Jigar M. Patel
International Tax Attorney
Situations commonly arise, where considering the amounts of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) or Advance Tax paid in the case of a taxpayer, he becomes entitled to claim a Refund of Income-tax, where the amount of such taxes actually exceed the income-tax liability on the Taxable Income for the relevant Assessment Year. Section 237 of the Income-tax Act provides for grant of Refund in the case of a taxpayer and Section 244A deals with interest payable by the Income-tax Department to a taxpayer on such Refund.
Time Limit for Claiming Refund
Section 239 requires that every claim for refund shall be made by furnishing an Income-tax Return (ITR) in accordance with the provisions of Section 139. The deadline for filing an ITR is three months before the end of the relevant assessment year. Accordingly, the claim for refund in respect of any tax paid, deducted or collected during the Financial Year 2022-23, should be made in the ITR required to be filed for the relevant Assessment Year 2023-24, not later than 31st December, 2023.
Remedy for Belated Refund Claims
What if a taxpayer misses the deadline for claiming his tax refund? The Central Board of Direct Taxes (CBDT) has issued a number of Circulars from time to time, by invoking its powers under Section 119(2)(b), granting remedy and relief in cases of belated claims of refunds.
CBDT Circular No.7/2023, dated 31st May, 2023 read with earlier Circular No.9/2015, dated 9th June, 2015 provide clarifications in regard to the procedure, time and monetary limits in regard to condonation of delay in filing of ITR for claiming tax refund, filing supplementary claim for refund after filing of an ITR and filing claims for carry forward of loss and set-off after the expiry of the time limit prescribed under Section 139 of the Income-tax Act.
Competent Authority to Grant Condonation
The power for condoning delay in case of claims for refund or carry forward and set-off of loss up to Rs.50 lakhs is vested with the Commissioner of Income-tax, exceeding Rs.50 lakhs but up to Rs.2 crores with the Chief Commissioner of Income-tax and exceeding Rs.2 crores but up to Rs.3 crores with the Principal Chief Commissioner of Income-tax. The power of condonation in cases of refund claims of more than Rs.3 crores, will be with the CBDT.
The Circular prescribed comprehensive guidelines on the conditions and procedure to be followed for deciding applications for condonation of delay in filing ITRs for claiming refund and carry forward of loss and set off. The jurisdictional Assessing Officer shall be directed to make necessary inquiries or scrutinize the case in accordance with the provisions of the Act to ascertain the correctness of the claim of the taxpayer.
Condonation for up to Six Assessment Years
It is pertinent to note that the condonation applications for refund (or loss claims) shall be accepted for only six years from the end of the assessment year for which such application is made.
Moreover, no interest will be admissible on belated claims of refunds. CBDT guidelines provide that as far as possible, a condonation application should be disposed of by the relevant competent authority within six months from the end of the month in which such application is received.
