Condonation of Delay in ITR Filing: Section 119(2)(b) Application and Genuine Hardship Test

Few moments in the tax calendar feel as final as 31 December — the outer wall for a belated or revised return under Section 139(4) and 139(5) of the Income-tax Act, 1961. Miss it and the e-filing portal slams shut. Yet thousands of salaried taxpayers, NRIs and small-business proprietors discover, a year or two later, that a TDS refund of Rs 40,000 to Rs 2 lakh sits unclaimed, or that a capital-loss of Rs 6 lakh from a 2022 equity sale was never carried forward. The law has not written off these claims — Section 119(2)(b) is the back door, used since CBDT issued Circular No. 9/2015 on 09-Jun-2015.

This Q&A walks through the mechanics: who has the power, what the six-year clock means, what "genuine hardship" requires in 2026, and how a Rs 1.4 lakh refund moves from a missed AY 2023-24 deadline to a credited bank account 18 months later.

The Scenario

Take a concrete fact pattern. Anjali, a 38-year-old salaried professional in Pune, switched employers in May 2022. Her first employer deducted TDS of Rs 1,42,000 on a salary paid through April 2022; her second employer deducted a further Rs 2,18,000 between June 2022 and March 2023. Form 26AS for AY 2023-24 therefore showed total TDS of Rs 3,60,000 against a self-computed tax liability, after Section 80C of Rs 1.5 lakh and a home-loan interest deduction of Rs 2 lakh under Section 24(b), of only Rs 2,18,000.

She was due a refund of Rs 1,42,000. But Anjali was hospitalised for a road-traffic injury in July 2023 and her chartered accountant filed nothing for AY 2023-24. The 31 December 2023 belated-return wall closed. Her refund did not vanish — it simply now requires a Section 119(2)(b) condonation petition, filed by 31 March 2030 (six years from the end of AY 2023-24, which itself ended on 31 March 2024). If you want to map the underlying tax computation and confirm the refund quantum before petitioning, the income-tax calculator and the old-vs-new regime comparator handle the FY 2022-23 and FY 2025-26 slabs respectively.

A second scenario shows the loss-carry-forward angle. Rahul, a derivatives trader in Bengaluru, had a non-speculative business loss of Rs 6,40,000 in FY 2021-22. He filed his ITR-3 on 15 August 2022 — eleven days after the 31 July 2022 due date for non-audited accounts. Section 80 read with Section 139(3) ordinarily strikes this loss off the carry-forward register because the return was not filed within 139(1) time. Section 119(2)(b) is his only route, and the threshold he must meet is materially higher than Anjali's. His capital-gains calculator workings will help quantify the loss correctly, but the legal hurdle is what we examine below.

Statutory Answer

Section 119 of the Income-tax Act, 1961, vests the Central Board of Direct Taxes with administrative power to issue orders, instructions and directions to subordinate income-tax authorities. Sub-section (2)(b) is the operative gateway:

"The 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, authorise any income-tax authority... 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..."

The bare provision does three things at once. It identifies the trigger ("genuine hardship"), it caps the relief catalogue (exemption, deduction, refund or "any other relief" — courts have read carry-forward of losses into this), and it delegates downward (any income-tax authority may be authorised). The full text of Section 119 is on the Income Tax Department portal and the bare-Act version is hosted by the India Code repository maintained by the Ministry of Law and Justice.

The procedural skeleton sits in CBDT Circular No. 9/2015 dated 09-Jun-2015. The Circular fixes a hard six-year clock from the end of the assessment year, restricts who can decide, and lays out the substantive test. The relevant authorities and their financial limits, after the most recent monetary-jurisdiction recalibration, work out as follows:

Two substantive caveats run through every condonation order. First, the refund or loss must be "correct and genuine" on its merits — Section 119(2)(b) is not a back door for a substantively defective claim. Second, no interest under Section 244A is payable for the period of delay attributable to the assessee; interest accrues only from the date the belated return is uploaded after condonation is granted.

The judicial gloss has been generous. The Bombay High Court in Sitaldas K Motwani v Director General of Income Tax [(2010) 323 ITR 223] held that "genuine hardship" must be construed liberally and that the Department cannot reject without an oral hearing. The Gujarat High Court in R. Seshammal v ITO and the Madras High Court in Bombay Mercantile Co-op Bank Ltd have similarly emphasised that procedural lapse should not snuff out a substantive right. The full text of these judgments is searchable on Indian Kanoon and constitutes binding authority for assessees in those jurisdictions.

A note on the new tax regime: the Section 87A rebate sits at Rs 60,000 for FY 2025-26 where total income does not exceed Rs 12 lakh. If your refund claim is built around 87A applicability, ensure the regime computation is correct — our explainer on Form 10IE switching rules lays out the salaried-vs-business mechanics. Surcharge in the new regime is capped at 25%, not 37%. Section 80CCD(1B) is NOT available in the new tax regime — the Rs 50,000 NPS top-up deduction is an old-regime-only deduction. Section 80CCD(1B) is not allowed in new regime computations. Our 80CCD(1B) deep-dive covers this exclusion in detail.

Worked Resolution

Return to Anjali's Rs 1,42,000 refund for AY 2023-24. The mechanics, step by step:

Step 1 — Confirm the six-year window. AY 2023-24 ended on 31 March 2024. The outer wall for a Section 119(2)(b) application is 31 March 2030. Anjali files in February 2026, comfortably inside the window.

Step 2 — Identify the right authority. Her claim is Rs 1,42,000, well below the Rs 1 crore upper bound. The application therefore goes to the jurisdictional Principal Commissioner of Income Tax (Pune), whose AOR can be derived from PAN-jurisdiction lookup on the Income Tax e-filing portal. She can also confirm jurisdiction against the assessment-year glossary entry for definitional clarity.

Step 3 — Build the genuine-hardship dossier. A condonation petition is not a one-paragraph email. The Pune Pr CIT will want, at minimum:

Step 4 — File and follow up. The petition is filed physically with the Pr CIT or, in jurisdictions that have rolled out the e-Nivaran functionality, online. The Department's internal benchmark is six months from filing. In practice, decisions arrive in four to six months for unambiguous cases; contested matters can drag for nine to twelve months.

Step 5 — Upload the belated return. Once the order is issued, Anjali receives a system reference number that unlocks the e-filing portal for AY 2023-24. She uploads ITR-1 (salary plus a single house property), the return is processed under Section 143(1), and the refund of Rs 1,42,000 is credited under Section 237. Interest under Section 244A runs from the processing date — typically two to three months later — not from the original 31 July 2023 due date. On a 6% per annum basis, the interest forgone for the 30-month delay is roughly Rs 21,300.

For Rahul's loss-carry-forward case, the calculus is harsher. The Department's stance, supported by ITAT and Delhi HC rulings, is that loss carry-forward beyond Section 139(3) time is condoned only where filing within 139(1) was practically impossible. An eleven-day delay due to professional negligence is borderline; a six-month delay due to hospitalisation is a strong case. He should cite Lodhi Property Co Ltd v Ministry of Finance [(2010) 323 ITR 441] which addresses a near-identical fact pattern.

A final practical tip: petitions where TDS is recorded in Form 26AS or AIS move faster because the revenue trail is independently verifiable. Where the refund hinges on disputed deductions or self-assessment-tax credits the Department cannot trace, the petition is materially more contentious.

FAQ

How long does a Section 119(2)(b) condonation actually take in 2026?

CBDT's benchmark is six months from filing. Empirically, TDS-refund applications below Rs 10 lakh are disposed in four to five months in metro Pr CIT charges. Loss-carry-forward applications and matters above Rs 50 lakh routinely take seven to nine months.

Can I withdraw money from the refund before the order is issued?

No. The refund is not "due and payable" until the belated return is processed under Section 143(1) following the condonation order. Section 237 read with Section 244A operates only after that processing — earlier the claim is contingent.

Does the six-year limit run from the assessment year or the financial year?

From the end of the assessment year. For FY 2022-23 (AY 2023-24), the AY ended on 31 March 2024 and the six-year wall is 31 March 2030. CBDT Circular 9/2015 paragraph 2 is unambiguous on this.

Is a Section 119(2)(b) order appealable?

Not under Section 246A — the order is administrative, not an "assessment" order. The remedy is a writ petition under Article 226 before the jurisdictional High Court. The Bombay HC in Sitaldas K Motwani has entertained such writs and remanded matters for fresh disposal where reasons were inadequate.

Can I file Section 119(2)(b) for a year where the return was never filed at all?

Yes. Circular 9/2015 contemplates both the case where a return was filed late and the case where no return was filed within 139(1) or 139(4) timelines. The substantive test — genuine hardship and a correct and bonafide claim — remains identical.

Does condonation under Section 119(2)(b) cover the new tax regime's Section 87A Rs 60,000 rebate?

Yes — a refund triggered by a missed Section 87A rebate claim is a "refund... or any other relief" within the section's scope. For FY 2025-26, where total income is up to Rs 12 lakh under the new regime, the 87A rebate is Rs 60,000 and any TDS in excess of the post-rebate liability becomes refundable.

What if my chartered accountant's negligence caused the delay?

Professional negligence has been accepted as genuine hardship in several High Court rulings, but the assessee must produce a contemporaneous engagement letter, fee receipts, and ideally a written admission from the CA. A bare assertion will not cross the threshold.