Section 119 briefly explained (For tax nerds)

Section 119 accords the following powers to CBDT:
  • 119(1): To issue instructions and directions to other income-tax authorities for the proper administration of this Act, given that orders shall not be issued requiring assessment or disposition of a particular case in a specific manner to avoid any bias or prejudice against the taxpayer in question. Such instructions are generally made to all income tax authorities except the Commissioner (Appeals) to avoid the interruption in the discharge of their appellate functions.
  • 119(2)(a): To provide relaxation regarding certain provisions in the public interest such as waiver or reduction of interest under 234A, 234B, 234C, 234E, penal consequences etc.
  • 119(2)(b): To admit application or claim for condonation of delay as explained at length in the subsequent paragraphs.
  • 119(2)(c): To provide relaxation for claiming deduction under Chapter IV/ VI-A, where the taxpayer fails to comply with any prescribed requirements for reasons beyond his control and provided that the taxpayer complies with such requirements before the completion of the assessment by the income tax officer.

Section 119(2)(b)

CBDT is empowered to deal with the applications for condonation of delay in filing returns containing a refund claim and returns claiming to carry forward loss and set off thereof under section 119(2)(b) read with Circular 9/2015 dated 9 June 2015.

The power to accept/reject the application by the prescribed income-tax officer in case of such claims will be subject to the following conditions:

Particulars Conditions
Generic conditions
  1. The income/loss declared, or the claim for refund, is true and correct, and it falls within the purview of genuine difficulty, which shall be decided based on the merits of the case.
  2. The officer dealing with the case shall be empowered to direct the jurisdictional assessing officer to make necessary inquiries or scrutinise the case as per the provisions of the Act to ascertain the correctness of the claim.
Additional conditions in case of refund claims
  1. The assessee’s income is not subject to assessment in the hands of any other person under the Act.
  2. Interest shall not be admissible on the belated claims of refund.
  3. The refund claimed 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
2.1. Time limit for filing application:
Possible scenarios The time limit for filing an application Points for consideration
In any case except where a refund claim arises  based on a court order Within six years from the end of the assessment year for which such application/claim is made. E.g., Mr A wants to claim a refund he failed to claim due to his poor health conditions in FY 2019-20 (AY 2020-21). He will have to make an application before the end of the AY 2026-27, .i.e by 31 March 2027 
A refund claim arises based on a court order - six months from the end of the month in which the Court order was issued or  - the end of the financial year, whichever is later. If the application is filed within the given deadlines, the period during which any such case was pending before any Court of Law shall be excluded while computing the six-year period stated above.
E.g., A refund for the AY 2013-14 was made available pursuant to a court order on 23 June 2021. The proceedings for which began on 20 April 2017.
For computing six years, the period from 20 April 2017 to 23 June 2021 shall be excluded. Therefore, the application would need to be filed on or before 31 March 2021, being later of 31 December 2021 and 31 March 2021.
2.2. Time limit for disposing of the application:

A condonation application must be disposed of within six months from the end of the month in which the application was received by the competent authority, as far as possible. It is pertinent to note that this time limit is recommendatory and not mandatory.

2.3. Procedure for filing return under section 119(2)(b): Step 1: File a manual or online application:

File a manual application to the jurisdictional officer authorised to deal with the application. The application may also be filed online on the income tax portal in the ‘Condonation request’ section under the ‘services’ tab.

The officers authorised to accept/ reject the application based on the amount of claim is tabulated as under:

Amount of claim Authority
Up to INR 10 lacs Principal Commissioners of Income-tax/Commissioners of Income-tax (Pr.CsIT/CsIT)
More than INR 10 lacs but up to INR 50 lacs Principal Chief Commissioners of Income-tax/Chief Commissioners of Income-tax (Pr.CCsIT/CCsIT)
More than INR 50 lacs CBDT

The application shall contain all the material facts. It is generally accepted to divide the application into two parts, namely,

a) the facts of the case along with the circumstances due to which the delay was caused, along with the supporting and
b) the genuine hardship caused to the taxpayer if such a claim is not allowed to him.

Step-2: Response to notice issued by the income tax officer

After submitting an application as above, a notice will be issued by the department seeking relevant information regarding the claim, which can be accessed on the income tax portal www.incometax.gov.in under:
- ‘E-file’ tab or
- ‘Pending actions’ section on the dashboard

The taxpayer can submit a reply to the notice online, either by himself or through his authorised representative (CA or an advocate)

Step-3: Disposal of application by the income tax officer

After verifying all the information provided by the taxpayer, the income tax officer shall decide upon the merits of the case and pass an order under section 119(2)(b). The order will be made available under the ‘E-file’ tab and on an email sent on the registered email-id of the taxpayer.

Step-4: Filing of return under section 119(2)(b):

Once the order of acceptance of your claim is received, you can file a return u/s 119(2)(b) on the income tax portal for the relevant assessment year, and the ITR form number should be the same as was applicable for that particular assessment year


Conclusion

In case of delay in filing a return, the taxpayer has an option to file a belated return under section 139(4) by the following dates, whichever is earlier:

Section 119 accords the following powers to CBDT:

- on or before the relevant AY ends or
- Before the tax authority completes the assessment

E.g. If the taxpayer fails to furnish the return for FY 2020-20 21(AY 2021 -22) by the deadline, he can file a belated return by 31 Jan 2022 being earlier of 31 Jan 2022 or before the tax authority completes the assessment (say 10 April 2022)

If the taxpayer misses the above deadlines due to genuine difficulties, he may apply for relief under section 119 as discussed above.

3.1. Few instances which the judiciary has upheld to be cases of genuine difficulties are:
Ruling Authority Case Law Judgement
Kerala High Court M. Rajan v. Principal Commissioner of Income-tax, Calicut (164 Kerala 2016) It was contended that the petitioners health condition was so poor that he could not make necessary arrangements for initiating the return filing process. The court held that it would only be appropriate to condone the delay.
Bombay High Court Artist Tree (P.) Ltd vs The CBDT (2014)
(52 Taxman 152)
One of the grounds for delay in filing was misplacement of TDS certificates due to change in the office, and considerable time was spent to re-extract these certificates resulting in delay. The court mentioned that there is nothing bogus in the explanation offered by the assessee, and the case of genuine hardship has been made out.

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.

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