The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the Income Tax Department cannot deny a legitimate refund merely because an income tax return was e-verified after the prescribed time if the delay has already been condoned by the Central Processing Centre (CPC). According to reports from Mint, the tribunal observed that retaining such tax despite there being no tax liability would be contrary to Article 265 of the Constitution, which states that no tax shall be levied or collected except by authority of law. The ruling was delivered on the specific facts of the case, where the taxpayer had filed the return within the statutory due date and the delay in e-verification had already been condoned by the CPC.
The case involved a Delhi taxpayer who filed his income tax return for Assessment Year 2015-16 under Section 139(1) on September 3, 2015. As reported by Mint, he declared nil taxable income after setting off current-year losses, unabsorbed depreciation and brought-forward losses, and claimed a refund of about ₹17.08 lakh, primarily on account of tax deducted at source (TDS) from rental income. The taxpayer, identified as Bhatia, a resident of Westend Colony in New Delhi, received ₹1.42 crore in rental income from various properties he owned. He could not complete the mandatory e-verification within the prescribed time due to caring for his 83-year-old father who required repeated hospitalisation. He subsequently filed a condonation request before the CPC, which was accepted, and the return was eventually e-verified on February 16, 2018.
Allowing the appeal, the Delhi ITAT noted that there was no dispute that TDS had been deducted from the taxpayer's rental income and that the credit was available in the department's records. According to Mint, the tribunal observed that the delay in e-verification had already been condoned by the CPC, and therefore the Revenue could not continue to deny the refund on the very procedural ground that had already been condoned. The bench further held that refusing to grant the refund despite there being no tax liability would amount to unjust enrichment by the Revenue. The tribunal stated that under Article 265 of the Constitution of India, no tax shall be levied or corrected except with the authority of law. In view of the constitutional mandate, as enshrined in Article 265, the tribunal held that denying the refund on technical grounds would tantamount to unjust enrichment and violate the constitutional mandate.
The order clarifies that in the facts of this case, the Delhi ITAT found that a refund could not be denied solely because the income tax return was e-verified after the prescribed time, since the delay had already been condoned by the CPC. As reported by Mint, the tribunal noted that the TDS had been deducted and reflected in the department's records and that there was no tax payable after the permissible set-off of losses. The ITAT held that once the delay in e-verification had been condoned, the Revenue could not continue to reject the refund on the same procedural ground, and observed that retaining the amount despite there being no tax liability would amount to unjust enrichment and would be contrary to Article 265 of the Constitution. Based on the facts and circumstances of the case, ITAT Delhi held that the Assessing Officer's refusal to grant the ₹17 lakh TDS refund, and the subsequent dismissal of Bhatia's appeal by the JCIT(A), had resulted in a miscarriage of justice, leading to the tribunal setting aside the impugned order.
