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Carry Forward of Losses or Refund Even If No Return Was Filed or Filed Late

CIRCULAR 9/2015 [F.NO.312/22/2015-OT], DATED 9-6-2015 is CBDT’s circular regarding condoning of delay in claiming refund & carry forward of loss
For many reasons, a person may forget to file a tax return within the stipulated period or even if income tax return filing is done, he files return of income late or forgets to claim a refund of tax that is legally allowable.
It is well known that filing late return will result in loss of carry forward of losses (business or capital loss) . This is due to combine section 80 of the Income Tax Act and Section 157 of the Income Tax (IT) Act, 1961 which provides for two conditions (given below) to be satisfied before business or capital loss is allowed to be carried forward : 
1. the return of loss must be submitted on or before the due date.
2. The loss has been determined by the assessing officer (AO)
Now, if either return is filed late or not filed at all during the allowed time ( one year from the end of the assessment year), your chance of the carry forward of capital or business loss or refund will be lost.
Good News! Loss or Refund Allowed in Genuine Case


But, the good news is that legislature has provided powers u/s 119(2) with CBDT to mitigate the hardship of taxpayers. CBDT has delegated the power u/s 119(2)(b) with local tax authorities like Chief Commissioner or Commissioner of Income Tax. It has been provided that under certain conditions, these tax authorities can condone the delay in filing of the return and allow the claim of refund and carry forward of losses .
Condition for Condoning Delay in Filing of Return


CBDT issued circular no 8/2001 by which it was clarified that delay in filing of tax return can be condoned even if the claim if for carry forward of loss. Further, CBDT issued Instruction No. 13/2006, dated 22-12-2006 by which the a number of conditions were added and the delegation to consider higher amount of the refund claim were distributed among Board,CCIT & CIT. A combined reading of all circular provides following important points :
  • About Carry Forward of Losses Claim
1. The claim of carry forward of loss or refund both can be there for condoning delay in filing of the return.
2. There is no limit of amount as far as carry forward of losses are considered.
  • About Refund claim
1. Refund claim can be made up to six years from the end of assessment assessment year for which refund pertains.
2. The refund has arisen as a result of excess tax deducted/ collected at source and payments of advance tax under the provisions of Chapter XVIIB, XVIIBB and XVII-C respectively
3. The income of the assessee is not assessable in the hands of any other person under any of the provisions of the Act; and
4. No interest will be admissible on the belated refund claims.
5. The power to condone delay in filing of return for refund claim are delegated as under:
6. CIT- up to Rs 10 Lakh
7. CCIT- Between 10 to 50 Lakh
8. CBDT , beyond Rs 50 lakh
Please note that in case of the refund claim, the CCIT/CIT may direct the A.O to scrutinize the return for which he is condoning the delay.
Case Laws on Condoning Delay in Filing of Return


Division Bench of Karnataka High court in the case of Mysore Sales International Ltd. v. Member (Income-tax), CBDT [1998] 233 ITR 663/[1998] 101 Taxman 614 held as under :
Held, that the Central Board of Direct Taxes has sufficient powers under section 119(2)(b) of the Income-tax Act, 1961, to consider the desirability or expediency of granting relief under the Act, even after the expiry of the period of limitation provided under any specific provision and dispose of the matter on the merits in accordance with law, provided it is intended for avoiding genuine hardship in a given case. From the order passed by the Central Board of Direct Taxes, its attention was not drawn to the provisions of section 119(2)(b) and, therefore, it had failed to apply itself to this benevolent provision. The order passed by the Central Board of Direct Taxes was liable to be quashed.
The same decision was followed by Karnataka High Court to give verdict in favour of assessee in R.N. Shetty Trust vs Secretary , CBDT 343 ITR 294 (Kar]
Conclusion on Getting Forgotten Refund or Carry Forward of Losses

First of all the relief allowed u/s 119(2)(b) is for tax payers who have genuinely suffered for unavoidable circumstance. If you have genuine reason for which either return was filed after the last date of filing return  or no return was filed, and you missed the claim of refund or carry forward of loss , you should file an application to the  Commissioner of Income Tax who has jurisdiction over you.

1. There is no prescribed form for application u/s 119(2)(b)
2. If application is rejected , do not apply to Tribunal , but apply to CBDT as it has been held in a number of cases that the order u/s 119(2)(b) is an administrative order.
3. In the application , foremost ground is genuine application, so describe properly all the circumstances which led to non filing or late filing of return