Condonation of delay in filing refund claim and claim of carry forward of losses under section 119(2)(b)

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 up to Rs. 10,000 and CCIT up to 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 5-2-1988 and 17-8-1988 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, Central Board of Direct Taxes [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 section 119(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 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.

Circular : No. 8/2001, dated 16-5-2001.

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