
separate returns in time. As regards first ground raised by assessees, it was
apparent that assessment years in question were 1998-99 to 2001-02 and even on
showing of assessees death of co-owner who was handling lease was in year 2004
whereas returns were filed in year 2005. So far as other ground was concerned,
separate share of each co-owners was a matter of agreement between parties and
lessee had absolutely no say in matter and, thus, non-receipt of break up of
respective shares could not be projected as a reason for not having filed
returns on close of respective assessment years. On facts, hardship projected
by assessees for condonation of delay was not genuine and could not be
countenanced. Therefore, assessee’s claim for refund could not be allowed. In
view of the above findings these writ petitions are dismissed. [In favour of
revenue] (Related Assessment years : 1998-99 to 2001-02 – [T. V. Hameed v. Union
of India (2012)
205 Taxman 83 : 17 taxmann.com 163 (Ker.)]
Assessee’s application seeking condonation of delay under section 119(2)(b) in filing return for relevant assessment year was rejected summarily without any reason being recorded for same, impugned order of rejection was to be set aside and application was directed to be revived before CBDT for disposal of same by a speaking order
This writ petition is
directed against the decision of the Central Board of Direct Taxes conveyed to
the petitioner through the letter of the Chief Commissioner of Income-tax dated
27.08.1992. By virtue of the said communication it is apparent that the
petitioner’s application seeking condonation of delay under section 119(2)(b)
of the Income-tax Act, 1961 (hereinafter referred to as the “said Act”) in
filing the return for the assessment year 1988-89 has been rejected. The
petitioner had claimed refund of the excess TDS deducted and paid as an agent
of the non-resident company-Zimmer AG, West Germany.
We have given several
opportunities to the learned counsel for the revenue to take instructions.
However, till date no such instructions are forthcoming inasmuch as the learned
counsel for the revenue states that according to her information the assessment
record stands transferred to the Assessing Officer at Kanpur. In this
eventuality, we feel that the communication dated 27.08.1992 is not backed by
any speaking order. The application filed by the petitioner under section 119(2)(b)
of the said Act has been rejected summarily without any reasons being recorded
for the same. On this ground alone, we set aside the order of rejection and
direct that the petitioner's application under section 119(2)(b) of the said
Act is revived before the Central Board of Direct Taxes. The Board shall decide
the application afresh after giving an opportunity of hearing to the
petitioner. The application would thereafter be disposed of by a speaking
order. Since this is an old matter, we hope that the Board shall dispose of the
said application as expeditiously as possible and preferably within 8 weeks. The
writ petition stands allowed. (Related Assessment year : 1988-89) – [J.K.
Synthetics v. Central Board of Direct Taxes (2009) 180 Taxman 207 (Del.)]
Extension for filing an
application for refund can be granted under section 119(2)(b) only on ground of
genuine hardship - Assessee filed application for refund belatedly and sought
condonation of delay in filing application for refund under section 119(2)(b) -
Board rejected condonation application for reason that returns were filed by
assessee much beyond time deliberately only to escape scrutiny assessment -
Board was justified in rejecting condonation application
The assessee filed an
application for refund belatedly and, also moved an application under section 119(2)
before the Central Board of Direct Taxes for condonation of the delay in filing
the application for refund. The Board rejected the condonation application on
the ground that the returns were filed by the assessee much beyond time
deliberately only to escape the scrutiny assessment.On writ:
Section 119(2)(b)
empowers the Board to extend the period for filing an application for refund in
case of genuine hardship. The Board has issued circulars from time-to-time
laying down conditions for condoning the delay in filing the application for
refund on the ground of genuine hardship.
The only ground on which
the extension can be granted is genuine hardship. That has rightly not been
defined under the Act. Whether there is genuine hardship or not depends upon
the facts of each case and no fixed criteria in the strait-jacket formula can
be laid down for the said purpose. In the instant case, admittedly, the returns
were filed much beyond time. Nothing had been stated on behalf of the assessee
explaining the delay in filing the returns. On the other hand, the Board had
found that that was a very deliberate attempt on the part of the assessee to
escape the liability under the Act.
The High Court does not
sit as an Appellate Forum over the decision of the authority in exercise of the
writ jurisdiction. It can interfere only when the authority has acted wrongly
in the decision making process or the order is such which cannot be supported
by reasons and similar other grounds. That was not a case in the instant case.
The Board had given reasons and the assessee had not been able to persuade the
Court that the orders had been passed without assigning any relevant reason.
The writ applications were, accordingly, to be dismissed. [In favour of
revenue] (Related Assessment years : 1993-94 and 1994-95 – [Deep
Narayan Gupta v. Central Board of Direct
Taxes (2003) 264 ITR 251 : (2004) 186 CTR 91 : 135 Taxman 499 (Pat.)]
Return claiming refund
could not be filed by assessee in time due to ill-health of Principal Officer
who was looking after taxation matters of petitioner - Petitioner-assessee’s
claim was rejected by CBDT on ground that no genuine hardship existed - In view
of provision of section 119(2)(b), phrase ‘genuine hardship’ should have been
construed liberally - Since assessee had satisfied all conditions mentioned in
Circular dated 12-10-1993 issued by CBDT in exercise of its powers under
section 119(2)(b) enabling income-tax authority to condone delay caused in
claiming refund, delay caused in filing claim for refund was satisfactorily
explained by petitioner and, therefore, claim for refund should not have been
rejected by Board
From the facts it was
clear that the Principal Officer had repeatedly fallen sick and was bed-ridden
for a long time. There was no one to look after taxation matters of the company
and so the returns could not be filed in time in which refund was claimed. It
was an admitted position that in exercise of power conferred by section 119(2)(b),
the Board has issued Circular dated 12.10.1993 enabling the income-tax
authority to condone delay caused in claiming refund. All the conditions
mentioned in the said Circular were satisfied by the petitioner. The
application for refund was rejected only on the ground that the case of genuine
hardship was not made out by petitioner. Applying the principles laid down by
the Madras High Court in R. Seshammal v. ITO (1999) 237 ITR 185 (Mad.),
it was to be held that the Board was not justified in rejecting the claim for
refund on the ground that case of genuine hardship was not made out by the
petitioner and delay in claiming the relief was not satisfactorily explained,
more particularly when the returns could not be filed in time due to ill health
of the Officer who was looking after the taxation matters of the petitioner. In
view of the provisions of section 119(2)(b), the phrase ‘genuine hardship’
should have been construed liberally and as the petitioner had satisfied all
the conditions mentioned in Circular, the claim for refund advanced by the
petitioner ought to have been examined on merits. For the abovesaid reasons,
the order of the CBDT was set aside and quashed and the Commissioner was
directed to consider the claim for refund made by the petitioner on merits and
in case it was found that the petitioner was entitled to refund as claimed, the
amount of refund should be paid to the petitioner forthwith. – [Gujarat
Electric Co. Ltd. v. CIT (2002) 255 ITR 396 : 172 CTR 220 : 120 Taxman 733 (Guj.)]
Power exercisable by
Board under section 119(2)(b) is a quasi-judicial power and not an
administrative power - Therefore, it is incumbent upon Board as also in
conformity with principles of natural justice, to afford an opportunity of
hearing to assessee before passing an order under section 119(2)(b) – Board’s
aforesaid order passed without giving said opportunity was not sustainable
For the assessment year
1985-86, the assessee filed his return belatedly and as such made an
application to the Board under section 119(2)(b) for the condonation of the
delay. The Board, after obtaining the comments of the ITO through the Chief
Commissioner, rejected the assessee's application. The assessee thereupon filed
a writ petition, seeking quashing of the Board's order, as also directions to
the respondents to make assessments on the basis of the return filed by him.
The Single Judge held that the Board's aforesaid order was an administrative
order and as such it was not necessary to give reasons or to afford an
opportunity of hearing to the assessee. He further held that the power
exercised by the Board under section 119(2)(b) was an administrative power and
not a judicial or quasi-judicial power and, therefore, it was not necessary to
hear and pass a considered order. On writ appeal:
When the Board has to
exercise power under the statute affecting the right of an assessee, such
exercise of power cannot at all be considered to be an administrative power. In
case the Board takes a view that the delay in filing the return cannot be
condoned, the assessee becomes liable for ex parte assessment.
The statute makes it
incumbent upon the Board to consider the case pleaded under clause (b) of
section 119(2) by the assessee who files his return beyond time. This power has
to be exercised by the Board and the Board alone and not by any other
authority. It is not possible to hold that this power is purely administrative
when it relates to condonation of delay in a case where the return is filed
beyond the period prescribed. The Board is required to exercise the discretion
on taking into consideration all the relevant/acts and circumstances and
determine whether the delay in filing the return should or should not be
condoned. The order must be accompanied by the reasons. It is not an arbitrary
exercise of power. This power has all the traits of judicial power. Therefore,
the power exercisable by the Board under clause (b) of section 119(2) is
quasi-judicial in nature. When an authority discharges the quasi-judicial
function, it follows without saying that it has to conform to the principles of
natural justice. It has to afford an opportunity to the party who is going to
be affected by the decision of the Board. Therefore, the Board is required to
afford an opportunity of hearing to the assessee, either oral hearing or through
submission of written arguments, with reference to the points made against the
assessee for not granting the relief sought for by him.
As long as the point
held against the applicant is made known to him, and his say is obtained and
the same is taken into consideration, the principles of natural justice are
complied with. Therefore, having regard to the number of matters which would be
received by the Board, the aforesaid procedure would be just and expedient and
would also be in conformity with the principles of natural justice. In the
instant case, no opportunity, whatsoever, had been afforded to the assessee.
His application for condonation of delay in filing the return had been rejected
on obtaining the information from the ITO behind the back of the assessee.
Therefore, the Board’s order could not at all be sustained. The Board is
directed to consider the application of the assessee, afresh in accordance with
law and in the light of the observations made in this order. Hence, the writ
appeal was allowed. (Related Assessment year : 1985-86) – [H. S.
Anantharamaiah v. Central Board of Direct Taxes (1993) 201 ITR 526 : 69 Taxman
291 (Karn.)]
Taking into
consideration report of Commissioner, which was forwarded by Chief
Commissioner, Bangalore, CBDT rejected application for condonation of delay in filing
application under section 154 - It was purely within discretion of CBDT to
condone or not to condone delay and, therefore, on facts, CBDT could not be
said to have acted arbitrarily
The assessees sought
rectification under section 154 of the Income-tax Act, 1961 (‘the Act’) by the
applications which were made belatedly. Condonation of delay was sought by
applications made under section 119(2)(b) of the Act. The Board taking into
consideration the report of the Commissioner, Cochin, which was forwarded to it
by the Chief Commissioner, Bangalore, rejected the applications for condonation
of delay. Such rejection was challenged in the original petition before this
Court. On writ petition, the Single Judge rejected the contention of the
assessee that CBDT had lost its jurisdiction to consider the application,
inasmuch as the files had been transferred to the Chief Commissioner,
Bangalore. On appeal :
Held : On facts, it was clear that the Chief
Commissioner, Bangalore, simply forwarded the report of the Commissioner,
Cochin. There was nothing to indicate that the proceedings had been transferred
to the Chief Commissioner, Bangalore, thereby divesting the jurisdiction of the
CBDT in the matter. Therefore, it was purely within the discretion of the CBDT
to condone or not to condone the delay. It could not be said that the CBDT
acted arbitrarily, inasmuch as it rejected the application for condonation of
delay only after taking into consideration the report called for from the
Commissioner, Cochin, which was duly forwarded by the Chief Commissioner,
Bangalore. – [A.P. Sivaraman v.
ITO (1999) 239 ITR 532 : 151 CTR 22 : (1998) 101 Taxman 634 (Ker.)]
An application under
section 119(2)(b) is considered by Board, Board is not required to write an
order recording reasons, however, it is required to apply its mind to merits of
case - Therefore, where Board after considering oral as well as written
arguments filed by parties, had rejected assessee’s application filed under
section 119(2)(b), it could be said that Board had applied its mind to merits
of case and had rejected assessee’s application on merits - As a consequence,
order passed by Board was to be affirmed
For the assessment years
1978-79 to 1980-81 the assessee company could not file its returns in time and
the same were filed during the accounting year relevant to the assessment year
1982-83. The assessee filed an application before the CBDT under section119
wherein the assessee explained the circumstances under which the returns could
not be filed within two years from the end of the assessment year concerned as
provided in sub-section (4) of section 139 and submitted that, as a result, the
assessee had lost the benefit of the carry forward of the losses and,
therefore, prayed that the Central Board of Direct Taxes be pleased to condone
the delay in filing the returns and direct the income-tax authorities to give
the relief regarding carry forward of losses. The Central Board, however,
rejected the application. On writ :
When an application
under section 119(2)(b) is considered by the Board, the Board is not required
to write an order recording reasons. What the Board, however, should do is to
apply its minds to the merits of the case. In the instant case, particularly
having regard to the fact that an oral hearing had been given and written
arguments were also permitted to be filed, the Board had applied its mind to
the merits of the case and had rejected the application of the petitioner on
the merits. Therefore, the instant petition was to be dismissed. [In favour of
the revenue] (Related Assessment years : 1978-79 to 1980-81) – [John Shalex
Paints (P) Ltd. v. Central Board of Direct Taxes (1993) 201 ITR 523 (Karn.)
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