Tuesday, December 19, 2023

CBDT Extends Deadline for Processing Refund Claims in ITRs for AYs 2018-19 to 2020-21

The Central Board of Direct Taxes (CBDT) has extended the time limit for processing refund claims in Income Tax Returns (ITRs) for the assessment years (AYs) 2018-19 to 2020-21. The decision, outlined in Order F. No. 225/132/2023/ITA-II, dated 1-12-2023, addresses concerns raised about the inability to process certain returns within the prescribed timeframe due to technical issues or other reasons not attributed to the taxpayers.

  1. Technical Glitches and Non-Attributable Delays: It has come to the attention of the Central Board of Direct Taxes ('Board') that, for AYs 2018-19, 2019-20, and 2020-21, returns filed under section 139, 142(1), or 119 of the Income-tax Act, 1961 ('Act') faced processing delays. This was not the fault of the assessees, and the intimation regarding the processing of such returns could not be sent within the prescribed timeframe under section 143(1) of the Act. Consequently, taxpayers faced difficulties in obtaining legitimate refunds as per the Act.

  2. Relaxation of Statutory Time Limits: To address the grievances of taxpayers, the Board had previously issued instructions/orders under section 119 of the Act, relaxing the statutory time limit for processing validly filed returns with refund claims in non-scrutiny cases. The latest order dated 16th October 2023 extended the timeframe until 31-01-2024 for processing returns of income filed electronically with refund claims up to AY 2017-18.

  3. Mitigating Genuine Hardship: Considering the pending grievances related to refund issues for AYs 2018-19, 2019-20, and 2020-21, the Board, utilizing its powers under section 119 of the Act, is now relaxing the time-frame prescribed in the second proviso to sub-section (1) of section 143. This allows the processing of all electronically filed returns with refund claims for the mentioned AYs, provided the date of sending intimation under sub-section (1) of section 143 has lapsed.

  4. Administrative Approval and Safeguards: The Board directs that these returns can be processed with prior administrative approval of Pr.CCIT/CCIT concerned. The intimation of such processing under sub-section (1) of section 143 can be sent to the assessee by 31.01.2024. Subsequent effects under the Act, including the issuance of refunds, will follow prescribed procedures. Safeguards are in place, requiring administrative approval from Pr.CCIT/CCIT, who will then refer to DGIT (Systems) for necessary enablement on a case-to-case basis.

  5. Exceptions to Relaxation: The relaxation does not apply to returns selected for scrutiny, unprocessed returns with a shown demand or a likely demand after processing, and returns remaining unprocessed for reasons attributable to the assessee.

  6. Compliance Notice: All concerned parties are urged to comply with these directives, and the progress of disposal of such cases shall be monitored by the Pr.CIT/CIT concerned.

This article summarizes the recent decision by the CBDT to extend the time limit for processing refund claims in ITRs for AYs 2018-19 to 2020-21, providing relief to taxpayers facing genuine hardships due to processing delays. The extension, accompanied by administrative approvals and safeguards, aims to ensure a fair resolution of refund-related issues