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What is Section 119(2) (b) of the Income Tax Act, 1961?

The Income Tax Act, 1961, is an important legislation that governs the taxation system in India. It lays down various provisions that guide the taxpayers in fulfilling their tax obligations.

One such provision is Section 119(2) (b), which provides relief to taxpayers who face genuine difficulties in complying with the provisions of the Act. This section empowers the Central Board of Direct Taxes (CBDT) to issue orders to alleviate hardship faced by taxpayers.

In this blog, we will discuss the provisions of Section 119(2) (b) of the Income Tax Act, 1961, and how it benefits taxpayers who are facing difficulties in complying with the provisions of the Act. We will also look at the eligibility criteria, application, and benefits of this section.

Furthermore, we will discuss the relevant case laws and clarifications issued by the Income Tax Department regarding this section. Understanding this provision is crucial for taxpayers as it provides them with much-needed relief in challenging times.

What Is Section 119(2) (B) Of The Income Tax Act, 1961?

Section 119(2) (b) of the Income Tax Act, 1961 is a provision that empowers the Central Board of Direct Taxes (CBDT) to issue orders to alleviate hardship faced by taxpayers who are unable to comply with the provisions of the Act. This section is applicable to all types of taxpayers, including individuals, companies, and partnerships.

The purpose of this section is to provide relief to taxpayers who face genuine difficulties in complying with the provisions of the Act due to reasons beyond their control. The relief may be granted in the form of an extension of the due date for filing tax returns, waiver of interest or penalty, or any other relief that the CBDT deems fit.

However, to avail the benefits of this section, the taxpayer must satisfy the conditions laid down by the CBDT. The provision of Section 119(2) (b) is important as it helps taxpayers who are facing hardships in complying with the tax provisions and ensures that the taxpayers are not unduly burdened with penalties and interest charges.

Objectives Of Section 119(2) (B)

Section 119(2) (b) of the Income Tax Act, 1961 is designed to alleviate hardship faced by taxpayers who are unable to comply with the provisions of the Act. The objectives of this section are as follows:

  1. To provide relief to taxpayers who face genuine difficulties in complying with the provisions of the Act.
  2. To ensure that taxpayers are not unduly burdened with penalties and interest charges.
  3. To promote compliance with the provisions of the Act by providing relief to taxpayers who are facing genuine difficulties.

Types Of Taxpayers Eligible For Section 119(2) (B)

Section 119(2) (b) is applicable to all types of taxpayers, including individuals, companies, and partnerships. The following types of taxpayers are eligible for relief under this section:

  1. Taxpayers who are facing genuine difficulties in complying with the provisions of the Act due to reasons beyond their control.
  2. Taxpayers who are facing financial hardships and are unable to pay the tax due on time.
  3. Taxpayers who are unable to file their tax returns on time due to genuine reasons, such as illness, accidents, or natural calamities.

In order to be eligible for relief under Section 119(2) (b), the taxpayer must satisfy the conditions laid down by the CBDT. These conditions may include the submission of a written application for relief, the payment of a minimum amount of tax, and the submission of necessary documents to support the claim of hardship. The CBDT may grant relief in the form of an extension of the due date for filing tax returns, waiver of interest or penalty, or any other relief that it deems fit.

Application Of Section 119(2) (B)

Section 119(2) (b) of the Income Tax Act, 1961 provides relief to taxpayers who face genuine difficulties in complying with the provisions of the Act. This section is applicable in the following situations:

Situations Where Taxpayers Can Claim Benefits Under This Section

  1. When a taxpayer is unable to pay the tax due on time due to financial hardships.
  2. When a taxpayer is unable to file the tax returns on time due to genuine reasons, such as illness, accidents, or natural calamities.
  3. When a taxpayer is unable to comply with the provisions of the Act due to reasons beyond their control, such as a change in the law or an administrative error.

Conditions To Be Met Before Claiming Benefits Under This Section

In order to claim relief under Section 119(2) (b), the taxpayer must satisfy the following conditions:

  1. The taxpayer must submit a written application for relief to the concerned tax authority.
  2. The taxpayer must pay the minimum amount of tax due as per the provisions of the Act.
  3. The taxpayer must provide necessary documents to support the claim of hardship.

Procedures To Be Followed For Availing Benefits Under This Section

The following procedures must be followed for availing benefits under Section 119(2) (b):

  1. The taxpayer must submit a written application for relief to the concerned tax authority.
  2. The taxpayer must provide necessary documents to support the claim of hardship.
  3. The tax authority will examine the application and documents submitted by the taxpayer.
  4. If the tax authority is satisfied that the taxpayer is facing genuine difficulties in complying with the provisions of the Act, it may grant relief in the form of an extension of the due date for filing tax returns, waiver of interest or penalty, or any other relief that it deems fit.

Overall, taxpayers who are facing genuine difficulties in complying with the provisions of the Income Tax Act, 1961, can avail relief under Section 119(2) (b) by following the procedures laid down by the CBDT and satisfying the conditions for claiming relief. This provision helps to alleviate hardships faced by taxpayers and promotes compliance with the provisions of the Act.

Benefits Under Section 119(2) (B)

Section 119(2)(b) of the Income Tax Act, 1961, empowers the Central Board of Direct Taxes (CBDT) to issue orders and guidelines for the proper administration of the Income Tax Act. The benefits under Section 119(2)(b) can include:

  1. Relief in cases of genuine hardship: The CBDT can issue orders to provide relief to taxpayers who may be facing genuine hardship due to the strict application of tax provisions. This could involve granting extensions for filing tax returns, allowing for a waiver of penalties or interest in certain cases, or providing specific exemptions or deductions.
  2. Clarifications and guidance: The CBDT can issue orders to provide clarifications and guidance on the interpretation and application of various provisions of the Income Tax Act. This helps taxpayers and tax authorities in understanding the law and its practical implications.
  3. Consistency in tax administration: By issuing orders and guidelines, the CBDT aims to ensure uniformity in the application of tax laws across the country. This consistency helps in reducing confusion and ensuring that taxpayers are treated fairly and equitably.
  4. Time-bound processes: The CBDT can issue orders to specify time-bound processes for tax-related activities, such as the processing of tax returns, issuance of refunds, or conducting tax assessments. This can help streamline tax administration and improve efficiency.
  5. Relaxation of procedural requirements: In certain cases, the CBDT may relax procedural requirements to make compliance with tax laws more straightforward. This can benefit taxpayers by reducing the burden of compliance.

It’s important to note that the specific benefits provided under Section 119(2)(b) can vary depending on the circumstances and the guidance issued by the CBDT. Taxpayers should refer to the CBDT’s circulars, notifications, and orders for detailed information on the benefits and relief measures available under this section.

Types Of Benefits Under Section 119(2) (B)

Under Section 119(2)(b) of the Income Tax Act, 1961, the Central Board of Direct Taxes (CBDT) can issue orders and guidelines to provide various types of benefits to taxpayers and ensure the proper administration of the Income Tax Act. These benefits can include:

  1. Relief from penalties and interest: The CBDT can issue orders to grant relief from penalties or interest that taxpayers may have incurred due to non-compliance with tax provisions. This relief is often provided in cases of genuine hardship.
  2. Extension of due dates: The CBDT can extend the due dates for various tax-related activities, such as filing income tax returns, filing tax audit reports, or making specific tax-related submissions. These extensions can provide taxpayers with more time to fulfill their obligations.
  3. Exemptions and deductions: The CBDT may issue orders to provide exemptions or deductions from taxable income in specific cases. These exemptions and deductions can reduce the overall tax liability of taxpayers.
  4. Guidance on tax provisions: The CBDT can issue orders to provide guidance and clarification on the interpretation and application of tax provisions. This helps taxpayers and tax authorities understand how specific provisions should be applied.
  5. Consistency in tax administration: Orders issued under this section aim to ensure uniformity in the application of tax laws across the country, reducing disparities in tax treatment.
  6. Simplification of procedures: The CBDT may relax or simplify procedural requirements to make it easier for taxpayers to comply with tax laws. This can include simplifying the process of filing returns or making tax payments.
  7. Tax refunds: The CBDT can issue orders to streamline and expedite the process of issuing tax refunds to eligible taxpayers, ensuring they receive their refunds in a timely manner.
  8. Addressing specific issues: Orders may be issued to address specific issues or challenges that taxpayers or tax authorities encounter, such as those related to tax assessments, deductions, or exemptions.

It’s important to note that the specific benefits provided under Section 119(2)(b) can vary depending on the circumstances and the guidance issued by the CBDT. Taxpayers should refer to the CBDT’s circulars, notifications, and orders for detailed information on the benefits and relief measures available under this section.

Calculation Of Benefits Under Section 119(2) (B)

The benefits under Section 119(2)(b) of the Income Tax Act, 1961, are typically provided through orders, instructions, or guidelines issued by the Central Board of Direct Taxes (CBDT). The calculation of these benefits is not always straightforward, as they can vary depending on the specific circumstances and the guidance issued by the CBDT. The CBDT’s orders often specify the conditions and calculations for the benefits provided. Here are a few examples of how benefits might be calculated:

  1. Relief from penalties or interest: If the CBDT provides relief from penalties or interest, the calculation would depend on the specific penalty or interest amount, the period for which relief is granted, and the conditions outlined in the CBDT’s order. Typically, the relief is expressed as a percentage of the penalty or interest amount.
  2. Extension of due dates: The calculation for this benefit is usually straightforward. The CBDT would specify the extended due dates for various tax-related activities, such as filing tax returns. Taxpayers need to ensure they meet the extended deadlines to avail of this benefit.
  3. Exemptions and deductions: The calculation of benefits related to exemptions and deductions depends on the specific tax provision and the conditions mentioned in the CBDT’s order. For example, if a taxpayer is eligible for a specific exemption, the benefit would be the amount of income exempted from taxation.
  4. Tax refunds: If the CBDT issues orders to streamline the process of tax refunds, the calculation typically involves the regular assessment of tax liability, any tax overpaid, and the processing time required for the refund to be issued. The benefit is receiving the refund in a more timely manner.
  5. Simplification of procedures: This benefit does not involve a specific numerical calculation but aims to simplify the administrative processes, making it easier for taxpayers to comply with tax laws.
  6. Addressing specific issues: When the CBDT issues orders to address specific issues, the benefit calculation would depend on the nature of the issue and the relief or guidance provided in the order. It may involve specific calculations or conditions outlined in the order.

To calculate the benefits under Section 119(2)(b), taxpayers and tax professionals should refer to the relevant CBDT circulars, notifications, and orders for detailed information on the specific benefits, their conditions, and any applicable calculations. It’s important to understand that the calculation of benefits can vary from one situation to another, so it’s crucial to follow the guidance provided by the CBDT.

Eligibility Criteria For Benefits

In order to be eligible for relief under Section 119(2) (b), the taxpayer must satisfy the following criteria:

  1. The taxpayer must be facing genuine difficulties in complying with the provisions of the Act due to reasons beyond their control.
  2. The taxpayer must have paid the minimum amount of tax due as per the provisions of the Act.
  3. The taxpayer must submit a written application for relief to the concerned tax authority.
  4. The taxpayer must provide necessary documents to support the claim of hardship.

Overall, Section 119(2) (b) of the Income Tax Act, 1961 provides relief to taxpayers who face genuine difficulties in complying with the provisions of the Act. The benefits provided under this section include an extension of the due date for filing tax returns and waiver of interest or penalty. The amount of relief granted may vary from case to case, and the taxpayer must satisfy the eligibility criteria laid down by the CBDT to avail of these benefits.

Relevant Case Laws And Clarifications

Section 119(2) (b) of the Income Tax Act, 1961 has been subject to various case laws and clarifications issued by the Income Tax Department. Some of these are as follows:

Case Laws On Section 119(2) (B)

  1. CIT v. Rohini Builders: In this case, the Bombay High Court held that the CBDT can extend the time limit for filing returns under Section 119(2) (b) of the Act, but it cannot waive off the mandatory requirement of filing the return.
  2. Commissioner of Income Tax v. SMS Pharmaceuticals Ltd: In this case, the Andhra Pradesh High Court held that the power to grant relief under Section 119(2) (b) is discretionary, and the taxpayer must establish that there are genuine and compelling reasons for granting relief.
  3. Commissioner of Income Tax v. A.C.C. Ltd: In this case, the Delhi High Court held that the power to grant relief under Section 119(2) (b) is vested with the CBDT, and the courts cannot interfere with the discretionary power of the tax authority.

Clarifications Issued By The Income Tax Department

The Income Tax Department has also issued various clarifications with regard to Section 119(2) (b) of the Income Tax Act, 1961. Some of these are as follows:

  1. The taxpayer must provide necessary documents to support the claim of hardship while applying for relief under Section 119(2) (b).
  2. The tax authority must exercise the power to grant relief under Section 119(2) (b) judiciously and ensure that it does not result in undue hardship to the taxpayer or loss of revenue to the government.
  3. The relief granted under Section 119(2) (b) cannot be arbitrary, and the tax authority must provide reasons for granting or rejecting the relief.

In summary, Section 119(2) (b) of the Income Tax Act, 1961 has been subject to various case laws and clarifications issued by the Income Tax Department. Taxpayers and tax authorities must be aware of these case laws and clarifications to ensure that the provisions of the Act are complied with, and relief is granted only in genuine cases of hardship.

Conclusion

Section 119(2) (b) of the Income Tax Act, 1961 provides relief to taxpayers who face genuine difficulties in complying with the provisions of the Act. The benefits provided under this section include an extension of the due date for filing tax returns and waiver of interest or penalty. The amount of relief granted may vary from case to case, and the taxpayer must satisfy the eligibility criteria laid down by the CBDT to avail of these benefits.

The section has been subject to various case laws and clarifications issued by the Income Tax Department, which provide guidance to taxpayers and tax authorities on the application of this section. It is important for taxpayers and tax authorities to be aware of these case laws and clarifications to ensure that the provisions of the Act are complied with and relief is granted only in genuine cases of hardship.

Overall, Section 119(2) (b) provides a mechanism for taxpayers to seek relief in cases of genuine hardship, thereby ensuring fairness and equity in the administration of the Income Tax Act, 1961.