ITAT Allows Rs 17 Lakh Tax Refund After Delay In E-Verifying ITR

A taxpayer who lost his claim for a tax refund of more than Rs 17 lakh because he failed to e-verify his income tax return (ITR) within the prescribed time has secured relief from the Income Tax Appellate Tribunal (ITAT), Delhi. The tribunal has ruled that once the delay in e-verification has been condoned, the Income Tax Department cannot deny a refund merely because the verification was completed after the deadline.

The case relates to Assessment Year 2015-16. The taxpayer had filed his ITR on September 3, 2015, declaring rental income of around Rs 1.42 crore from multiple properties. After adjusting current year losses, unabsorbed depreciation and brought forward losses, he reported no taxable income and claimed a refund of about Rs 17.08 lakh. The amount represented advance tax paid and tax deducted at source (TDS) from his rental income.

Delay In E-Verification

Although the return was filed within the due date, the taxpayer could not e-verify it within the prescribed period. He later explained that he had been looking after his 83-year-old father, who was seriously ill and had been hospitalised several times.

He later filed a condonation request before the Centralised Processing Centre (CPC), which accepted the reason for the delay. The return was eventually e-verified on February 16, 2018.

However, the return was not processed under Section 143 (1), and the refund was not issued. The taxpayer had also filed an application under Section 154, but the Assessing Officer rejected the refund claim, stating that the return was not e-verified within the deadline. The Joint Commissioner of Income Tax (Appeals) also upheld the decision.

ITAT’s Decision

The TDS had already been deducted from the taxpayer's rental income and was reflected in the department's records. ITAT pointed out that the delay in e-verification had already been condoned by the CPC.

The tribunal observed that after condoning the delay, the department could not continue to deny the refund on the same procedural ground.

Referring to Article 265 of the Constitution, the ITAT said that no tax can be collected except with the authority of law. It observed that withholding the refund despite there being no tax liability would amount to retaining money that was not legally due.

ITAT said that tax authorities are expected to collect only the taxes payable under the law and should not reject a valid refund claim solely because of a procedural lapse.