Filing a Time-Barred ITR: Condonation of Delay u/s 119(2)(b) for Refunds and Loss Carry-Forward
Missed every ITR deadline but still owed a refund or a loss carry-forward? Section 119(2)(b) and CBDT Circular 11/2024 keep one door open. Here is the statutory route, with a worked Rs 30,000 refund example.
You are owed a refund, or you booked a capital loss you want to set off in a future year, but every filing window for that assessment year has closed. The original and revised return deadlines under sections 139(1) and 139(5) have passed, the belated return deadline under section 139(4) is gone, and an updated return under section 139(8A) cannot help because it is barred from producing a refund. Section 119(2)(b) of the Income-tax Act, 1961 is the door that remains open. Under CBDT Circular No. 11/2024 dated 1 October 2024, a taxpayer facing genuine hardship can seek condonation of delay and file a time-barred return that still carries a valid refund or loss carry-forward.
The Scenario
Priya realises in August 2026 that for an earlier assessment year she never filed her ITR, even though roughly Rs 30,000 of TDS had been deducted across two employers and a bank fixed deposit. Her final tax liability for that year was nil, so the entire Rs 30,000 is a refund sitting unclaimed. The belated-return window under section 139(4) closed on the 31 December that followed the assessment year, and the revised-return route under section 139(5) is long shut.
Her first instinct is to file an updated return. That fails at the threshold: section 139(8A) expressly bars an updated return that results in a refund or reduces the tax payable, so ITR-U cannot recover a single rupee of the Rs 30,000. A second taxpayer, Rohan, has the mirror problem - a short-term capital loss of Rs 1,20,000 from FY that he never carried forward because he did not file in time, and which section 74 would otherwise let him set off against gains for up to eight assessment years. Both problems have one statutory answer.
Statutory Answer
Section 119(2)(b) of the Income-tax Act, 1961 empowers the Central Board of Direct Taxes to authorise an income-tax authority to admit an application or claim for a refund or for carry-forward of loss after the limitation period has expired, to avoid genuine hardship. The operating instructions are in CBDT Circular No. 11/2024 dated 1 October 2024, which supersedes the earlier instructions on the subject. The bare text of section 119 is on indiacode.nic.in.
Three conditions define the route. First, timing: the circular provides that a condonation application must be made within five years from the end of the relevant assessment year, and the competent authority is expected to dispose of it within six months from the end of the month in which it is received. Second, authority: the application is routed to the Principal Commissioner or Commissioner, the Chief Commissioner, or the Principal Chief Commissioner depending on the size of the claim, so a Rs 30,000 refund and a Rs 3 crore refund are not decided at the same level. Third, and most important for planning, the circular records that where the request is accepted, no additional tax, interest or penalty is payable on that account - condonation restores your right to file the correct return, nothing more punitive.
A crucial procedural point: you cannot file first and seek forgiveness later. A competent-authority order bearing a unique number (DIN) must exist before you file. Only then does the e-filing portal let you select the filing type described below.
| Return route | Section | Refund allowed? | Fresh loss carry-forward? |
|---|---|---|---|
| Original / revised return | 139(1) / 139(5) | Yes | Yes |
| Belated return | 139(4) | Yes | Restricted (house-property loss and unabsorbed depreciation only) |
| Updated return (ITR-U) | 139(8A) | No | No |
| After condonation | 119(2)(b) + 139(9A) | Yes | Yes |
The table shows why condonation is the only route that reopens both a refund and a fresh business or capital loss carry-forward once section 139(4) has closed. That is the point Rohan's Rs 1,20,000 capital loss turns on.
Worked Resolution
Take Priya's refund first. The arithmetic below uses the FY 2025-26 new-regime slabs to show the method; apply the slabs of the year for which you are seeking condonation. Her salary and fixed-deposit interest are taxed under the new regime after the Rs 75,000 standard deduction, and the section 87A rebate then extinguishes the liability entirely.
| Line item | Amount (Rs) |
|---|---|
| Gross salary | 9,60,000 |
| Fixed-deposit interest | 40,000 |
| Gross total income | 10,00,000 |
| Less: standard deduction (s.16(ia)) | 75,000 |
| Taxable income | 9,25,000 |
| Tax before rebate (new regime slabs) | 32,500 |
| Less: rebate u/s 87A | 32,500 |
| Tax after rebate | 0 |
| Add: health and education cess (4%) | 0 |
| Total tax liability | 0 |
| TDS deducted during the year | 30,000 |
| Refund due | 30,000 |
The base tax of Rs 32,500 is the 5 per cent charge on the Rs 4,00,000 slab from Rs 4,00,000 to Rs 8,00,000 (Rs 20,000) plus 10 per cent on the Rs 1,25,000 that falls in the Rs 8,00,000 to Rs 12,00,000 slab (Rs 12,500). Because Priya's taxable income of Rs 9,25,000 is below the Rs 12,00,000 threshold, the section 87A rebate of up to Rs 60,000 in the new regime wipes the Rs 32,500 out completely, leaving a nil liability and a Rs 30,000 refund. You can reproduce this on the income-tax calculator, confirm the withholding on the TDS calculator, and sanity-check the regime choice on the old vs new regime tool.
Rohan's loss is preserved rather than refunded. A short-term capital loss of Rs 1,20,000, once the return is validly filed after condonation, is carried forward under section 74 and can be set off against future capital gains, sparing tax at 20 per cent on short-term equity gains or 12.5 per cent on long-term gains above the Rs 1,25,000 annual exemption. Model those set-offs on the capital gains calculator. The statutory carry-forward periods that make this worth chasing are set out below.
| Loss type | Governing section | Carry-forward limit |
|---|---|---|
| Business loss (non-speculative) | 72 | 8 assessment years |
| Speculative business loss | 73 | 4 assessment years |
| Capital loss (short and long term) | 74 | 8 assessment years |
| Loss from house property | 71B | 8 assessment years |
Once the competent authority issues its order, filing is mechanical. On the e-filing portal you choose the return-filing type 'u/s 139(9A) - After Condonation of delay u/s 119(2)(b)' and enter the unique number (DIN) and the date of the order exactly as issued. The return is then processed on its merits, the Rs 30,000 refund is released to the pre-validated bank account, and Rohan's Rs 1,20,000 loss enters his carry-forward schedule. If a discrepancy later surfaces between your claim and Form 26AS, resolve it the same way you would any other year - see our guide to fixing a tax credit mismatch against Form 26AS, and if a query is raised, reply through e-Proceedings.
A practical drafting note for the application itself: the hardship must be genuine and documented. A missed deadline caused by prolonged hospitalisation, a bereavement, or a genuine inability to access records carries far more weight than mere oversight, and the Rs 30,000 or Rs 1,20,000 at stake should be shown to be a correct and verifiable claim, not an estimate.
FAQ
What is the difference between a belated return and a condoned return?
A belated return under section 139(4) is filed after the original due date but before 31 December of the assessment year, without anyone's permission, and it cannot carry forward business or capital losses. A condoned return under section 119(2)(b) is filed after even that 31 December deadline has passed, needs a competent-authority order first, and can carry both a refund and a fresh loss carry-forward.
Does condonation of delay cost anything in penalty?
No. CBDT Circular No. 11/2024 dated 1 October 2024 records that where the condonation request is accepted, no additional tax, interest or penalty is payable on that account. The relief simply removes the bar of limitation so the correct return can be filed.
How long do I have to apply?
Under CBDT Circular No. 11/2024, a condonation application for a refund or loss carry-forward must be made within five years from the end of the relevant assessment year, and the authority is expected to decide it within six months from the end of the month of receipt.
Can I use ITR-U to claim my Rs 30,000 refund?
No. An updated return under section 139(8A) is expressly barred from producing a refund or reducing tax payable. For a refund claim after the section 139(4) window closes, section 119(2)(b) condonation is the only route.
Which authority will decide my application?
CBDT Circular No. 11/2024 dated 1 October 2024 assigns the application to the Principal Commissioner or Commissioner, the Chief Commissioner, or the Principal Chief Commissioner depending on the claim amount. Confirm the monetary band that applies to your claim on incometax.gov.in before filing.
Will my refund carry interest for the years of delay?
Refund interest is governed by section 244A, and condonation does not create any special entitlement beyond it; you should not assume interest on a refund recovered years late. The core relief in CBDT Circular No. 11/2024 is that accepting the request attracts no additional tax, interest or penalty from you - it does not guarantee interest to you.
Where can I read the primary sources?
The bare text of section 119 of the Income-tax Act, 1961 is on indiacode.nic.in, the Act is hosted on incometaxindia.gov.in, and the step-by-step filing type 'u/s 139(9A) - After Condonation of delay u/s 119(2)(b)' is documented in the e-filing service-request user manual on incometax.gov.in.
Sources & Citations
- Raise e-Filing Service Requests - Condonation of Delay (User Manual) — Income Tax Department
- The Income-tax Act, 1961 - Section 119 — Income Tax Department
- India Code - The Income-tax Act, 1961 (bare Act) — Government of India, Legislative Department