Claim Income Tax Refund for Unfiled ITR: Section 119(2)(b)

Claiming Income Tax Refund for Unfiled Returns: The Section 119(2)(b) Route

Summary: Taxpayers who failed to file an Income Tax Return within the normal or belated-return time limit may still claim a legitimate refund by seeking condonation of delay under Section 119(2)(b) of the Income-tax Act, 1961. CBDT Circular No. 11/2024 dated 1 October 2024 prescribes the competent authorities, monetary limits, five-year outer time limit, conditions and procedure for such applications. The taxpayer must establish genuine hardship and substantiate the refund claim. An updated return under Section 139(8A) cannot be used to claim or increase a refund. Judicial precedents emphasise a liberal, justice-oriented approach to genuine hardship. The article also provides a step-by-step procedure and a specimen application for condonation of delay.

Introduction

Many taxpayers discover, sometimes years later, that tax was deducted at source or paid in excess for a financial year for which no Income Tax Return (ITR) was ever filed. Once the due date for filing (and even the belated return window under Section 139(4)) lapses, the taxpayer would ordinarily lose the right to claim that refund. However, the Income-tax Act, 1961 provides a statutory remedy — condonation of delay under Section 119(2)(b) — that allows the Central Board of Direct Taxes (CBDT), or its delegated authorities, to permit a taxpayer to file the return and claim the refund even after the normal time limits have expired, provided the delay is explained by “genuine hardship.”

This article explains the procedure, the governing circular, and the judicial precedents that support such applications — particularly relevant for taxpayers who missed filing returns for FY 2023-24 (AY 2024-25) and FY 2024-25 (AY 2025-26).

The Legal Basis

Section 119(2)(b) empowers the CBDT, for the purpose of avoiding genuine hardship, to authorise any income-tax authority to admit an application or claim for any exemption, deduction, refund, or relief under the Act after the expiry of the period specified for making such claim, and to deal with the same on merits, in accordance with law.

Since an updated return under Section 139(8A) cannot be used to claim or enhance a refund, and the belated return window under Section 139(4) has a hard cut-off, a condonation application under Section 119(2)(b) remains the only available route where no return has been filed at all and a genuine refund is due.

The Governing Circular

The CBDT’s current comprehensive guidelines on this subject are contained in Circular No. 11/2024, dated 1st October 2024, issued in supersession of all earlier instructions, including Circular No. 9/2015 and Circular No. 7/2023. The key features of this circular are:

1. Monetary limits and competent authority

2. Time limit

No condonation application will be entertained beyond five years from the end of the relevant assessment year. This limit applies uniformly to all delegated authorities. Where the refund arises consequent to a Court order, the period the matter remained pending before the Court is excluded, provided the application is filed within six months of the Court order (or the end of the financial year, whichever is later).

3. Disposal timeline

Applications should, as far as possible, be disposed of within six months from the end of the month in which they are received.

4. Conditions for acceptance

The authority must be satisfied that the assessee was prevented by reasonable cause from filing the return within the due date, and that the case is one of genuine hardship on merits. The authority may direct the jurisdictional Assessing Officer to make necessary inquiries.

5. Restriction on interest

Where a refund is admitted through this route, no interest under Section 244A is payable on such belated claims, and the income must not be assessable in the hands of any other person.

Step-by-Step Procedure

• Establish genuine hardship — document the specific reason preventing timely filing (illness, death in the family, natural calamity, loss of records, technical failure, unfamiliarity with e-filing, or error by a tax representative) with supporting evidence.
• Compute the refund — reconcile TDS/TCS credit with Form 26AS and AIS so the refund figure is verifiable. Prepare separate computations for each assessment year involved.
• Draft the application — address it to the jurisdictional authority determined by the monetary limits, narrating facts, reasonable cause, genuine hardship, and citing Circular No. 11/2024 and supporting case law.
• File the application — generally through the “Condonation Request” service on the e-filing portal for the relevant assessment year, or physically where the online facility is not enabled.
• Respond to departmental inquiries — the authority may direct the Assessing Officer to verify the hardship and correctness of the claim.
• File the return once condoned — the department typically enables the ITR filing utility for that specific year, or accepts the return physically as directed in the order.
• Processing and refund — the return is processed under Section 143(1) and the refund, once verified, is credited to the pre-validated bank account (without interest under Section 244A).

Judicial Precedents Supporting a Liberal Approach

Courts have consistently cautioned tax authorities against a narrow, technical reading of “genuine hardship,” emphasising that the provision exists to enable substantive justice rather than to penalise inadvertent, non-deliberate delay.

Sitaldas K. Motwani v. Director General of Income Tax (International Taxation), [2010] 323 ITR 223 (Bom.)

The Bombay High Court held that the expression “genuine hardship” in Section 119(2)(b) must be construed liberally. The Court observed that the legislature conferred the power to condone delay so that authorities could do substantive justice by deciding matters on merit, and that “refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and a cause of justice being defeated.” It further held that the authority is not expected to closely scrutinise the eventual success of the refund claim at the condonation stage itself. This judgment remains the most widely relied-upon authority in such matters.

B.M. Malani v. Commissioner of Income Tax, (2008) 174 Taxman 363 / 306 ITR 196 (SC)

This Supreme Court decision arose under Section 220(2A) (waiver of interest on genuine hardship), where the Court held that “genuine” means “not fake or counterfeit, real, not pretending,” that the ingredients of genuine hardship must be determined having regard to this dictionary meaning and the surrounding legal context, and that while the authority retains discretion in deciding such applications, that discretion must be exercised judiciously and not arbitrarily. Although decided in the context of Section 220(2A), this interpretation of “genuine hardship” has been expressly relied upon by the Bombay High Court in Sitaldas K. Motwani (discussed below) and by several other courts while deciding condonation applications under Section 119(2)(b), given the common statutory language.

Nirzari Amitbhai Mehta v. Principal Commissioner of Income Tax-1, 2024 LiveLaw (Guj) 155 (Guj. HC)

The Gujarat High Court set aside an order rejecting condonation on the ground that the taxpayer had not furnished “proof” of hardship, holding that the authority ought to have decided the application without adopting a pedantic, technical approach. Relying on Sitaldas Motwani, the Court remanded the matter for fresh consideration within twelve weeks.

Collector, Land Acquisition v. Mst. Katiji, AIR 1987 SC 1353

Though not an income-tax matter, this foundational Supreme Court ruling is routinely applied in condonation proceedings across statutes. It lays down that a liberal, justice-oriented approach must ordinarily be preferred over a purely technical one, since the litigant does not benefit from delaying their own claim, and refusing condonation can defeat a meritorious cause.

Conclusion

Section 119(2)(b), read with CBDT Circular No. 11/2024 and the body of judicial precedent that has developed around it, provides a clear and workable framework for taxpayers to recover legitimate refunds even where no return was filed within the ordinary time limits — provided the delay can genuinely be explained and the claim itself is bona fide and verifiable. A well-documented application, addressed to the correct authority based on the monetary limit, supported by relevant case law, offers a reasonable prospect of the delay being condoned and the refund being released, subject to the return being filed and processed thereafter.

This article is for general informational purposes and does not constitute legal or tax advice. Readers are advised to evaluate the facts of their specific case, and where necessary, seek independent professional advice before initiating proceedings under Section 119(2)(b).

APPLICATION FOR CONDONATION OF DELAY UNDER SECTION 119(2)(b) OF THE INCOME-TAX ACT, 1961

To,

The Principal Commissioner of Income Tax / Commissioner of Income Tax,

[Jurisdictional Pr. CIT / CIT Charge, e.g., Pr. CIT, Agra],

[Address of the Income Tax Office]

Subject: Application under Section 119(2)(b) of the Income-tax Act, 1961 for condonation of delay in filing Income Tax Return(s) for Assessment Year 2024-25 (F.Y. 2023-24) and Assessment Year 2025-26 (F.Y. 2024-25) and for permission to claim refund arising thereon.

Respected Sir/Madam,

I, [Name of the Applicant], son/daughter/wife of [Father’s/Husband’s Name], holding Permanent Account Number (PAN) [PAN Number], resident of [Complete Address], respectfully submit this application seeking condonation of delay in filing my Income Tax Returns for Assessment Year 2024-25 and Assessment Year 2025-26, and pray that I be permitted to file the said returns and claim the refund legitimately due to me, on the following facts and grounds:

1. Facts of the Case

• The applicant is assessed to tax under PAN [PAN Number] in Ward/Circle [Ward/Circle details], and derives income from [salary / business / profession / other sources, as applicable].
• For Assessment Year 2024-25 (relevant to Financial Year 2023-24) and Assessment Year 2025-26 (relevant to Financial Year 2024-25), tax was duly deducted at source / paid in advance / paid as self-assessment tax on the applicant’s income, as reflected in Form 26AS and the Annual Information Statement (AIS) of the applicant.
• However, the applicant could not file the Income Tax Returns for the said assessment years within the time prescribed under Section 139(1), or even within the extended period under Section 139(4), on account of the following genuine hardship: [state the specific valid reason here — e.g., the applicant was under continuous medical treatment/hospitalisation from [date] to [date] due to [nature of illness], as evidenced by the medical records enclosed; OR the applicant’s father/mother/spouse passed away during the relevant period, as evidenced by the death certificate enclosed; OR the applicant’s records/laptop/documents were lost/destroyed due to [reason], as evidenced by the enclosed report; OR any other bona fide and verifiable reason].
• The delay in filing the return is thus entirely on account of circumstances beyond the applicant’s control, and is neither wilful nor deliberate. The applicant does not stand to gain in any manner by the delay; on the contrary, the applicant stands to lose a legitimate refund if the delay is not condoned.

2. Refund Details

• For Assessment Year 2024-25: Total tax deducted/paid ₹[Amount] as per Form 26AS/AIS, against tax liability of ₹[Amount/NIL], resulting in a refund of ₹[Refund Amount] becoming due to the applicant.
• For Assessment Year 2025-26: Total tax deducted/paid ₹[Amount] as per Form 26AS/AIS, against tax liability of ₹[Amount/NIL], resulting in a refund of ₹[Refund Amount] becoming due to the applicant.
• The computation of income and refund for both assessment years, duly reconciled with Form 26AS and AIS, is enclosed as Annexure to this application.
• It is submitted that the income of the applicant is not assessable in the hands of any other person under any provision of the Act, and the refund has arisen solely on account of excess tax deducted/collected at source and/or excess advance tax/self-assessment tax paid.

3. Legal Position

Section 119(2)(b) of the Income-tax Act, 1961 empowers the Income-tax authorities, as delegated by the Central Board of Direct Taxes, to admit an application or claim for refund after the expiry of the prescribed period, where the case involves genuine hardship. The applicable guidelines are contained in CBDT Circular No. 11/2024 dated 1st October 2024, which vests the present authority with the power to decide such applications within the prescribed monetary limits, and permits condonation of delay up to five years from the end of the relevant assessment year.

It is respectfully submitted that the expression “genuine hardship” occurring in Section 119(2)(b) has been held to require a liberal construction by the Hon’ble Bombay High Court in Sitaldas K. Motwani v. Director General of Income Tax (International Taxation), [2010] 323 ITR 223 (Bom.), wherein it was held that refusing to condone a delay can result in a meritorious matter being thrown out at the threshold and a cause of justice being defeated, and that an applicant seeking condonation does not stand to benefit from the delay.

Reliance is further placed on B.M. Malani v. Commissioner of Income Tax, (2008) 174 Taxman 363 / 306 ITR 196 (SC), wherein the Hon’ble Supreme Court, while interpreting the expression “genuine hardship” (in the context of Section 220(2A), an interpretation since applied by courts to Section 119(2)(b) applications as well), held that the discretion vested in the authority must be exercised judiciously and not arbitrarily; and on Nirzari Amitbhai Mehta v. Principal Commissioner of Income Tax-1, 2024 LiveLaw (Guj) 155 (Guj. HC), wherein the Hon’ble Gujarat High Court held that a pedantic and technical approach ought to be avoided while deciding applications under Section 119(2)(b).

4. Prayer

In view of the above facts and circumstances, it is most respectfully prayed that this Hon’ble authority may kindly be pleased to:

• condone the delay in filing the Income Tax Returns of the applicant for Assessment Year 2024-25 and Assessment Year 2025-26 under Section 119(2)(b) of the Income-tax Act, 1961;
• permit the applicant to file the said returns of income for the aforesaid assessment years; and
• direct that the refund(s) due to the applicant, as computed above, be processed and granted in accordance with law upon filing and verification of the said returns.

The applicant undertakes to file the return(s) of income immediately upon the delay being condoned and the utility being enabled, and to furnish any further information or clarification that this Hon’ble authority may require.

5. List of Enclosures

• Computation of total income and refund for A.Y. 2024-25 and A.Y. 2025-26
• Form 26AS / Annual Information Statement (AIS) for both assessment years
• Evidence supporting the genuine hardship stated above (medical records / death certificate / other supporting document, as applicable)
• Copy of PAN card
• Copy of pre-validated bank account details (for refund credit)
• Any other document relevant to the claim

Verification

I, [Name of the Applicant], do hereby verify that the contents of the above application are true and correct to the best of my knowledge and belief, and that no material fact has been concealed therefrom.

Place: [Place]

Date: [Date]

(Signature of the Applicant)

[Name of the Applicant]

PAN: [PAN Number]