Condonation of delays in claiming refunds. - Income Tax - 1867/1990

INSTRUCTION NO. 1867/1990 Dated: November 30, 1990 Reference is invited to the earlier instructions/circulars issued by the Board (copies enclosed) regarding condonation of delays in claiming refunds etc. by invoking the provisions of section 119(2)(b) of the Income-tax Act, specifically the following:- (i) Instruction No.1795 dated 17th August, 1988 and letter No.225/263/88-ITA.II dated 23rd January, 1989 stating that the Assessing Officer shall, before entertaining a belated refund claim, obtain the prior approval of the Commissioner of Income-tax where the refund claim does not exceed Rs.1,000/- and of the Chief Commissioner of Income-tax/Director General of Income-tax where the refund exceeds Rs.1,000/- but does not exceed Rs.10,000/- ; and (ii) Order No.225/201/87/ITA-II dated 5.12.88 clarifying that the Board has delegated the power to condone the delay in case the refund does not exceed Rs.10,000/-, provided the Chief Commissioner of Income-tax/Director General of Income-tax or the Commissioner of Income-tax, as the case may be, is satisfied that the conditions laid down in the various instructions/circulars on the subject are satisfied. However, such delegation was restricted to condonation of delay and not rejection thereof. 2. Some Chief Commissioners have recommended the cases of contractors and other persons engaged in business, who had made applications under section 119(2)(b) of the Income-tax Act for the purpose of claiming refunds of income-tax deducted at source from contract receipts etc. for rejection as they were not satisfied that the income returned by the said persons was full and true or even reasonable considering the extent of profit disclosed. It was also noticed that such persons were not maintaining any books of account and, therefore, the possibility of purposely delaying the filing of the returns so as to avoid scrutiny by the Department could not be ruled out. Needless to say that such cases were not found to be of genuine hardship. 3. The Board has been accepting such recommendations as it would be against public policy to condone such delays thereby giving an extended time to such assessees to manipulate their accounts so as to evade taxes. 4. The Board now desire that the Chief Commissioners/Directors General/Commissioners should not only see that the conditions laid down by the various Board circulars are satisfied, but also look further into the facts of the case and examine the source of income, whether the income has been reflected in other years or not, whether there is any scope for manipulation of accounts due to the delay in filing the claim of refund etc., before applying the provisions of section 119(2)(b) of the Income-tax Act. It is desired that only genuine cases should be considered for the purpose of applying the provisions of section 119(2)(b) of the Act and the applications should not be disposed of in a routine manner. 5. These instructions may be brought to the notice of all officers working in your region.