Summary of this article
ITAT directed refund of Rs 5.31 lakh.
Taxpayer had not filed an original ITR.
Refund was claimed through Section 148 proceedings.
The Income Tax Appellate Tribunal (ITAT), Delhi, has directed the Income Tax Department to issue a refund of Rs 5.31 lakh with additional statutory interest to a taxpayer who had not filed an original income tax return for the relevant assessment year. The ruling is significant because the taxpayer has claimed the refund for the first time in a return filed in response to a reassessment notice under Section 148 of the Income Tax Act. The tax department rejected the claim on the grounds that no original return was filed under Section 139.
Section 139 of the Income Tax Act deals with the filing of income tax returns. It guides taxpayers on when and how they need to file their income tax return. It deals with situations such as filing a return after the due date, correcting and filing an updated return.
Section 148 deals with the reassessment of income. If the Tax Department has information suggesting that a person’s taxable income may not be reported accurately, it can initiate the reassessment proceedings.
The basic difference between the two is that Section 139 is about the taxpayer filing an ITR as part of their normal tax compliance, whereas Section 148 is about the Income Tax Department reopening or initiating assessment proceedings.
What Was The Case?
In a report by Livemint, the case is relevant for the assessment year 2019-20. The taxpayer, who is based out of New Delhi, had not filed an income tax return by the due date. The tax department has issued a notice under Section 148 on March 27,2023. This was after they received notifications about high-value transactions. After the notice was issued, the taxpayer had filed a return declaring his business loss of Rs 1.38 crore. The return showed a nil taxable income but also claimed a refund of tax deducted at source (TDS) of Rs 5,31,680. The assessing office had rejected the refund claim with the argument that the taxpayer had not filed an original return under Section 139 and was asking for a refund for the first time through a return filed in response to a Section 148 notice.
The Delhi-based taxpayer questioned this decision before the Commissioner of Income Tax (Appeals), but the CIT (A) upheld the Assessing Officer’s Position.
The tribunal viewed the case from a different perspective. They stated that the absence of the original return does not prevent the taxpayer from receiving a refund. In this specific case, the reassessment proceedings determined the taxpayer's income as nil. Since TDS was collected and there was no tax liability attached, the tribunal stated that the amount was refundable. The AO has been directed to issue the taxpayer a refund of Rs 5,31,680 along with applicable interest.
This ruling does not mean that taxpayers can seek refunds in every reassessment case, but it does highlight that the absence of the original ITR cannot defeat refund claims.
