How to Claim Income Tax Refund for Unfiled ITR: Section 119(2)(b)

Quick Summary: Condonation of Delay for Refunds

• Governing Law: Section 119(2)(b) of the Income-tax Act, read with CBDT Circular No. 9/2015 dated 09.06.2015.
• Time Limit: The condonation application must be filed within 6 years from the end of the relevant Assessment Year (AY).
• Core Requirement: You must legally prove “genuine hardship” (e.g., severe prolonged illness, natural calamity, or missing TDS certificates).
• Jurisdictional Limits: Applications are processed by the Pr. CIT/CIT (up to ₹10 Lakhs), the Pr. CCIT/CCIT (₹10L to ₹50 Lakhs), or the CBDT directly (above ₹50 Lakhs).
• Filing Mechanism: Once approved, the ITR cannot be filed directly online. You must use the offline Excel/JSON utility, select “119(2)(b)” from the drop-down menu, and quote the specific Document Identification Number (DIN) of your approval order.

What is Section 119(2)(b) Condonation of Delay?

The Income-tax Act, 1961 operates on strict deadlines. Under normal circumstances, if you miss the original due date under Section 139(1) and the belated return deadline under Section 139(4), your window to file a standard ITR slams shut. If you have excess TDS deducted by your employer or bank, that money becomes effectively trapped by the government.

However, Section 119(2)(b) serves as a powerful, equitable relief mechanism. It empowers the Central Board of Direct Taxes (CBDT) to admit an application or claim for any exemption, deduction, refund, or any other relief after the expiry of the period specified under the Act. The legislature introduced this section to ensure that honest taxpayers do not lose their rightfully earned money merely due to a procedural delay, provided the delay was caused by genuine, unavoidable circumstances.

It is vital to understand that condonation is not a “right”—it is a discretionary relief granted by the tax authorities. If the competent authority accepts your request, you are permitted to file your ITR for that specific past year without facing arbitrary rejection by the e-filing portal.

The Operational Framework: CBDT Circular No. 9/2015

To prevent arbitrary rejections and to streamline the processing of these applications across the country, the CBDT issued Circular No. 9/2015 on June 9, 2015. This landmark circular laid down the definitive framework, the strict monetary limits, and the absolute timelines for admitting condonation requests for refunds and carry-forward of losses.

According to the circular, the income tax authorities must satisfy themselves on three critical fronts before granting condonation:

• The claim is correct and genuine.
• The case genuinely qualifies as one of “genuine hardship” on the merits.
• The income declared is not assessable in the hands of any other person under the Act.

The Absolute 6-Year Time Limit

The circular clearly stipulates that no condonation application for the claim of a refund shall be entertained beyond six years from the end of the assessment year for which such application/claim is made. This limit is non-extendable. For example, if you are claiming a refund for Financial Year 2019-20 (Assessment Year 2020-21), the 6-year clock starts on March 31, 2021. You have until March 31, 2027, to file the condonation application. Once this date passes, the doors are permanently closed, regardless of how severe your hardship was.

Who Are the Competent Authorities Based on Refund Amount?

To prevent a massive administrative backlog at the central CBDT office in New Delhi, Circular 9/2015 strategically delegates the power to accept or reject condonation applications to regional authorities. The jurisdiction is based strictly on the monetary value of the refund claimed for any single Assessment Year.

Taxpayers must verify their exact refund amount (including applicable cess and surcharge, but excluding any expected interest) to determine where to mail their application dossier:

Condonation of Delay vs. Updated Return (ITR-U): Which One Do You Need?

Following the introduction of the Updated Return (ITR-U) under Section 139(8A) in the Finance Act 2022, there is immense confusion among taxpayers. Many attempt to file an ITR-U to claim a missed refund, only to find the portal rejects their calculation. This is because the two provisions serve diametrically opposite purposes.

An Updated Return under 139(8A) allows you to declare additional income you forgot to report, but it strictly penalizes you by applying 25% or 50% additional tax on the pending amount. Crucially, Section 139(8A) explicitly prohibits using the updated return to file a return of loss, claim a refund, or increase an existing refund amount.

If your goal is to get money back from the government, the ITR-U facility is legally blocked for you. Condonation under 119(2)(b) is your exclusive pathway.

What Constitutes “Genuine Hardship”?

The phrase “genuine hardship” is not strictly defined in the Income-tax Act, leaving it open to interpretation by the jurisdictional Commissioners. However, based on decades of judicial precedents from various High Courts, the tax authorities generally look for circumstances that were genuinely beyond the taxpayer’s control. A simple “I forgot to file” or “I was busy at work” will result in an immediate rejection.

Commonly Accepted Grounds for Genuine Hardship:

• Severe or prolonged illness of the taxpayer or a direct family member (supported by hospital admission records).
• Natural calamities (floods, earthquakes) resulting in the destruction of accounting records.
• Significant delay by an employer, bank, or deductor in issuing Form 16 or Form 16A, leaving the taxpayer unaware of the TDS deducted.
• Non-Resident Indians (NRIs) who lacked access to the Indian tax portal, faced systemic login issues from abroad, or were unaware of specific Double Taxation Avoidance Agreement (DTAA) refund mechanisms until audited by foreign authorities.
• Ongoing family disputes, messy divorces, or corporate liquidations that froze access to necessary financial documents.

Worked Example 1: The Senior Citizen Fixed Deposit Trap

Consider Mr. Sharma, a 68-year-old senior citizen. His total income for FY 2021-22 (AY 2022-23) was ₹4,50,000, entirely derived from bank fixed deposits. Because he failed to submit Form 15H, his bank deducted TDS of ₹45,000 under Section 194A at a 10% rate.

Under the old tax regime, a senior citizen has a basic exemption limit of ₹3,00,000. For the remaining ₹1,50,000, the tax is 5% (₹7,500). However, because his total income is below ₹5,00,000, he is eligible for a full tax rebate under Section 87A. Therefore, Mr. Sharma’s final tax liability is Zero. The entire ₹45,000 deducted by the bank is rightfully his.

Mr. Sharma discovers this excess TDS deduction in early 2026. The belated return deadline (December 31, 2022) is long gone. He cannot file an ITR-U because it blocks refunds. Instead, he engages a Chartered Accountant to draft a condonation application under Section 119(2)(b).

The CA cites genuine hardship, attaching Mr. Sharma’s medical records showing he was undergoing cataract surgery during the 2022 filing season. Because the refund is below ₹10 Lakhs, the application is physically mailed to the jurisdictional Principal Commissioner of Income-tax (Pr. CIT). After a brief hearing, the Pr. CIT issues an approval order with a DIN. Mr. Sharma files his return offline, quotes the DIN, and successfully receives his ₹45,000 refund (though without Section 244A interest).

Worked Example 2: The Non-Resident Indian (NRI) Real Estate Sale

Consider Ms. Priya, a Non-Resident Indian living in the UK. In FY 2020-21 (AY 2021-22), she sold a piece of ancestral property in India. The buyer, adhering strictly to Section 195 of the Income-tax Act, deducted TDS at a flat rate of 20% (plus surcharge and cess) on the entire sale consideration, amounting to ₹18,50,000.

However, Ms. Priya immediately reinvested the capital gains into specified NHAI capital gains bonds, making her entire capital gain exempt under Section 54EC. Her actual tax liability in India was Zero, meaning she is owed a massive refund of ₹18,50,000.

Due to the COVID-19 pandemic and international travel bans, she could not access her Indian CA or physical property documents, causing her to miss the belated return deadline. In 2026, she initiates the Condonation of Delay process.

Because the refund amount is ₹18.5 Lakhs (falling in the ₹10L – ₹50L bracket), her application is directed to the Principal Chief Commissioner of Income-tax (Pr. CCIT). She provides flight records, pandemic lockdown notifications in the UK, and her Section 54EC bond certificates as proof of genuine hardship and bona fide claims. Upon approval, she files her ITR offline, quotes the order number, and repatriates her ₹18.5 Lakh refund.

Document Checklist: Preparing Your Condonation Dossier

A condonation application is not a simple online form click. It is a quasi-judicial process. The competent authority meticulously evaluates the merits of the case before granting relief. If you fail to substantiate your claim, the application will be summarily rejected. You must compile a robust, physical dossier containing the following:

Step-by-Step E-Filing Process (Post-Approval)

Congratulations. You survived the administrative hurdles and received an official order from the Commissioner granting condonation. The order will clearly state a Document Identification Number (DIN) and an Order Date. Now, you must file the return.

Common Pitfalls That Lead to Application Rejection

Despite the liberal, justice-oriented approach emphasized by various High Courts in condonation cases, applications face summary rejections when taxpayers fail to do their homework. Avoid these critical mistakes:

• Vague Hardship Claims: Writing “I had financial difficulties” or “I gave the papers to my CA and he forgot” is not sufficient. You need hard, documentary proof of your hardship.
• Missing Form 26AS: Failing to attach Form 26AS is the fastest way to get rejected. If the TDS is not reflecting in the government’s portal, the Commissioner cannot grant a refund, regardless of what your physical Form 16 says.
• Jurisdictional Errors: Mailing a ₹15 Lakh refund claim to the Pr. CIT instead of the Pr. CCIT. Your application will languish in the wrong office and potentially become time-barred while waiting to be forwarded.
• Time-Barred Defaults: Waking up 7 years after the Assessment Year has ended. The 6-year limit in Circular 9/2015 is ironclad and non-extendable by regional authorities.
• Filing Before Approval: Some taxpayers generate the JSON and try to hack the portal by entering fake DIN numbers while their application is still pending. This triggers instant portal blocks and severely damages your credibility with the Assessing Officer.

Frequently Asked Questions (FAQs)

Sources & References

• CBDT Circular No. 9/2015 dated 09.06.2015 (Guidelines for Condonation of Delay)
• Income Tax Act, 1961 — Section 119 and Section 139 Provisions
• Income Tax Portal — Filing of ITR after Condonation of Delay User Manual