Section 119(2)(b) of the Income Tax Act, 1961, plays a critical role in India’s tax framework. It provides essential support to taxpayers who, due to valid reasons, face challenges in meeting crucial tax-related deadlines. This provision allows for the granting of time extensions, recognizing that unforeseen circumstances and legitimate difficulties can impede the timely compliance with tax responsibilities. This piece explores the significance of this legal provision, the procedure for requesting relief, the role of the Central Board of Direct Taxes (CBDT), and the qualifications necessary for its application. Understanding Section 119(2)(b) is essential for taxpayers navigating the complexities of Indian taxation.
Understanding the Significance of Timely Filing
Fulfilling the obligation of submitting income tax returns promptly constitutes a cornerstone of India’s taxation framework. The stipulation outlined in Section 139 of the Income Tax Act necessitates taxpayers to adhere to designated time frames for filing their returns. The significance of these time constraints is manifold, encompassing the timely collection of tax revenues, the precision of tax liability assessments, and the facilitation of refund claims or loss carry forwards.
When taxpayers miss the prescribed deadlines, it can have significant consequences. Filing tax returns after the due date can carry substantial implications, such as the potential forfeiture of refund claims and the inability to carry forward losses from a particular year. This underscores the paramount importance of adhering to the tax deadlines specified in Section 139 of the Income Tax Act.
What Is Condonation of Delay?
Condonation of delay is a legal concept involving:
- Forgiveness for Missing Deadlines: It allows the forgiveness or excusal of missed deadlines due to reasonable and justifiable reasons.
- Common in Legal and Administrative Settings: It’s often applied in legal, financial, and administrative contexts to prevent penalties and application rejections when delays occur due to unforeseen circumstances.
- Discretionary Decision: The decision to grant condonation of delay is made at the discretion of relevant authorities or courts.
- Aims for Fairness and Equity: It seeks to ensure fairness and equity by taking into account genuine explanations for the delay.
- Preservation of Rights: It helps individuals and entities preserve their rights when strict adherence to deadlines is crucial, such as in legal cases or financial matters.
- Case-Specific: Condonation is not guaranteed and is determined on a case-by-case basis. A compelling explanation for the delay is essential when seeking condonation of delay.
The core principle behind condonation of delay is to strike a balance between enforcing deadlines and recognizing that unavoidable situations can sometimes hinder timely compliance with legal or administrative requirements.
Remedy Under Section 119(2)(b)
Section 119(2)(b) of the Income Tax Act, 1961, provides vital remedies for taxpayers facing genuine hardships that hinder them from meeting tax-related deadlines. These remedies, regulated by this provision, play a crucial role in the Indian tax system.
Key Aspects of Remedies Under Section 119(2)(b)
The key aspects of remedies under section 119(2)(b) are:
- Empowerment of Income Tax Authorities: Section 119(2)(b) allows income tax authorities to consider applications for exemptions, deductions, refunds, or other relief, even after the prescribed deadline has passed.
- Condonation of Delay: This provision condones delays in filing applications or claims when valid reasons exist.
- Six-Year Limit: Claims for refunds or loss carryforwards beyond six years from the end of the assessment year are not entertained.
- Court Order Exclusion: The time pending before a court order can be excluded, subject to certain conditions.
Application and Process:
Here’s how the application and process of remedy under section 119(2)(b) works:
- Submission of Application: Taxpayers must submit an application with reasons and supporting documents.
- Verification of Claims: Authorities verify the claim’s accuracy and compliance with tax laws.
- Examination of Genuine Hardship: Authorities evaluate if the delay was due to genuine hardships.
- Timely Decision Making: Decisions are expected within six months from the application date.
Conditions for Granting Relief:
Here are the conditions for granting relief:
- The taxpayer’s income should not be taxable in another person’s hands.
- No interest is paid on refund claims.
- The reason for the refund claim should be related to TDS, self-assessment tax, or advance tax excess.
Provisions of Section 119(2)(b) and Related Circular
Section 119(2)(b) of the Income Tax Act, 1961, is like a rule that says the Central Board of Direct Taxes (CBDT) can make simple guides. Importantly, this authorization extends to scenarios where the stipulated time frame for submitting such claims has elapsed. This provision proves invaluable in cases where taxpayers encounter genuine hardships or unforeseen challenges that hinder their ability to meet tax-related deadlines.
Circular No. 09/2015, issued by the CBDT on June 9, 2015, serves as a comprehensive guideline outlining the conditions, procedures, and timelines for granting the condonation of delay. This circular offers essential insights into the practical application of Section 119(2)(b) and provides clear directives to income tax authorities for handling condonation of delay applications. Here, we delve into the key provisions of Section 119(2)(b) and examine the relevant aspects covered by Circular No. 09/2015.
Key Provisions of Section 119(2)(b):
Here are the key provisions of section 119(2)(b):
Empowerment of Income Tax Authorities:
Section 119(2)(b) grants the CBDT the authority to enable income tax authorities to consider submissions, petitions, or pleas for assistance under the Income Tax Act, even beyond the stipulated time constraints. This authorization encompasses a broad spectrum of tax-related issues, which encompass benefits, allowances, reimbursements, and various other aspects.
Condonation of Delay:
The fundamental objective of Section 119(2)(b) is to offer assistance to taxpayers facing authentic difficulties or hindrances that cause delays in their application or claim submissions. This provision acknowledges that strict compliance with tax-related deadlines may not always be achievable, particularly in situations involving unforeseen challenges.
Six-Year Limit:
Section 119(2)(b) imposes a limitation on the timeframe for considering condonation applications. Income tax authorities cannot entertain applications for refunds or claims for carrying forward losses that are more than six years old from the end of the relevant assessment year.
Key Aspects of Circular No. 09/2015:
Here are the key aspects of circular no. 09/2015:
Monetary Limits:
Circular No. 09/2015 establishes monetary thresholds to determine which income tax authorities are empowered to handle condonation of delay applications. The limits are as follows:
- For claims not exceeding Rs. 10 lakhs, the authority responsible is the Principal Commissioner of Income Tax or the Commissioner of Income Tax.
- Claims exceeding Rs. 10 lakhs but less than Rs. 50 lakhs are dealt with by the Principal Chief Commissioner of Income Tax or the Chief Commissioner of Income Tax.
- Claims exceeding Rs. 50 lakhs fall under the purview of the CBDT.
Timely Decision Making:
The circular emphasizes the importance of timely decision making. It expects that condonation applications should be decided within six months from the end of the month in which they are received by the competent authorities. This provision ensures that taxpayers receive a prompt resolution to their condonation of delay requests.
Verification of Claims:
The income tax authorities have a responsibility to validate the correctness and authenticity of the income, loss, or refund assertions put forth by the taxpayer. It is imperative for them to ascertain that the claim is founded on valid grounds and is substantiated by pertinent documentation.
Flexibility for Genuine Hardships:
Circular No. 09/2015 underscores the flexibility of the Indian tax system in addressing genuine hardships. It acknowledges that unforeseen circumstances can prevent taxpayers from meeting deadlines, and the condonation of delay mechanism serves as a safeguard to mitigate the impact of such situations.
Who Can Accept Applications?
The CBDT’s circular also establishes monetary limits that dictate which income tax authorities are empowered to handle condonation applications. These limits are as follows:
- If the monetary limit of the claim made is not more than Rs. 10 lakhs, the income tax authority that handles it is the Principal Commissioner of Income Tax or the Commissioner of Income Tax.
- If the monetary limit of the claim is more than Rs. 10 lakhs but less than Rs. 50 lakhs, the income tax authority responsible is the Principal Chief Commissioner of Income Tax or the Chief Commissioner of Income Tax.
- If the monetary limit of the claim exceeds Rs. 50 lakhs, the authority in charge is the CBDT.
Conclusion
In conclusion, Section 119(2)(b) and Circular No. 09/2015 offer a lifeline to taxpayers facing genuine hardships and obstacles in meeting tax deadlines. This provision reflects the flexibility and fairness of the Indian tax system, ensuring that individuals and businesses are not unfairly penalized for circumstances beyond their control. As taxpayers traverse the intricate landscape of tax compliance, they can rely on the condonation of delay as a means of seeking relief and guaranteeing that their legitimate claims are considered, even when deadlines are missed. This provision serves as a crucial safety net in India’s taxation framework.
