Return filed after condonation of delay : What you must know?

The Finance (No.2) Act, 2024, has introduced key amendments to the Income-tax Act, 1961, impacting the time frame for filing returns and assessments. These changes aim to provide clarity and streamline processes for taxpayers who have been allowed extensions for filing returns under special circumstances, as permitted by the Central Board of Direct Taxes (CBDT) under section 119(2)(b) of the Income-Tax Act.

In this article, we will go through the amendments made to Section 139 and Section 153 of the Income-tax Act, effective from October 1, 2024.

Amendment to Section 139 – Sub-section (9A)

With effect from October 1, 2024, a new sub-section (9A) has been inserted into Section 139, which governs the filing of income tax returns. The amendment reads as follows:

• "Where any return of income is furnished in pursuance of an order under clause (b) of sub-section (2) of section 119, the provisions of this section shall apply."

This insertion signifies that when a taxpayer files their return of income following an order issued under Section 119(2)(b), the provisions of Section 139 will apply in full force. Section 119(2)(b) empowers the CBDT to authorize delayed returns in cases where a taxpayer faces circumstances beyond their control, preventing them from filing the return within the regular time frame. Such an order allows the taxpayer to file a belated return even beyond the time limits prescribed under Section 139.

Amendment to Section 153 – Sub-section (1B)

The Finance (No.2) Act, 2024, has also introduced a new sub-section (1B) to Section 153, which deals with the time limits for the completion of assessments. This sub-section reads as follows:

• "Notwithstanding anything in sub-section (1), where a return is furnished in consequence of an order under clause (b) of sub-section (2) of section 119, an order of assessment under section 143 or section 144 may be made at any time before the expiry of twelve months from the end of the financial year in which such return was furnished."

Key Implication of Section 153(1B):

The newly inserted sub-section (1B) introduces a specific time limit for completing assessments in cases where a return is filed pursuant to an order under Section 119(2)(b). The key takeaway is that the assessment order under Section 143 or Section 144 must be passed within 12 months from the end of the financial year in which such a return is furnished. This amendment overrides the standard time limits for completing assessments under sub-section (1) of Section 153.

Overall Impact of These Amendments:

• Section 139(9A): The insertion of sub-section (9A) ensures that when a taxpayer files a return under an order from the CBDT (Section 119(2)(b)), they will be treated at par with other taxpayers in terms of compliance with procedural requirements. This brings clarity and consistency to how such returns are handled.
• Section 153(1B): By setting a definitive timeline for the completion of assessments where returns are filed under Section 119(2)(b), this provision offers certainty to both taxpayers and the tax department. Previously, there was no explicit provision governing the assessment time limit for returns filed in special circumstances under Section 119(2)(b), leading to ambiguity. The amendment ensures that such assessments must be completed within 12 months from the end of the financial year of return filing.

Conclusion:

The amendments introduced in the Finance (No.2) Act, 2024, provide a streamlined approach to handling income tax returns and assessments for taxpayers who file their returns under exceptional circumstances. The insertion of sub-section (9A) into Section 139 and sub-section (1B) into Section 153 ensures consistency and clarity in the treatment of such returns while providing a specific time frame for completing assessments. These changes are likely to simplify the process for both taxpayers and the tax authorities, reducing ambiguities in handling delayed returns filed under the authority of the CBDT.

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Disclaimer:

The information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. Readers are advised to consult with a qualified tax advisor or legal professional for specific advice tailored to their individual circumstances, particularly regarding reassessment proceedings and claiming refunds. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the content of this article.

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