CBDT Grants Relief for Processing Electronically Filed ITRs with Refund Claims Beyond Prescribed Time in Non-Scrutiny Cases

On March 1, 2024, the Central Board of Direct Taxes (CBDT) issued an important order addressing the processing of income tax returns (ITRs) electronically filed with refund claims under section 143(1) of the Income-tax Act, 1961, extending beyond the prescribed time limits in non-scrutiny cases.

The CBDT observed instances where certain returns for the assessment year (AY) 2021-22, validly filed electronically under sections 139, 142, or 119 of the Income-tax Act, 1961, encountered technical issues or faced delays not attributed to the taxpayers. Consequently, the processing of these returns under section 143(1) couldn’t be completed within the stipulated timeframe, depriving taxpayers of their legitimate refunds as per the Act.

In response to this situation, the CBDT, leveraging its powers under section 119 of the Act, decided to alleviate genuine hardships faced by taxpayers. The Board relaxed the time-frame prescribed in the second proviso to sub-section (1) of section 143, enabling the processing of all electronically filed income tax returns for AY 2021-22 with refund claims, for which the deadline for sending intimation under sub-section (1) of section 143 had lapsed. However, this relaxation is subject to prior administrative approval from the Principal Chief Commissioner of Income Tax (Pr.CCIT)/Chief Commissioner of Income Tax (CCIT) concerned. Intimations of such processing will be dispatched to the respective taxpayers by April 30, 2024.

Subsequent procedures under the Act, including the issuance of refunds, will follow the prescribed protocols. To ensure procedural integrity, once administrative approval is granted by the Pr.CCIT/CCIT, the Principal Commissioner of Income Tax (Pr.CIT)/Commissioner of Income Tax (CIT) concerned will refer to the Director General of Income Tax (Systems) for necessary enablement to the Assessing Officer on a case-to-case basis. The progress of case disposal will be closely monitored by the respective Pr.CIT/CIT.

However, certain exceptions are excluded from this relaxation:

a) Returns selected for scrutiny;

b) Returns remaining unprocessed where either demand is indicated as payable or likely to arise post-processing;

c) Returns remaining unprocessed for reasons attributable to the assessee.