By CA Surekha Ahuja
Section 119(2)(b), “Genuine Hardship”, Delayed Income-tax Return Relief, NRI Refund Claims and Procedural Preservation of Tax Rights
Tax controversy in India frequently turns not on the allowability of a claim, but on the timeliness of its assertion. A refund may be legally due, A loss may be legally determinable, A deduction may be legally admissible.
A treaty claim may be legally available. Yet each of these may become procedurally unenforceable if the statutory mechanism for claiming them is not exercised within the prescribed time.
This is the precise legislative context in which Section 119(2)(b) of the Income-tax Act, 1961 assumes significance. Section 119(2)(b) operates as a statutory remedial jurisdiction enabling condonation of delay where procedural limitation threatens substantive tax entitlement and where refusal to admit the claim would result in genuine hardship.
In practical terms, it is the principal statutory mechanism for condonation of delay in income-tax refund claims, delayed return-based loss claims, delayed deduction claims and delayed treaty-based tax relief claims.
Its significance has now been materially strengthened by the Bombay High Court in Eksons (P.) Ltd. v. Chief Commissioner of Income-tax (17.03.2026), where internal management disputes and corporate governance deadlock were recognised as constituting genuine hardship for the purpose of Section 119 condonation.
The judgment marks an important shift. It expands the law of condonation from personal hardship jurisprudence to institutional incapacity jurisprudence.
This article examines the legal scope of Section 119 condonation of delay, the evolving judicial position, NRI tax refund implications, practical application strategy and the corresponding legislative transition under Section 239 of the Income-tax Act, 2025.
Section 119(2)(b): Statutory Jurisdiction for Condonation of Delay in Refund Claims, Loss Claims and Delayed Tax Relief Applications
Section 119 vests the Central Board of Direct Taxes with administrative supervisory powers for proper implementation of the Act.
However, its practical significance lies in sub-section (2), particularly clause (b).
Section 119(2)(b) empowers the Board to authorise admission of an application or claim after expiry of the prescribed statutory period where such delayed admission is justified by genuine hardship.
This jurisdiction is exceptional, but not discretionary in an arbitrary sense.
It is a statutory corrective mechanism intended to prevent procedural limitation from producing substantive tax injustice.
The provision becomes relevant where:
- the underlying tax claim is otherwise valid in law;
- the statutory limitation period has expired; and
- the taxpayer establishes genuine hardship causing the delay.
This framework is central to delayed income-tax refund condonation and delayed return relief.
Section 239 of the Income-tax Act, 2025: Legislative Continuity of Section 119 Relief Framework
Under the new Income-tax Act, 2025, the administrative and procedural relief framework earlier structured under Section 119 has been legislatively reorganised under Section 239.
The statutory architecture has changed. The remedial philosophy remains intact.
Comparative legal position
| Particulars | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
| Administrative jurisdiction of CBDT | Section 119 | Section 239 |
| Condonation of delay jurisdiction | Section 119(2)(b) | Corresponding relief framework under Section 239 |
This legislative shift is important for tax practitioners.
Condonation applications must be aligned to the governing statute based on the relevant tax period.
Incorrect statutory mapping weakens professional drafting.
Scope of Section 119 Condonation of Delay: Not Restricted to Income-tax Refund Claims
One of the most frequent professional misconceptions is to restrict Section 119 condonation only to refund claims. That understanding is incomplete.
The scope of Section 119(2)(b) extends to any substantive tax relief which fails procedurally on account of limitation. This includes:
| Type of tax claim | Whether condonation may apply |
|---|---|
| Income-tax refund claims | Yes |
| Carry-forward of business loss | Yes |
| Carry-forward of capital loss | Yes |
| Delayed deduction claims | Yes |
| Delayed exemption claims | Yes |
| DTAA relief claims | Yes |
| Foreign tax credit claims | Yes |
The legal test is not the category of claim. The legal test is whether substantive entitlement survives and procedural delay alone obstructs its assertion. That distinction is foundational.
Meaning of “Genuine Hardship” under Section 119(2)(b): Legal Threshold and Practical Interpretation
The expression “genuine hardship” is the jurisdictional foundation of Section 119 condonation.
The Act does not define it.
Its content therefore emerges through judicial interpretation. The phrase must be understood strictly, but reasonably.
Hardship does not mean inconvenience. Hardship does not mean omission through indifference.
Hardship does not mean routine negligence. It refers to a real, bona fide and factually demonstrable inability to comply within time.
Professionally, the test may be structured as follows:
| Legal test | Professional relevance |
|---|---|
| Was there a valid tax claim? | Foundational requirement |
| Was the claim time-barred? | Jurisdictional trigger |
| Was there genuine hardship? | Relief basis |
| Was taxpayer conduct bona fide? | Credibility factor |
| Did hardship cause delay? | Decisive factor |
The fifth factor—causal nexus—is the most important.
Bombay High Court in Eksons (P.) Ltd.: Expansion of Section 119 Jurisprudence
The Bombay High Court ruling in Eksons (P.) Ltd. v. Chief Commissioner of Income-tax materially strengthens Section 119 condonation jurisprudence.
The factual matrix was commercially significant. Internal disputes among directors resulted in governance paralysis.
Financial statements could not be finalised, Board approvals were stalled, Audit closure became impossible, the dispute had escalated before the National Company Law Tribunal.
The inability to complete statutory return filing was therefore directly linked to institutional incapacity.
The department rejected condonation, The High Court reversed the departmental view.
It directed reopening of the filing portal and permitted return filing under Section 139(4).
Legal ratio emerging from Eksons
The judgment establishes three important principles:
Institutional incapacity constitutes genuine hardship
Hardship is not restricted to personal disability.
Corporate governance paralysis may equally qualify.
Past compliance conduct affects condonation credibility
A taxpayer with established compliance history is better placed to establish bona fide conduct.
Procedural law cannot mechanically defeat substantive rights
Where the delay is supported by genuine factual impossibility, procedural limitation must yield to substantive justice.
This is the most important practical takeaway from Eksons.
Causal Nexus under Section 119: The Decisive Test in Condonation of Delay
Section 119 relief does not operate merely because hardship exists.
It operates where hardship caused delay. That distinction is critical. A board dispute, by itself, is not enough.
A board dispute preventing financial finalisation, delaying audit closure and disabling statutory filing creates the legal causation required for condonation. This causal nexus must be clearly documented.
Professionally, weak condonation applications usually fail on causation. Not on hardship.
Section 119 for NRI Income-tax Refund Claims: Why Delayed Return Relief Becomes Critical
Section 119 condonation assumes greater significance for NRIs because of source-based tax deduction structures.
In many NRI cases, tax is deducted at domestic rates.
However, final tax liability may be lower under the applicable Double Taxation Avoidance Agreement.
This creates excess withholding.
That excess becomes refundable only through return filing.
If return filing is delayed, the refund claim becomes procedurally vulnerable.
Section 119 therefore becomes the principal remedy.
Common NRI scenarios include:
| Income source | Practical tax issue |
|---|---|
| Bank deposits | Excess TDS |
| Rental income | Higher withholding than actual tax liability |
| Investment income | Treaty rates ignored |
| Capital gains | Incorrect withholding computation |
For NRIs, Section 119 condonation often directly determines tax refund recovery.
NRI Tax Refund Strategy: Professional Compliance Protocol
Tax refund delays for NRIs are frequently procedural.
A structured compliance protocol reduces litigation.
Tax credit reconciliation
Before filing, reconcile:
- Form 26AS
- AIS
- TIS
Mismatch remains a primary cause of CPC delay.
DTAA documentation
Maintain:
| Document | Importance |
|---|---|
| Tax Residency Certificate | Mandatory |
| Form 10F | Procedural support |
| Treaty position disclosure | Legal basis |
Incomplete documentation weakens refund claims.
Bank validation & E - Verification
Refund release depends on pre-validated bank details.
This is an operational requirement.
A filed but unverified return remains incomplete.This is one of the most frequent refund-processing failures.
Section 119 Condonation vs Updated Return under Section 139(8A): Strategic Distinction
Section 119 and updated return operate differently.
Professionals must not confuse them.
| Basis | Section 119 | Updated Return |
|---|---|---|
| Nature | Remedial jurisdiction | Corrective jurisdiction |
| Objective | Preserve substantive right | Correct omitted disclosure |
| Refund claim | Permissible | Restricted |
| Additional tax cost | Generally absent | Applicable |
| Genuine hardship required | Yes | No |
Where the issue concerns delayed assertion of an existing tax right, Section 119 is generally the proper route.
Where omitted income is being corrected, updated return applies.
This distinction materially affects tax cost.
Documentation Checklist for Section 119 Condonation of Delay
The following should ordinarily be maintained:
- computation of income
- Form 26AS
- AIS/TIS reconciliation
- financial statements
- board resolutions or minutes
- auditor communications
- NCLT documents (where relevant)
- medical documents (where relevant)
- affidavit in support
In condonation litigation, documentation is the strongest legal asset.
Conclusion: Section 119 Is the Statutory Defence against Procedural Forfeiture of Tax Rights
Section 119(2)(b) remains one of the most important procedural relief provisions under Indian tax law.
Its successor framework under Section 239 of the Income-tax Act, 2025 preserves that legislative intent.
Its role is not to dilute procedural discipline.
Its role is to prevent procedural limitation from destroying substantive tax rights where delay is attributable to genuine hardship.
The Bombay High Court in Eksons (P.) Ltd. has materially expanded this jurisprudence by recognising institutional incapacity as a valid ground for condonation.
That principle has important implications for corporate taxpayers, NRI tax refund claims and professional advisory strategy.
Tax professionals advising on delayed income-tax refund claims, delayed return loss claims or delayed treaty relief claims should examine Section 119 condonation before concluding statutory forfeiture.
Because in tax practice, procedural limitation does not always terminate substantive entitlement.
In appropriate cases, Section 119 preserves it.
