Important points while drafting an application for condonation of delay

Introduction: where the assessee has to claim some benefit such as refund, deduction, etc but time lapse due to any genuine hardship or there is a delay in filing the audit report causing a denial of a deduction, etc. In such cases condonation application can be filed u/s119 (2) (b) with relevant authorities and condonation may be granted, this article has discussed those provisions in detail duly supported by recent case laws.

The delay could be condoned by authorities only if such authorities have the power to condone delay. Hon’ble Madras High Court in the case of All Angels Educational Society v CCIT [2016] 72 taxmann.com 251, while considering the issue of whether the CIT(E) has the power to condone the delay in filing an application for grant of approval under section 10(23C) of the Act or not, the Hon’ble High Court held that where there is no provision to empower the statutory authority to condone the delay, then the authority cannot condone such delay. The Hon’ble High Court has considered the judgments of the Hon’ble Supreme Court in the case of State of U.P v Harish Chandra AIR 1996 SC 2173 as well as UOI v Kirloskar Pneumatic Co. Ltd. 1996 taxmann.com 575 (SC).

Provisions in section 119 related to condonation of delay: 

Section 119(2)(b) Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship  in any case or class of cases, by general or special order, authorize any income-tax authority, not being a Joint Commissioner (Appeals) or   Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law;

Situations when a condonation petition may be filed:

• delay in return filing where a refund is to be claimed
• delay in filing returns  for claiming to carry forward of loss and set-off thereof
• The monetary limit of jurisdiction
  

  1.	Claim Upto Rs 10 lakh	Principal Commissioners of Income-tax/Commissioners of Income-tax (Pr. CIT/CIT)
  2.	Claim beyond  Rs 10 lakh but up to Rs. 50 lakh	Principal Chief Commissioners of Income-tax/Chief Commissioners of Income-tax (Pr. CCIT/CCIT)
  3.	Claim above  Rs. 50 lakh	CBDT

• The time limit for condonation application:  within 6  years from the end of the assessment year for which such application/claim is made.
• Exclusion from the above limitation period of years: where a refund claim has arisen consequent to a 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 6 years, provided such condonation application is filed within 6 months from the end of the month in which the Court order was issued or the end of financial year whichever is later.
• The time limit for disposal of condonation application: A condonation application should be disposed of within 6  months from the end of the month in which the application is received by the competent authority, as far as possible.

Conditions for Acceptance/rejection of the application:

1. claim amount must be correct
2. genuine hardship
3. authorities empowered may direct the jurisdictional assessing officer to make necessary inquiries or scrutinize the case.

Important case laws on condonation

Delay in filing audit report resulting in disallowance of claim: The Legislature had conferred power on the Principal Commissioner to condone delay under section 119 to enable authorities to do substantive justice to parties by disposing of the matter on merits, the impugned delay was to be condoned. in this case, there was a delay in furnishing the audit report causing a denial of deduction in the intimation and time limit passed and delay in revision application u/s263  due to rectification application filed but not disposed of.. [Pankaj Kailash Agarwal v.ACIT [2024] 161 taxmann.com 383 (Bombay)]

Commissioner (Exemption) is not vested with any power to condone delay involved in filing an application for grant of approval under section 10(23C)(vi) Manav Rachana Education Society CIT(E) Vs.CIT(E) [2023] 148 taxmann.com 24 (Raipur – Trib.)

Delay in section 80G(5) condoned:  Where assessee-trust filed application in Form No. 10AB for approval under the first proviso to sub-section (5)( iii) of section 80G on 2-12-2022 and Commissioner (Exemption)  noted that assessee had not filed an application on or before 30-9-2022 as per CBDT circular No.8/2022 rejected application as not maintainable, since Tribunal had the power to condone delay, hence, the delay was to be condoned and the matter was to be remitted to Commissioner (Exemption) to decide application afresh on merits. Swachh Vapi Mission Trust Vs. CIT(E) [2024] 160 taxmann.com 657 (Surat-Trib.)]

The timeline prescribed under clause (iii) of the first proviso to section 80G(5) should be treated as a directory and not mandatory, hence, once the timeline prescribed for filing Form No.10A for recognition under section 12A had been extended up to 30-9-2023, same may be treated as extended for forms namely Form No.10AB for renewal of approval/recognition/registration under clause (iii) of first proviso to section 80G also. it must be noted that CBDT Circular No. 6 of 2023 dated 24-5-2023 had an extended time limit to file forms for registration under section 12A and for recognition under section 80G Upto 30-9-2023 only for cases in section 80G(5)(i) filing form 10A   but same was not extended to Form No.10AB for renewal of recognition beyond 30-09-2022.[ CIT-1982 Charitable Trust Coimbatore Vs. ITO (E) [2024] 160 taxmann.com 475 (Chennai – Trib.)] 

Notes: besides the general administrative power of condonation, appellate authorities such as CIT(A), ITAT, etc also have the power to condone delay in filing an appeal.

CIRCULAR NO. 9/2015 [F.NO.312/22/2015-OT] DATED 9-6-2015

SECTION 119 OF THE INCOME-TAX ACT, 1961 – INCOME-TAX AUTHORITIES – INSTRUCTIONS TO SUBORDINATE AUTHORITIES – CONDONATION OF DELAY IN FILING REFUND CLAIM AND CLAIM OF CARRY FORWARD LOSSES UNDER SECTION 119(2)(b)

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.

The Principal Commissioners of Income-tax/Commissioners of Income-tax (Pr.CsIT/CsIT) shall be vested with the powers of acceptance/rejection of such applications/claims if the amount of such claims is not more than Rs.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 applications/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 amounts exceeding Rs.50 lakhs shall be considered by the Board.

12. No condonation application for a 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.
14. In a case where a refund claim has arisen consequent to a 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.
16. The powers of acceptance/rejection of the application within the monetary limits delegated to the Pr.CCIT/CCIT/Pr.CIT/CIT in case of such claims will be subject to the following conditions:

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