Pending non-scrutiny I-T returns with refund claims to be processed by Oct 31

The Income Tax Department has reopened the window for processing pending returns with refund claims. These returns are for up to Assessment Year 2017-18 (fiscal year 2016-17). However, this will not cover returns selected in scrutiny.

It has been decided to intimate the assessees about processing of such returns by October 31, the department said in an order issued on Friday. The order will not be applicable to returns — selected for scrutiny, returns remain unprocessed as there is demand or possibility of demand and returns remain unprocessed for any reason attributable to assessee.

Income Tax has a concept called ‘Time Barred.’ This means after a particular time line, the application will not be taken up for further action. Accordingly, a particular section (143) of Income Tax Act says that intimation regarding processing of income tax needs to be sent before the expiry of one year from the end of the financial year in which the return is made. The tax department admitted that due to certain technical glitches or for the other reasons not attributable to the assessees concerned, several returns for various Assessment Years up to the Assessment Year 2017-18 could not be processed and consequently intimations could not be sent within the time period.

“This has led to a situation where the taxpayer is unable to get his legitimate refund in accordance with provision of Act, although the delay is not attributable to him,” the order said. Keeping this in mind, an order was issued on August 5, 2019 to process such refunds by December 31, 2019. However, the matter is yet to be resolved completely prompting the Income Tax Department to reconsider its decision.

Accordingly, the department decided to process pending returns with prior administrative approvals of Principal Chief Commissioner of Income Tax/Chief Commissioner of Income Tax concerned. To ensure adequate safeguards, it has also been decided that post approval by top official, a reference would be made to Principal Director General of Income Tax (System) to provide necessary enablement to the Assessing Officer on a case to case basis.

Shailesh Kumar , Partner at Nangia & Co LLP, said : “This is a welcome step from the Government, which will not only allow taxpayers to receive their legitimate refunds, but more importantly help them improve their liquidity in these stressed times due to Covid-19.”

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