CBDT Extends Processing Of Conditionally Accepted Delayed ITRs Amid Technical Glitches: When Can Taxpayers Expect Refunds?

The Central Board of Direct Taxes (CBDT) recently extended the time limit to process some valid income tax returns that were filed under Section 119(2)(b) of the Income Tax Act, which condoned the delay in filing income tax returns (ITR). The delay, which happened due to technical glitches, will bring relief for taxpayers who have been waiting for their refunds.

In a circular issued on June 25, 2025, the CBDT clarified that all electronically filed returns submitted up to March 31, 2024, which were accepted u/s 119(2)(b), will now be processed, even if the usual time limit for sending intimation under Section 143(1) has lapsed.

Why are these returns delayed?

Explains CA Ashish Niraj, Partner, A S N & Company, Chartered Accountants, “Many taxpayers had filed their ITR on the basis of order u/s 119(2)(b) of the Income Tax Act 1961 condoning delay in filing of return but were eagerly waiting for their ITR to get processed. It was a delay on part of the department due to technical glitch.”

“This circular will bring relief to all such taxpayers. The circular states that all valid returns of income filed electronically on or before 31.03.2024 (March 31, 2024) which is not processed yet will be processed now and its intimation shall be sent by 31.03.2026 (31 March 2026) - meaning thereby the circular is for date extension.”

This essentially means that taxpayers whose returns were delayed but accepted by the tax department under genuine circumstances can finally expect their returns to be taken up for processing.

The deadline to send the processing intimation has been extended to March 31, 2026.

Is this a blanket extension?

This is not a blanket extension on all returns filed on the basis of order u/s 119(2)(b). “All such cases where any proceedings for assessment (u/s 143(3)/144/144B/153A/153C ) Re-assessment under section 147 or 148 or recomputation/revision has been completed for relevant assessment year subsequent to filing of such return of income, will not get benefit of this circular,” CA Niraj states.

To put simply, CBDT has made it clear that if assessment, reassessment, recomputation, or revision proceedings have already been completed for that assessment year, the return will not be reprocessed. In other words, if the tax department has already taken a final view on the case, this relaxation does not override that.

Also, taxpayers whose PAN is not linked with Aadhaar will not receive any refund, even if their return is processed.

Technical Glitches Affecting Refunds

The Income Tax Department had faced several operational issues over the last few years.

According to CA Niraj, these glitches in the income tax portal have affected not just taxpayers, but also tax professionals and department officials, causing bottlenecks in return processing.

As per the latest release, the department has tasked the Director General of Income-tax (Systems), Bengaluru with laying down the procedure for processing these condoned returns. This is to ensure a standardised approach and that the deadline for sending out intimation letters is met.

Last year, the board also capped the timeline for condonation applications; no such application can be entertained beyond five years from the end of the relevant assessment year, for filings made on or after October 1, 2024.

With this extension, the department aims to clear long-pending cases where taxpayers were otherwise eligible for refunds but caught in procedural or technical bottlenecks.