Table of Contents
Introduction
Even sometime many income taxpayers can sometimes miss statutory deadlines due to unforeseen or genuine reasons. But does this mean the taxpayer permanently loses the right to claim a refund or avail tax benefits? Fortunately, Section 119(2)(b) of the Income Tax Act, 1961 provides a legal remedy by empowering the Central Board of Direct Taxes (CBDT) to condone delays in certain cases involving genuine hardship.
This comprehensive guide on Condonation of Delay under Income Tax covers every aspect—legal provisions, CBDT circulars, practical scenarios, jurisdiction limits, case laws, procedural guidelines, and FAQs—to help you navigate the complexities of delay condonation effectively.
Legal Provision and Authority for Condonation of Delay under Income Tax
Section 119(2)(b) – Income Tax Act, 1961
Section 119(2)(b) empowers the CBDT to authorize income tax authorities to admit applications or claims that were not filed within the prescribed time limits, if the taxpayer can demonstrate genuine hardship. The key elements of this provision are:
- Discretionary Power: Not automatic; requires application and justification.
- Genuine Hardship: Must be substantiated with facts and circumstances.
- Administrative Relief: Focused on equitable justice, not just legal rigidity.
CBDT’s Administrative Power
The CBDT derives its power to issue circulars, instructions, and grant condonation from the above provision. These powers are delegated to various levels of income tax authorities based on monetary thresholds and types of delay.
CBDT Circular No. 01/2024 dated 01/10/2024
This Circular is the latest comprehensive guideline on condonation of delay in refund claims and other applications. It supersedes earlier circulars (such as Circular 09/2015) and provides the following:
Monetary Thresholds for Condonation of Delay
Refund Amount | Authority to Grant Condonation |
Up to ₹10 lakhs | Principal Commissioner / Commissioner of Income Tax |
₹10 lakhs to ₹50 lakhs | Principal Chief Commissioner / Chief Commissioner |
Above ₹50 lakhs | CBDT |
Key Conditions:
- Time limit of 6 years from the end of the relevant assessment year (AY).
- Application must be genuine and supported by documents.
- No interest is admissible on belated refunds.
Common Scenarios Where Condonation of Delay Applies
The power to condone delays under Section 119(2)(b) of the Income Tax Act, 1961, empowers the Central Board of Direct Taxes (CBDT) and other competent authorities to admit belated claims, provided there is a genuine hardship involved and the claim is otherwise valid. Over the years, several practical use-cases have emerged where taxpayers have sought relief by invoking this provision. Below are the most prominent and recurring scenarios where such condonation is not only possible but also often accepted by the authorities, based on factual and reasonable grounds:
1. Delay in Filing Income Tax Return (ITR)
Legal Reference:
- Section 139(4) – Belated return
- Section 139(5) – Revised return
Practical Context:
Taxpayers sometimes fail to file their ITR within the time prescribed under Section 139(1). However, they may still file a belated return under Section 139(4) before the end of the assessment year or revised return under Section 139(5). But once even that window closes, the Income Tax Portal no longer allows submission.
If such delayed filing pertains to a refund claim or a carry forward of losses, the only remedy available is through a condonation application under Section 119(2)(b). The authority may accept the return for processing if the delay is attributable to genuine hardship and the claim is otherwise legally valid.
2. Delay in Claiming Income Tax Refund
Legal Reference:
- Section 119(2)(b) to be read with CBDT Circular No. 09/2015 dated 09.06.2015 and CBDT Circular dated 01.10.2024
Practical Context:
Refund claims are typically tied to timely return filings. A taxpayer who, for valid reasons (like health emergencies, system errors, or financial mismanagement), misses the due date under Section 139(1), and subsequently the window under Section 139(4), may still claim a refund by applying for condonation of delay.
However, there are boundaries:
- The application must be filed within six years from the end of the relevant assessment year.
- The claim should be genuine, verifiable, and supported by necessary documentary evidence.
- Refund should not have arisen due to retrospective amendments or issues already under dispute.
3. Delay in Filing Form 10 – Accumulation of Income [Section 11(2)]
Legal Reference:
- Section 11(2) read with Rule 17
- CBDT Circular No. 273 dated 03.06.1980
Practical Context:
Charitable and religious trusts who wish to accumulate income for a specific purpose are required to file Form 10 within the due date specified under Section 139(1). A failure to do so may disqualify them from claiming accumulation benefits.
However, courts and the CBDT have clarified that delay in submission of Form 10 is procedural and not substantive, and condonation may be granted if the trust can justify the delay based on reasonable cause.
This has been upheld in multiple judicial precedents, provided:
- The intention to accumulate income was always there.
- The trust has not applied the income for unintended purposes.
- The delay is properly explained and no mala fide intent is found.
4. Delay in Filing Form 10B – Audit Report [Section 12A(1)(b)]
Legal Reference:
- Section 12A(1)(b), Rule 17B
- CBDT Circular No. 10/2019 dated 22.05.2019
Practical Context:
For charitable institutions, submission of the audit report in Form 10B is mandatory if their income exceeds the maximum amount not chargeable to tax. Delay in furnishing this audit report may lead to denial of exemption under Section 11 and 12.
However, the CBDT allows condonation of such delays on application, provided:
- The audit report was prepared and signed before the due date.
- The delay in uploading was due to procedural or technical issues.
- The delay is not intentional and is backed by a valid explanation.
Recent CBDT circulars including Circular dated 01.10.2024 explicitly permit such condonations through online or manual requests addressed to jurisdictional Pr.CIT/CIT.
5. Delay in Filing Form 67 – Foreign Tax Credit (FTC)
Legal Reference:
- Rule 128(9) of the Income Tax Rules, 1962
- CBDT Circular No. 9/2022 dated 26.06.2022
Practical Context:
To claim Foreign Tax Credit (FTC), an assessee must submit Form 67 on or before the due date for filing return under Section 139(1). Failure to comply often leads to FTC denial even if the tax was paid in the foreign country and is legally admissible.
Courts and the CBDT, in various rulings, have recognized that the requirement is procedural, and condonation may be permitted especially where:
- FTC was properly claimed in the ITR.
- Foreign tax paid is undisputed and legally due.
- Delay occurred due to ignorance, portal glitches, or misguided advice.
6. Delay in Filing Form 9A – Application for Deferment of Income Application
Legal Reference:
- Section 11(1) Explanation 2, Rule 17
- Relevant Circulars by CBDT
Practical Context:
Trusts opting to apply income in the subsequent year (instead of the year of receipt) must file Form 9A before the due date under Section 139(1).
If the form is not submitted timely, the income may become taxable. However, under condonation provisions, trusts can request acceptance of delayed submission, especially where:
- The purpose of deferment is genuine.
- The trust has maintained proper books and disclosed intentions.
- The delay is minor or due to oversight.
7. Delay in Filing ITR to Claim Capital Gains Exemptions (e.g., Section 54, 54F, etc.)
Legal Reference:
- Sections 54, 54F, 54EC, etc.
- Read with Section 139(1) and 139(4)
Practical Context:
For claiming exemptions on long-term capital gains, say under Section 54, the investment must be made within the stipulated period, and the return must ideally be filed on time.
In some cases, taxpayers miss the ITR deadline but have otherwise complied with exemption conditions. Here, filing a condonation request enables the taxpayer to retain exemption benefits if:
- Proof of purchase/investment is available.
- Funds were correctly routed through Capital Gains Account Scheme (if applicable).
- The intent was clear and supported by valid reasons.
8. Delay in Filing TDS Returns – Rare But Possible
Legal Reference:
- Section 200(3) and relevant rules
- Though not typically condonable under Section 119(2)(b)
Practical Context:
Generally, TDS returns are subject to strict deadlines, and delays lead to interest and penalty under Sections 234E and 271H. However, in very limited and exceptional cases, such as:
- Natural calamities
- Technical failures from TRACES or NSDL systems
- Force majeure events
CBDT has considered condonation, albeit rarely and on humanitarian or public interest grounds. Relief is not automatic and is highly discretionary.
Summary Table – Common Scenarios for Condonation of delay
Scenario | Legal Basis | Time Limit | Authority | Key Conditions |
Belated ITR for refund/loss | Sec 139(4), 119(2)(b) | 6 years | Pr.CIT/CIT | Genuine hardship |
Refund Claim | 119(2)(b), CBDT Circulars | 6 years | CBDT | Valid and verifiable claim |
Form 10 (Trusts) | Sec 11(2), Rule 17 | Case-by-case | CBDT/Courts | Reasonable cause |
Form 10B | Sec 12A(1)(b), Rule 17B | As per CBDT circulars | Pr.CIT | Audit before due date |
Form 67 (FTC) | Rule 128 | Case-by-case | CBDT/ITD | Substantive compliance done |
Form 9A (Trusts) | Sec 11(1), Rule 17 | Case-by-case | Pr.CIT | Delayed due to oversight |
ITR for Capital Gains Exemption | Sec 54/54F/139(1) | 6 years | CBDT | Investment done; delay justified |
TDS Return Filing | Sec 200(3) | Rare | CBDT | Force majeure only |
Step-by-Step Procedure to File Condonation Application under Section 119(2)(b)
Filing a condonation of delay application involves a mix of legal and administrable procedural accuracy. While the Income Tax Act does not provide a fixed format, the CBDT has, through various circulars and guidelines, laid down a general framework. Below is a step-by-step procedure that taxpayers must follow to increase their chances of a successful condonation application:
1. Drafting the Condonation Application
The first and most important step is to prepare a formally written application addressed to the appropriate authority. The application should be clear, concise, and factually accurate, containing the following key elements:
- Name, PAN, and assessment year involved.
- Specific delay to be condoned (e.g., delay in filing ITR, Form 10B, etc.).
- Reason for the delay, such as medical emergencies, natural calamities, system errors, professional negligence, etc.
- Relief sought – e.g., acceptance of belated ITR, processing of refund, allowance of exemption.
- A humble invocation of the “genuine hardship” clause under Section 119(2)(b).
A professional tone is essential, and language should reflect the bona fide intent of the taxpayer.
2. Attach Supporting Documents
Supporting documents are vital to substantiate the claims made in the application. These documents serve as evidence of hardship and help establish the credibility of the delay. Depending on the nature of the case, the following documents may be attached:
- Copy of income tax computation showing refund or exemption.
- Proof of taxes paid, TDS certificates (Form 16, 16A), or tax challans.
- Bank statements showing transaction dates (e.g., investment under Section 54).
- Medical certificates, hospital records, or travel documents in case of emergencies.
- Screenshots or correspondence showing portal technical issues or server downtime.
- Affidavits or declarations explaining factual errors, miscommunication, or reliance on a third-party accountant.
Each document should be duly signed and self-attested, and presented in a structured annexure format for easy review by the officer.
3. Submission of the Application
The mode of submission depends on the authority competent to handle the case:
- If the amount of refund claimed or income involved is below ₹50 lakhs, the application is generally submitted to the Principal Commissioner or Commissioner of Income Tax (Pr.CIT/CIT) having jurisdiction.
- For larger claims (above ₹50 lakhs), it may need to be filed with the CBDT, usually via the relevant field officer.
Mode of submission:
- Offline: Submit a physical copy at the income tax department’s jurisdictional office with an acknowledgment.
- Online: In certain cases (e.g., delay in Form 10B filing), condonation modules are available on the e-filing portal.
Always retain a copy of the application and acknowledgment for future reference and tracking.
4. Timelines and Legal Time Limit
The condonation application must be submitted within a statutory time limit of 6 years from the end of the relevant assessment year. This is as per CBDT Circular No. 9/2015 and reaffirmed in Circular dated 01.10.2024.
Points to note:
- If the refund arises due to court order, the 6-year limit is computed from the end of the financial year in which the order is passed.
- Filing early increases the chances of acceptance. Excessive delay, even within the 6-year limit, may weaken the claim if no compelling hardship is shown.
Case Laws and Judicial Pronouncements on Condonation of Delay
1. Collector, Land Acquisition v. Mst. Katiji (1987) – Supreme Court
This is a landmark judgment of the Supreme Court where it was held that courts must adopt a liberal approach in condonation matters. The Apex Court emphasized the need to prefer substantial justice over technicalities, noting that:
“The judiciary should not be hyper-technical and should not cause injustice merely because of a short delay. Each day’s delay need not be explained pedantically.”
Although this was a general law case, it is widely cited in income tax condonation cases as a guiding principle.
2. Shivananda Saraswathi Trust v. CBDT (2015) – High Court (Madras)
In this case, the trust had filled the Form 10B after due date as compare to the time limit mention under Section 12A(1)(b). The CBDT had rejected the condonation application. However, the High Court observed:
- Filing the audit report is procedural, and the trust had fulfilled all substantive conditions for exemption.
- Delay due to professional mistake was a reasonable cause.
- The court directed the CBDT to accept the belated Form 10B and process the exemption claim.
This case reaffirmed the principle of “substance over form”.
3. Tata Chemicals Ltd. v. CIT – High Court (Bombay)
In this notable case, the assessee’s refund claim was rejected for being filed after the due date. The High Court held that:
- A refund is a substantive right, and cannot be denied solely on procedural grounds if all taxes are duly paid and records support the claim.
- Denial would amount to unjust enrichment of the State, which is against public policy.
The ruling supported the taxpayer’s right to invoke Section 119(2)(b) in refund-related condonation applications.
Important Conditions and Limitations
While Section 119(2)(b) empowers authorities to grant relief, it is not absolute. Several conditions and limitations apply, and failing to meet these can result in outright rejection of the application.
1. Time Limit – 6 (Six) Years
- The application must be filed within 6 years from the end of the assessment year to which the claim relates.
- If the refund arises as a result of court order, the 6-year period is computed from the end of the financial year in which the order was passed.
No condonation will be considered if this statutory limit is breached, regardless of hardship.
2. No Guarantee of Interest on Refunds
Even if condonation is granted and refund processed:
- The interest under Section 244A on such refund is discretionary.
- CBDT often denies interest on delayed refund claims arising through condonation applications.
This is to discourage lethargy and ensure timely compliance.
3. Not Applicable to Appeals, Penalty or Rectification Petitions
Section 119(2)(b) is only applicable to condonation of delay in making applications or claims. It does not extend to:
- Filing of appeals or revisions (governed by Sections 246A, 264, etc.).
- Applications for rectification under Section 154.
- Condonation of penalty proceedings or prosecution cases.
For those, the Income Tax Act provides separate mechanisms and authority structures.
4. Burden to Prove “Genuine Hardship” is on the Applicant
The term “genuine hardship” is not defined in the Income Tax Act, but judicial interpretations require that:
- The taxpayer must clearly demonstrate hardship beyond mere inconvenience.
- Negligence, ignorance of law, or casual delay are not acceptable grounds.
- The delay must be due to circumstances beyond the taxpayer’s control and must be supported with documentary evidence.
If hardship is not proved, condonation will be denied.
Draft Templates
FAQs – Condonation of Delay under Income Tax
Q1. Can any delay be condoned by the Income Tax Department?
Answer:
No, not every delay can be condoned. The Income Tax Department only condones delays that fall within the scope of Section 119(2)(b) of the Income Tax Act, 1961. As per this provision, only those delays which result in “genuine hardship” to the assessee and are related to claims for exemption, refund, or relief may be condoned.
Further, the authority must be satisfied that:
- The assessee has acted in good faith.
- The delay was due to circumstances beyond the taxpayer’s control, such as medical emergencies, technical failures, or miscommunication from professionals.
- The claim is otherwise legally allowable and not a fabricated or time-barred relief.
Mere negligence, ignorance of law, or procedural indifference are not sufficient grounds for condonation.
Q2. What is the maximum period within which a condonation application can be filed?
Answer:
The maximum time limit to file a condonation application is 6 years from the end of the relevant assessment year (AY) to which the delay pertains. This limit has been laid down in CBDT Circular No. 9/2015 dated 09.06.2015, which governs the condonation of delay in refund claims and exemption-related filings.
Exceptions:
- If the delay relates to a refund claim arising due to a court order, then the 6-year period is counted from the end of the financial year in which the order is passed, not from the AY.
Note that even within the 6-year period, undue delay without reasonable explanation may still result in rejection. Hence, filing the application as early as possible is strongly advisable.
Q3. Will I receive interest on the refund if the delay is condoned?
Answer:
Not necessarily. Even if the Income Tax Department condones the delay and processes the refund, it does not automatically entitle the taxpayer to interest under Section 244A of the Act.
This is because:
- Interest on refunds is discretionary in condonation cases.
- In several past CBDT circulars and court rulings, it has been held that delayed refunds caused by the taxpayer’s own fault (such as late filing) do not warrant compensation via interest.
- Interest may be denied even if the refund amount is accepted.
Therefore, taxpayers must understand that condonation ensures only the principal relief, and interest on delayed refund is not a guaranteed outcome in such cases.
Q4. Can delay in filing audit reports such as Form 10B, 9A, 10, or Form 67 be condoned?
Answer:
Yes, delays in filing certain mandatory audit or compliance forms—including Form 10B (audit report for trusts), Form 9A (application of income), Form 10 (accumulation of income), and Form 67 (foreign tax credit claim)—can be condoned subject to reasonable cause/ grounds.
The courts and CBDT have recognized that:
- These filings are procedural in nature.
- The taxpayer must have fulfilled the substantive conditions for claiming the exemption or relief.
- Genuine reasons, such as professional oversight or technical portal issues, can be acceptable grounds for condonation.
For instance, in Shivananda Saraswathi Trust v. CBDT, the High Court condoned the delay in filing Form 10B, reinforcing the principle of substance over form.
However, the taxpayer must clearly demonstrate genuine hardship and provide sufficient documentary evidence to support their case.
Q5. What are the chances of rejection in a condonation of delay application?
Answer:
The condonation application may be rejected under several circumstances, including:
- Lack of clarity in explaining the delay.
- Absence of documentary evidence or supporting proof of hardship.
- Filing the application very late within the 6-year period, without justification for the prolonged delay.
- If the claim itself is inadmissible under the law (e.g., a time-barred deduction or refund not backed by records).
- Delay caused by intentional inaction, carelessness, or lack of due diligence.
Authorities scrutinize each application based on merit and the “genuine hardship” standard. Unless the taxpayer clearly establishes that the delay occurred due to factors beyond their control and the claim is legally valid, the chances of rejection are significantly high.
Conclusion
The condonation mechanism under Section 119(2)(b) ensures justice and fairness for taxpayers facing genuine hardship. While the timelines prescribed under the Income Tax Act are strict, the law also recognizes that procedural lapses should not result in undue loss if the taxpayer has a valid reason.
Taxpayers are advised to act promptly and maintain proper documentation to support their case for condonation.
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