Refund Allowed Even Without Original ITR (Delhi ITAT) and filed u/ 148 notice

By | September 13, 2026
0 Comment

Refund Allowed Even Without Original ITR (Delhi ITAT) and filed u/ 148 notice

In ITA No. 2347/Del./2026 (D.B. Engineering P. Ltd. vs. ACIT, Circle 7(1), Delhi), the Delhi Bench ‘C’ of the ITAT ruled that an assessee is entitled to a refund of excess TDS claimed in a return filed under Section 148, even if no original return was filed under Section 139.
Case Overview
  • Assessment Year: 2019–20
  • Order Date: August 11, 2026
  • Coram: Shri S. Rifaur Rahman (AM) & Shri Raj Kumar Chauhan (JM)
  • Refund Amount in Dispute: ₹5,31,680 (TDS credit)
Key Facts
  • The assessee did not file an original return under Section 139.
  • Following proceedings initiated under Section 147/148A, a notice under Section 148 was issued on March 27, 2023.
  • In response, the assessee filed a return on April 21, 2023, declaring a business loss of ₹1,38,29,756, Nil taxable income, and claimed a refund of ₹5,31,680 for TDS deducted.
  • The Assessing Officer completed the assessment under Section 147 read with Section 144B, accepting the Nil income, but denied the refund on the ground that refunds cannot be claimed in a Section 148 return if no return was originally filed under Section 139.
  • The CIT(A)/NFAC upheld the denial, citing the Supreme Court’s Sun Engineering decision and asserting that Section 147 proceedings are strictly for the benefit of the Revenue.
Tribunal Findings & Decision
  • Substantive Right to Refund (Section 237): Section 237 confers a statutory right to refund whenever tax paid exceeds tax chargeable. Once an assessment order determines Nil taxable income, the refund of excess TDS is a mandatory, consequential relief flowing directly from the assessment.
  • No Section 239 Bar: Section 239 does not prohibit granting a refund on a valid return furnished pursuant to a Section 148 notice.
  • Misapplication of Sun Engineering: The Tribunal clarified that Sun Engineering Works Pvt. Ltd. (198 ITR 297 SC) prevents an assessee from reopening settled issues or claiming fresh deductions dehors the reassessment. Claiming consequential TDS credit after Nil income is determined is not a new claim outside the assessment.
  • Article 265 Violation: Retaining excess tax when no liability exists constitutes unjust enrichment and violates Article 265 of the Constitution (no tax shall be collected except by authority of law).
  • Judicial Precedents Followed: Reliance was placed on CIT v. Vali Brothers (Allahabad HC), Kalindee Rail Nirman (Engineers) Ltd. v. CIT (Rajasthan HC), and Ajit Kumar v. ACIT (ITAT Bangalore).
Verdict
The appeal was allowed. The Assessing Officer was directed to issue the refund of ₹5,31,680 along with statutory interest admissible under the Act.