CBDT Circular can’t restrict powers of Income Tax Authority u/s 119(2)(b) to condone delay beyond six years
In a recent judgment, Hon’ble High Court has held CBDT Circular can not restrict powers of Income Tax Authority u/s 119(2)(b) to condone delay beyond six years for granting refund
ABCAUS Case Law Citation:
5194 (2026) (08) abacus.in HC
In the instant case, the Petitioner company had filed Writ Petition challenging the order passed by Principal Commissioner of Income Tax (PCIT) rejecting the application for condonation of delay in claiming refund under Section 119 (2)(b) of Income Tax Act, 1961 (the Act).
The case of the petitioner was that, it had filed income tax returns for the relevant assessment years. However, due to the financial difficulties faced by it, the business of the petitioner got wound up. It was further stated that due to health problems of the Managing Director of the petitioner concern, it could not approach the respondent authorities in time to claim refund but after six years.
However the application made by the Petitioner under Section 199(2)(b) of the Act were dismissed by the PCIT on the ground that as per the CBDT Circular No. 9/2015, dt.09.06.2015, no condonation application for claim of refund/loss shall be entertained beyond six years from the end of the assessment year for which such application/claim is made.
The rejection order stated that the limit of six years shall be applicable to all the authorities having powers to condone the delay as per the above prescribed monetary limits, including the board.
The stand of the Revenue was that petitioner did not file its return of income as per Section 139(1) of the Act, but filed it belated. It was further stated that as per Section 239 of the Act, the assesse has to file a Form for claim of refund. It was further stated that as per Circular No.9/2015, dt.09.06.2015, the application for condone of delay cannot be entertained beyond six years from the end of assessment year for which such application has been filed.
The Hon’ble High Court observed that provisions of section 119(2)(b) would clearly indicate that the intention of the legislature was to take a liberal approach, whenever an application is filed under the above provision of law. Further, under Section 119(2)(b) of the Act, the power is conferred on the Commissioner of Income Tax to condone the delay in furnishing the returns or an appropriate application within a reasonable period of time.
The Hon’ble High Court further observed that in section 119(2)(b) there is no specific time prescribed for condonation of delay, meaning thereby discretion is given to the CIT to exercise the same in proper prospective, especially taking into account the difficulties faced by the assessees.
The Hon’ble High Court further opined that the reasoning given by the PCIT, while rejecting the applications of the petitioner do not stand for legal scrutiny inasmuch as the circulars issued by Central Board of Direct Taxes would be binding on the authorities, however the same is not binding on this Court, especially while exercising jurisdiction under Article 226 of the Constitution of India. Apart from the same, fixing the time limit under the circular aforementioned is not tenable, as the same would run contrary to Section 119(2)(b) of the Act.
The Hon’ble High Court held that the CIT is conferred with the power under Section 119(2)(b) of the Act, to condone the delay on the part of assessees in filing the returns or appropriate applications. In such circumstances, rejecting the applications filed by the petitioner on the ground that the same is beyond a period of six years as per the Circular No.9/2015, dt.09.06.2015 is not sustainable under law.
Accordingly, the Hon’ble High Court set aside the impugned order with a direction to the respondents to consider the claim of the petitioner for refund and pass appropriate orders as expeditiously as possible.
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