Relaxation for Processing Delayed ITRs (Filed After Condonation)

CBDT Circular 07/2025: Relaxation for Processing Delayed ITRs (Filed After Condonation)

Background

Under normal conditions, Income Tax Returns (ITRs) filed after the deadline (due date) are not processed unless the delay is condoned under Section 119(2)(b) of the Income-tax Act.

Condonation means the CBDT or authorized authority accepts the reason for delay and allows the return to be filed even after the deadline. However, some of these delayed returns—though condoned—were not processed in time (within the timeframe under Section 143(1)) due to technical/system issues.

Issue Faced

• Taxpayers filed delayed returns after condonation approval under Section 119(2)(b).
• Due to technical glitches, those returns could not be processed in time.
• Result: Taxpayers didn’t receive refunds or any response from the department.
• This led to grievances being filed with the CBDT.

CBDT’s Solution

CBDT has now invoked its powers under Section 119 to relax the time limit for processing these delayed returns.

What is Now Allowed?

Returns of income (valid ITRs) that were:

• Filed electronically,
• On or before 31st March 2024,
• After condonation approval under Section 119(2)(b),
• But not processed due to the lapse of the time limit under Section 143(1),

WILL NOW BE PROCESSED by 31st March 2026.

The tax department will issue 143(1) intimation to such taxpayers within this extended period.

Exceptions: When This Does NOT Apply

If for that same Assessment Year:

• A full assessment under Sections 143(3), 144, 153A, 153C, or
• A reassessment under Sections 147/148, or
• A revision/recomputation has already been completed,

Then this relaxation will NOT apply.

💸 Refunds & Interest

• Once the return is processed, refunds (if due) will be issued with interest as applicable.
• BUT if PAN-Aadhaar linkage is not done, refunds will not be released, as per Circular No. 03/2023.

⚙️ Next Steps by the Department

The DGIT (Systems), Bengaluru will:

• Set up the procedure to process these ITRs.
• Ensure that all such ITRs get their 143(1) intimation by 31st March 2026.

🧾 Summary in Simple Words:

Taxpayers who filed late returns after getting condonation permission (but didn’t get refunds due to non-processing), will now get their returns processed and refunds issued. The deadline for the Income Tax Department to finish this is 31st March 2026.

Circular No. 07/2025

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