Introduction: On the 1st of December, 2023, the Central Board of Direct Taxes (CBDT), under the Ministry of Finance, issued a crucial order under section 119 of the Income-tax Act, 1961. The order addresses the processing of electronically filed income tax returns with refund claims, extending the deadline beyond prescribed limits for non-scrutiny cases. This decision comes in response to technical issues and other non-attributable reasons causing delays in the processing of returns for assessment years 2018-19, 2019-20, and 2020-21.
Detailed Analysis: The CBDT acknowledges that validly filed returns under sections 139, 142(1), or 119 of the Income Tax Act, 1961, for the mentioned assessment years, could not be processed under section 143(1) within the specified timeframe. This delay in processing has led to taxpayers being unable to receive legitimate refunds, even when the delay is not their fault.
To address this, the CBDT had previously issued orders under section 119, extending the statutory time limit for processing such returns in non-scrutiny cases. The most recent order, dated 16th October 2023, extended the time frame until 31.01.2024 for processing returns of income filed electronically with refund claims up to AY 2017-18.
Considering the ongoing grievances related to refund issues for AYs 2018-19, 2019-20, and 2020-21, the CBDT, leveraging its powers under section 119, further relaxes the time-frame prescribed in the second proviso to sub-section (1) of section 143. This allows the processing of returns with refund claims for the mentioned assessment years, subject to prior administrative approval of Pr.CCIT/CCIT concerned. The intimation of such processing can be sent to the assessee concerned by 31.01.2024.
The order outlines that all subsequent effects under the Act, including the issuance of refunds, will follow prescribed procedures. Adequate safeguards are in place to monitor the progress of disposal of such cases.
Exceptions to this relaxation include returns selected for scrutiny, unprocessed returns with payable demand, or likely demand, and returns remaining unprocessed for reasons attributable to the assessee.
Conclusion: In conclusion, the CBDT’s order provides a lifeline for taxpayers facing delays in receiving refunds due to processing issues. The extension of the processing timeframe offers a solution to genuine hardships faced by taxpayers for specific assessment years. Taxpayers are urged to understand the exceptions and take advantage of the extended processing timeframe. This order reflects the government’s commitment to addressing challenges faced by taxpayers with flexibility and consideration.
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F. No.225/132/2023/ITA-II
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
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North Block, the 1st December, 2023
Order under section 119 of the Income-tax Act, 1961
Subject: Processing of returns of income validly filed electronically with refund claims under section 143(1) of the Income-tax Act, 1961 beyond the prescribed time limits in non-scrutiny cases-regd.
It has been brought to the notice of the Central Board of Direct Taxes (`Board’) that due to certain technical issues or for other reasons not attributable to the assessees concerned, several returns for assessment years (AYs) 2018-19, 2019-20 and 2020-21, which were otherwise filed validly under section 139 or 142(1) or 119 of the Income tax Act, 1961 (`Act’) could not be processed under sub-section (1) of section 143 of the Act. Consequently, intimation regarding processing of such returns could not be sent within the timeframe prescribed under sub-section (1) of section 143 of the Act. This has led to a situation where the taxpayers are unable to get their legitimate refund in accordance with provisions of the Act, although the delay may not be attributable to them.
2. To resolve the grievances of such taxpayers, the Board had earlier issued instructions/orders u/s 119 of the Act from time to time relaxing the prescribed statutory time limit for processing of such validly filed returns with refund claims in non-scrutiny cases. As per the latest order dated 16th October, 2023, time frame was given till 31.01.2024 to process returns of income validly filed electronically with refund claims upto AY 2017-18.
3. The matter has been considered by the Board in view of pending grievances of taxpayers related to issue of refund for AYs 2018-19, 2019-20 and 2020-21. To mitigate genuine hardship being faced by the taxpayers on this issue, the Board, by virtue of powers vested with it under section 119 of the Act, hereby relaxes the time-frame prescribed in second proviso to sub-section (1) of section 143 and directs that all returns of income validly filed electronically with refund claims for AYs 2018-19, 2019-20 and 2020-21, for which date of sending intimation under sub-section (1) of section 143 of the Act has lapsed, subject to the exceptions mentioned in para 5 below, can be processed now with prior administrative approval of Pr.CCIT/CCIT concerned. The intimation of such processing under sub-section (1) of section 143 of the Act can be sent to the assessee concerned by 31. 01.2024.
4. All subsequent effects under the Act including issue of refund shall also follow as per the prescribed procedures. To ensure adequate safeguards, it has been decided that once administrative approval is accorded by the Pr.CCIT/CCIT, the Pr.CIT/CIT concerned would make a reference to the DGIT (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.
5. The relaxation accorded above shall not be applicable to the following returns:
a) returns selected in scrutiny;
b) returns remain unprocessed, where either demand is shown as payable in the return or is likely to arise after processing it;
c) returns remain unprocessed for any reason attributable to the assessee.
6. This may be brought to the notice of all for necessary compliance.
7. Hindi version to follow.
(Dr. Castro Jayaprakash. T)
Under Secretary to Government of India
Copy for information to:
i. Chairman (CBDT) and all Members of CBDT
ii. All Pr.CCsIT/DsGIT
iii. DGIT(Systems),Delhi & DGIT (Systems),Bengaluru with request for further necessary action in the matter
iv. ADG (TPS)-1 and ADG(TPS)-2 with request for further necessary action in the matter
v. ADG(Systems)-4 with request for uploading on department’s official website
vi. JCIT, Database Cell for uploading on IRS Officers website
vii. Guard file
(Dr. Castro Jayaprakash. T)
Under Secretary to Government of India
Excellent Decision by the Ld. CBDT to minimum
hard ship of the Tax Payers for refund withheld for long times.