In a significant relief for taxpayers who had filed income tax returns (ITRs) late but with proper condonation from the Income Tax Department, the Central Board of Direct Taxes (CBDT) has allowed processing of such returns and issuance of refunds by March 31, 2026.
The tax department’s move is aimed at addressing cases where valid ITRs filed under condonation of delay on or before 31 March 2024, granted under section 119(2)(b) of the Income Tax Act, 1961, could not be processed due to technical issues, according to a CBDT circular. As a result, taxpayers were left in the lurch with no refund or acknowledgment, despite having complied with procedural requirements.
Expert view: Addressing genuine hardship of taxpayers
Commenting on the development, Deepesh Chheda, Partner, Dhruva Advisors, said: “The Income Tax Act, 1961 provides that a taxpayer can claim a refund or claim losses carry forward by filing a return of income as per the applicable provisions. In certain cases, due to genuine hardship, the taxpayers are unable to file the return within the specified due dates. As a result, such taxpayers are either unable to claim refund or denied the opportunity to carry forward the losses incurred.”
The CBDT issued Circular No. 9 of 2015, which permits taxpayers having genuine hardship to apply for condonation of delay in filing the return. Where condonation is granted by the competent authority, the taxpayer is allowed to file a return under section 139(9A), enabling them to claim refunds or carry forward losses, subject to specified conditions. Such relief is restricted to cases involving genuine hardship and is not available generally to all taxpayers.
However, due to technical issues, several such returns filed pursuant to the condonation were not processed within the statutory timeline, and no intimation was issued. Consequently, refunds were not granted to such taxpayers, prompting representations from affected taxpayers.
“To address this, the CBDT issued Circular No. 07/2025 dated 25 June 2025, acknowledging the issue of non-processing of valid returns filed electronically (on or before 31 March 2024) pursuant to condonation granted under section 119(2)(b). The Board has now relaxed the time limit for processing of valid returns and directed that such returns where the time limit for issuing intimation has expired, shall now be processed. The intimation in respect of such returns shall be issued to the concerned taxpayers on or before 31 March 2026, thereby enabling genuine taxpayers to receive their refunds,” Chheda said.
Also read: Received salary from two employers in FY 2024-25? Here’s how to file your ITR correctly
Here’s what the CBDT circular says:
As per Circular No. 07/2025, CBDT has allowed the processing of valid returns filed electronically on or before March 31, 2024, where delay was condoned under section 119(2)(b).
It has directed that such returns, even if the time limit for issuing intimation under section 143(1) has expired, shall now be processed.
The circular said that intimations must be sent to the taxpayers concerned by March 31, 2026.
However, the relaxation will not apply to cases where assessment, reassessment, or recomputation has already been done for that assessment year under sections 143(3), 144, 147, 148, 153A, or 153C of the Act.
The circular also reiterates that a refund in such cases will be subject to all other provisions of the Act, including PAN-Aadhaar linkage. If PAN is not linked with Aadhaar, no refund will be issued, even if the return is processed.