Condonation of delay in filing refund claim and claim of carry forward of losses

Analysis of Circular No. 09/2015-Income Tax Dated: 09.06.2015: Condonation of Delay in Filing Refund Claim and Carry Forward of Losses

Introduction: Circular No. 09/2015, issued by the Central Board of Direct Taxes (CBDT) on June 9, 2015, provides comprehensive guidelines for the condonation of delay in filing refund claims and claims of carry forward of losses under Section 119(2)(b) of the Income-tax Act. This analysis aims to dissect the key provisions and implications of the circular.

Key Provisions:

1. Delegation of Powers:
   • Principal Commissioners of Income-tax/Commissioners of Income-tax (Pr.CsIT/CsIT) have the authority to accept/reject applications/claims for amounts up to ₹10 lakhs for any one assessment year.
   • Principal Chief Commissioners of Income-tax/Chief Commissioners of Income-tax (Pr.CCsIT/CCsIT) have the power for amounts exceeding ₹10 lakhs but not more than ₹50 lakhs.
   • Applications/claims exceeding ₹50 lakhs shall be considered by the CBDT.
2. Condonation Time Limit:
   • No condonation application for a refund/loss claim will be entertained beyond six years from the end of the assessment year.
   • The limit applies to all authorities, including the CBDT.
   • The disposal of condonation applications should ideally occur within six months from the end of the month of receipt.
3. Effect of Court Proceedings:
   • The period for pending court proceedings will be excluded from the six-year limit if the refund claim arises from a court order.
   • The condonation application must be filed within 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.
4. Conditions for Acceptance/Rejection:
   • The income/loss declared and the refund claimed must be correct, genuine, and the case should demonstrate genuine hardship.
   • Authorities have the power to direct the assessing officer to conduct necessary inquiries or scrutinize the case.
5. Belated Supplementary Claim of Refund:
   • A belated application for a supplementary refund claim can be admitted for condonation if other conditions are met.
   • Conditions include ensuring the income is not assessable in someone else’s hands, no interest on belated claims, and the refund arises from excess tax deductions or payments.
6. Special Provision for 8% Savings Bonds:
   • The time limit of six years does not apply to refund claims related to 8% Savings (Taxable) Bonds, 2003, where interest was accounted for on a mercantile basis, and TDS was deducted on the entire interest amount.
7. Applicability and Grievance Redressal:
   • The circular covers pending applications/claims as of its issue date.
   • The CBDT reserves the power to examine grievances arising from the authorities’ orders and issue directions for proper implementation. However, no review or appeal against these orders would be entertained by the CBDT.

Conclusion: Circular No. 09/2015 streamlines the process for condonation of delay in filing refund claims and carry forward of losses. It establishes clear guidelines, delegation of powers, and conditions for acceptance, ensuring a structured and efficient approach while providing relief under genuine circumstances. The inclusion of specific provisions, such as the exclusion of court proceeding periods and the treatment of supplementary refund claims, adds nuance and flexibility to the overall framework.

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CIRCULAR NO 09/2015

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

Dated : June 9, 2015

Sub: Condonation of delay in filing refund claim and claim of carry forward of losses under Section 119(2)(b) of the Income-tax Act

In supersession of all earlier Instructions/Circulars/Guidelines issued by the Central Board of Direct Taxes (the Board) from time to time to deal with the applications for condonation of delay in filing returns claiming refund and returns claiming carry forward of loss and set-off thereof under section 119(2)(b) of the Income-tax Act (the Act), the present Circular is being issued containing comprehensive guidelines on the conditions for condonation and the procedure to be followed for deciding such matters.

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 application/claims if the amount of such claims is not more than ₹ 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 application/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 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/CJT 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.

6. 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 Pr.CCsIT/CCsIT/Pr.CsIT/CsIT in case of returns claiming refund and supplementary claim of refund would be subject to the following further conditions:

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.

[F. No. 312/22/2015-OT]

Ekta Jain

Deputy Secretary to Government of India