The Central Board of Direct Taxes (CBDT) has issued Circular No. 07/2025, dated June 25, 2025, extending the time limit for processing income tax returns (ITRs) filed with condonation of delay under Section 119(2)(b) of the Income-tax Act, 1961.
The circular addresses grievances where valid returns filed electronically-after being condoned by the competent authority-could not be processed within the prescribed time under the second proviso to Section 143(1) due to technical issues. As a result, affected taxpayers have been unable to receive their refunds.
Key Highlights of the Circular
- Extended Processing Deadline: The CBDT has now directed that valid delayed returns filed electronically on or before March 31, 2024, and condoned under Section 119(2)(b), may be processed, and intimations under Section 143(1) can be issued by March 31, 2026.
- Applicability: This relaxation applies only to cases where no assessment, reassessment, recomputation, or revision proceedings have been completed for the relevant assessment year after the filing of such returns.
- Refund Conditions: Any refund due will follow standard provisions, including applicable interest. However, refunds will not be processed where PAN-Aadhaar linkage is not found, in accordance with CBDT Circular No. 03/2023 dated March 28, 2023.
- Implementation Oversight: The Director General of Income-tax (Systems), Bengaluru, will specify procedures to ensure timely processing and issuance of intimations.
The circular cites earlier relevant instructions, including CBDT Circulars No. 09/2015, 07/2023, and 11/2024, as the basis for identifying condoned ITRs.
Implications for Taxpayers
This relaxation is a significant step for taxpayers who had their delayed returns condoned but faced undue hardship due to system-related delays. It ensures they receive their rightful refunds and brings clarity to the processing timelines.
Taxpayers are advised to ensure PAN-Aadhaar linkage and monitor their communication from the IT Department for updates on the processing of such returns.
Official copy of the circular has also been attahced
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