Income Tax Update: CBDT Relaxes Time Limit for Processing Valid Returns Filed Electronically pursuant to orders u/s 119(2)(b) [Read Circular]

The Central Board of Direct Taxes ( CBDT ) has issued Circular No. 07/2025 dated 25th June 2025, relaxing the time limit for processing valid income tax returns filed electronically pursuant to condonation orders under section 119(2)(b) of the Income-tax Act, 1961.

The move comes in response to grievances from taxpayers whose delayed returns, although condoned, could not be processed within the time frame prescribed under the second proviso to section 143(1) due to technical issues, resulting in pending refunds.

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CBDT has now directed that all such valid returns filed electronically on or before 31st March 2024, and where the time limit to issue intimation under section143(1) has expired, shall be processed. The intimation must be issued to the concerned assessees by 31st March 2026.

“The matter has been considered by the Board and it has been decided to relax the time-frame prescribed in second proviso to sub-section (1) of section 143 of the Act in exercise of its powers under section 119 of the Act, and directs that valid returns of income filed electronically on or before 31.03.2024 pursuant to condonation of delay ufs 119(2)(b) of the Act by the competent authority, for which date of sending intimation under sub-section (1) of section 143 of the Act has lapsed, shall be processed now. Accordingly, intimation under sub-section (1) of section 143 of the Act in respect of processing of such ITRs shall be sent to the assessees concerned by 31.03.2026” said the department in its circular.

However, this relaxation will not apply to cases where assessment, reassessment, recomputation, or revision proceedings have already been completed for the relevant assessment year.

Additionally, refunds will not be issued in cases where PAN is not linked with Aadhaar, in accordance with Circular No. 03/2023 dated 28.03.2023.

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The Director General of Income-tax (Systems), Bengaluru has been tasked with specifying the procedures to ensure timely processing of such returns. It is anticipated that this change will make it easier to issue outstanding refunds and provide complying taxpayers with procedural relief.

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