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Section 119 of the Income Tax Act

Income tax is one of the foremost revenues earning methods for most governments across the world. Not only does it help sponsor the national development narrative, but it also ensures that every citizen can contribute towards the maintenance of common resources equally. In India, approximately 4.5 % or 5.9 crore people are currently classified as direct income taxpayers. Although these numbers are relatively small, with growing incomes and the push towards a $5 trillion economy, they are bound to increase manifold.

The taxation system in India is by and large governed by a set of well-defined, comprehensive and detailed laws. Tracing their origins to Article 265 of the Constitution which explicitly states that "no tax shall be levied or collected except by the authority of law." These laws have been codified under the Income tax act,1961. The various sections of this act describe the different ways in which income tax can be charged, claimed, refunded, or carried forward.

However, one of the most prominent sections of the IT act, 1961, that has been inserted with the primary aim of making the taxation process transparent, hassle-free and simple is Section 119.

What Is Section 119?

The Income tax laws generally prescribe the specific period within which tax returns have to be filed. During this period, taxpayers are free to make claims to avail refunds, deductions, exemptions, and loss carryforwards. Nevertheless, there might be occasions when people are unable to file returns on time due to some exigent circumstances. In such a situation, would they lose their right to file a claim?

This is precisely the imbroglio that Section 119 intends to resolve!

Section 119 of the Income tax act, 1961 essentially empowers the Central Board of Direct Taxes (commonly referred to as CBDT) to issue meticulous instructions for its subordinate authorities to follow. More specifically, sub-section 119 (2) (b), authorizes the CBDT to fruitfully direct the lower authorities in terms of:

  • Allowing delayed filing of income tax returns.
  • Claiming exemptions, refunds, deductions or relief, even if the prescribed time limit has expired.
  • Establishing whether the delay was caused due to a genuine reason.
  • Issuing general or special orders to admit belated applications and determine each case on its merit.
  • Finding ways to reduce hardships, if any, caused to the taxpayer.

To put it simply, Section 119 accords the CBDT a certain level of power and discretion. This can ensure the disposition of different income tax cases without any sort of bias, impertinence, or prejudice.

Who Is the Authority for Accepting or Rejecting Applications?

As explained above, Section 119 allows applications for income tax claims to be filed even after the designated due date is over. For fulfilling this purpose, CBDT has issued an exhaustive set of guidelines via Circular number 9/2015. These guidelines don't just talk about the powers vested at various levels of the income tax hierarchy, but they also mention the monetary limits up to which these authorities can accept or reject claim applications.

A detail of the limits prescribed and the authorities responsible for dealing with the same have been depicted in the following table:

Monetary LimitAuthority Responsible
When the claim ranges from Rs. 1 thousand to Rs. 10 lakhs.The Principal Commissioner of Income Tax (Pr. CIT) or the Commissioner of Income Tax (CIT).
When the claim ranges from Rs. 10 lakhs to Rs. 50 lakhs.The Principal Chief Commissioner of Income Tax (Pr. CCIT) or the Chief Commissioner of Income Tax (CCIT)
When the claim is greater than Rs. 50 lakhs.Central Board of Direct Taxes (CBDT)

The applications which are submitted for claiming refunds, deductions, or exemptions reach the offices of the aforementioned authorities. Then each one of them is examined on the basis of its merit.

At this juncture, it would be extremely important to note that these authorities cannot keep the applications pending for a prolonged period. There is a pre-ordained time limit, within which action on the submitted applications needs to be taken.

What Is the Time Limit for Accepting or Rejecting Claims?

For both, taxpayers and tax assessors, a wide-ranging time limit has been provided, which needs to be strictly adhered to. These time limits are not subject to any change, and therefore, they must be followed in letter and spirit. The limits include:

Taxpayers

The taxpayers who have not been able to make an income tax claim on time can ask for a refund, an exemption, a deduction, or a loss carryforward within six years from the end of their original assessment year. This can be better explained with the help of an example. Let us consider that Mr. X was not able to claim a tax refund owing to the poor state of his health, in the financial year (FY) 2017-18 or the assessment year (AY) 2018-19. The expected refund amounted up to a sum of Rs. 5 lakhs. In this case, Mr. X is free to submit an application addressed to the Principal Commissioner of Income Tax or the Commissioner of Income Tax for claiming his refund. The time limit for him to file such an application would be 31st March, 2026.

Authorities

Once the designated authorities receive the application, they are supposed to either accept or reject the applicant's request within a time span of six months. This six months period would be calculated from the last date of the month in which the application was originally received. For instance, if Ms. Y makes a claim for income tax relief on 20th July, 2019, her application will have to be accepted or rejected by the 31st January, 2020.

However, in both such cases, it would be wise to remember that if the income tax relief in terms of refund, deduction, or exemption is granted by a court of law. Then the total period for which the case was under the court's consideration, would not be used to calculate the designated span of six years or six months. Instead, the time limit would be calculated from the date on which a copy of the court's final order is received.

How To File A Return Under Section 112 (2) (b)?

Right after your application for a claim has been accepted, you would be asked to file a proper income tax return under Section 112 (2) (b) of the Income tax act, 1961. In order to do this, you will have to visit the e-filing website of the income tax department and take the following steps:

  1. Use your user ID and password to login to the income tax e-filing portal.
  2. Visit the 'e-file' section and click on it.
  3. A drop-down menu will appear. On this, select the tab titled 'income tax returns.'
  4. Pick the assessment year for which you intend to file your returns.
  5. You will now be asked to choose a filing type. Select 'Filing against notice or order.'
  6. A list of sections will be displayed. Choose 'section 139 read with section 119 (2) (b). Sometimes, instead of Section 139, Section 139 (4) would be mentioned. Pick either one of them.
  7. Finally, verify your identity and click on 'File returns.' Your claim would immediately be submitted.

In most cases, the processing of these claims would take about 7 to 15 days. Nonetheless, once they have been processed, you would receive the total amount of relief claimed in your linked bank account. When followed to the letter, this process enables taxpayers to yield instant returns, without having to face the scourge of needless delays and official red-tapism.

Factors to Consider

Apart from the details mentioned above, as a taxpayer, you will also have to consider a variety of other factors. These are:

  • For the deductions, exemptions, refunds and loss carryforwards that you claim, no interest would be paid by the income tax department, owing to the delay in relief.
  • As per the Income Tax Act, 1961, the income accruing to any one person, would not be considered taxable, if it is processed by the hands/accounts of another person.
  • The claim for refunding money can only be made due to reasons like excess payment of Tax Deduction on the Source (TDS), payment of self-assessment tax or advanced settlement of tax.
  • A proper investigation would be conducted into the genuineness of your claim. If the authorities find your claim to be unsatisfactory, it would be summarily rejected.

Therefore, before submitting your application to the requisite authorities, it would be crucial to make sure that your claim falls within the ambit of established law, procedures, covenants, and conventions.

Conclusion

If you too have been wondering whether you qualify for receiving delayed tax relief, digital platforms can prove to be of immense help. They don't just allow you to calculate your total income tax, but they also ensure that you can submit claim requests with adequate simplicity and ease. Powered by their years of experience and expertise, such platforms can provide you with every bit of information that you might need for filing a comprehensive income tax return.

As times change, the assessment of direct income tax would start becoming more complex. Although numerous ways and means of granting tax relief would be made available, the possibility of people missing out on their timely tax payments would remain large. Under such circumstances, a complete understanding and application of sections like 119, would not just reduce taxpayer hardship, but it would also make the mammoth task of financial governance, much more lucid, transparent, and unambiguous. This is why creating awareness about the appropriate use of Section 119 is not just necessary, but also essential.

Frequently Asked Questions

On What grounds can I claim an income tax refund under Section 119?

Under Section 119, you can claim an income tax refund only if:

  • An excess amount has been deducted under TDS (Tax deduction on the source).
  • If you are a self-assessor and have paid a surplus in the last assessment year.
  • In case you have opted for an advanced settlement of tax.

Except for the grounds mentioned above, a claim for refund would not be entertained for any other reason whatsoever.

How will the time limit be calculated if my claim settlement case is pending in a court of law?

If your claim settlement is pending in a court of law, you will have to wait for the court to declare its verdict. The moment that is done and a copy of the judgement is received by the concerned authority, the period of six years or six months (whichever is applicable) would be calculated from that date onward.

Who should I approach if I have to claim a refund of Rs. 7 lakhs?

For a claim between Rs. 1 lakh and Rs. 10 lakhs, you will have to approach the office of the Principal Commissioner of Income Tax or the Commissioner of Income Tax. For an amount beyond Rs. 10 lakhs, the application will have to be submitted to the Principal Commissioner of income tax or the chief commissioner of income tax.

In what situation would the six years window of granting tax claims, be rendered invalid?

The six years window would be rendered invalid if the applicant has invested in the savings bond scheme of 2003 and has received cumulative interest on a mercantile basis, on which the bank has deducted TDS over different financial years. Such cases would not be included under the grant of income tax relief.

If I am not satisfied with the order, who can I approach?

In case you are not satisfied with the orders issued, you can approach the CBDT. The CBDT reserves the power to examine grievances, if any. Based on its investigation, it can issue orders or guidelines to make suitable corrections. However, the Board does not entertain any reviews or appeals against the decisions made by the requisite authorities.

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