Condonation of Delay in ITR Filing under Section 119(2)(b)

Condonation of Delay in Income Tax Return (ITR) Filing under Section 119(2)(b) of the Income Tax Act, 1961

Summary: Under Section 119(2)(b) of the Income Tax Act, taxpayers who miss the ITR filing deadline can request a condonation of delay, particularly for claims like refunds, deductions, exemptions, or loss carry-forwards. Governed by Circular No. 11/2024, effective October 1, 2024, the process requires a formal application, either through the Income Tax portal or directly to the concerned authority. Applications must be submitted within five years from the relevant assessment year, with extended timelines allowed in case of court litigation. Decision-making authority depends on the claim amount, with higher claims handled by senior officers. The circular ensures a structured approach to condonation requests while requiring genuine claims and documentation. Practical methods include submitting a detailed paper application, supporting documents, and in-person meetings for clarity. Judicial precedents highlight scenarios where delays were condoned due to genuine hardship, illness, or technical failures. An alternative, ITR-U, permits late filing with penalties, but condonation is preferable to avoid extra costs. Timely applications with proper documentation improve chances of acceptance, making this process vital for taxpayers facing procedural delays.

If an assessee fails to file their Income Tax Return (ITR) within the prescribed time limit, the government provides a mechanism for condoning the delay. The condonation of delay is governed by Section 119(2)(b) of the Income Tax Act, supplemented by the guidelines outlined in Circular No. 11/2024, issued on October 1, 2024. This circular details the procedure and conditions under which a condonation request may be filed.

If you intend to file a condonation request after October 1, 2024, or if your condonation request is already pending with the department as of that date, the provisions of Circular No. 11/2024 will apply. In cases of genuine hardship, the assessee may submit a condonation request, and the department has the discretion to accept delayed ITRs that involve claims for refunds, deductions, exemptions, or the carry-forward of losses.

I generally prefer to apply for condonation of delay either through email or by submitting a hard copy to the respective officer, as the option is often not available or does not reflect properly on the Income Tax portal.

Please note that the Commissioner of Income Tax, Central Processing Centre (CPC), Bengaluru, has been vested with the authority to accept or reject petitions filed under Section 119(2)(b) of the Income Tax Act. These petitions seek condonation of delay in verifying the return of income by submitting the ITR-V to the Centralized Processing Centre (CPC), Bengaluru, within the prescribed time limit.

Circular No. 11/2024 specifies the respective officer to whom the condonation application must be submitted. It is important to note that this circular revises the previous limits for claims.

Under the revised circular, the decision-making authority is assigned based on the claim amount, ensuring a structured and transparent process for condonation requests.

Time Limits for Filing Applications

• Applications must be submitted within five years from the end of the relevant assessment year.
• If the delay results from a court case, the five-year period excludes the litigation duration. The application must be filed within six months of the final court order.

Processing Timelines

Authorities are required to decide on condonation applications within six months from the end of the month in which the application is received.

Conditions for Acceptance

• The taxpayer’s claim must be genuine.
• The income should not be taxable in another person’s hands.
• No interest will be granted on late refund claims.
• The refund must arise from excess tax deductions, advance tax, or self-assessment tax.

Filing a Condonation Application

You can file condonation of request by two methods :

Steps for Income Tax Portal

• Login to the Income Tax e-filing portal.
• Navigate to ‘Condonation Request’ under the ‘Services’ tab.
• Select ‘Allow ITR filing after time-barred’ and fill in the necessary details.
• Upload supporting documents (e.g., medical certificates, IT portal screenshots, court orders).
• Submit the request and complete e-verification.

Alternative Methods (Other Than the Income Tax Portal)

I personally prefer the following methods over filing the application through the Income Tax Portal. Even if the application is submitted online, I still recommend following the steps outlined below for better clarity and effectiveness.

1. Prepare a Detailed Paper Application:

• Avoid submitting a simple one-page application.
• Clearly explain the reason for the delay in filing.
• If possible, cite relevant case laws to strengthen the application.

2. Compile a Paper Book with Supporting Documents:

• Attach all necessary supporting documents to substantiate the claim.
• Ensure the paper book is well-organized and properly indexed.

3. Submit the Application via Email & In-Person:

• Send the complete application, along with supporting documents, to the respective officer’s email ID.
• If feasible, visit the officer in person to explain the case thoroughly.

4. Importance of a Personal Meeting:

• A direct interaction helps in providing better clarity regarding the case.
• Due to the heavy workload in the department, some emails may get overlooked. A face-to-face discussion increases the chances of timely resolution.

Judicial Precedents Supporting Condonation

CIT v. G.M. Knitting Industries Pvt Ltd: This case set a precedent for accepting delayed claims when genuine hardship exists.

The Travancore Cements Employees Co-Operative Bank Ltd. v. Commissioner of Income Tax (Kerala High Court, 2014): The High Court held that if an assessee fails to file the return on time due to delays in receiving an audit report, the application for condonation can be rejected.

M/S Regen Infrastructure & Services Pvt. Ltd. v. CBDT (Madras High Court, 2016): The High Court held that the CBDT should have condoned a one-day delay in filing a return caused by technical issues with the e-filing portal.

Manjulaben Bipinchandra Patel v. Deputy Commissioner of Income Tax (ITAT Ahmedabad, 2024): The Tribunal upheld the Commissioner’s decision that the assessee, who failed to file a return on time to carry forward a business loss, was ineligible for condonation of delay under Section 119(2)(b).

6. Practical Scenarios Where Condonation Can Help

8. Conclusion

CBDT’s Circular No. 11/2024 significantly enhances the efficiency and fairness of condonation application handling. Taxpayers are encouraged to file requests promptly with the appropriate documentation and, if necessary, seek professional assistance. By adhering to the guidelines outlined in Section 119(2)(b), taxpayers can ensure that legitimate claims for refunds and loss carry-forwards are not lost due to procedural delays.

Other Option

An alternative option for taxpayers is the form ITR-U, which allows late filing. However, this comes with a significant penalty: taxpayers may incur a penalty of 25% or 50% of the additional tax under Section 139(8A). This penalty can be avoided through the Condonation Request process governed by Section 119(2)(b), provided the request is approved. We will delve deeper into this topic in a future article.

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