This is how the landlord got a tax refund of Rs 17 lakh, ITAT’s decision changed his fate

A taxpayer from New Delhi has got a big relief from the Income Tax Appellate Tribunal (ITAT). A homeowner resident of Delhi’s Westend Colony was not given an income tax refund of Rs 17 lakh simply because he did not e-verify his Income Tax Return (ITR) on time. However, later the delay was waived by the Central Processing Center (CPC). Now ITAT has given its verdict in favor of the taxpayer in this case and has directed the Income Tax Department to issue the refund.

The taxpayer had filed ITR on time on 3 September 2015 for assessment year 2015-16. He had received rent of Rs 1.42 crore from his various properties. He had claimed a tax refund of about Rs 17 lakh on the basis of advance tax and TDS deducted on rental income.

Father’s serious illness became the reason for the delay

Taxpayers could not do e-verification of ITR within the stipulated time. He told that his 83-year-old father was seriously ill and had to be taken to the hospital again and again. For this reason he could not complete the e-verification process within the time limit.

Later he appealed to CPC to forgive the delay, which was accepted. After this, in February 2018, he also completed the e-verification of ITR. Despite this, the Income Tax Department refused to give the refund saying that the return was not e-verified on time.

What did ITAT say?

The matter reached ITAT Delhi, where the tribunal said that when CPC has already condoned the delay in e-verification, it is not appropriate to withhold tax refunds merely on technical grounds. Citing Article 265 of the Indian Constitution, the tribunal said that no tax can be imposed or collected without the authority of law.

ITAT held that TDS on the rental income of the taxpayer had already been deducted and was also on record. In such a situation, stopping the refund merely due to procedural lapse would be unfair enrichment for the Income Tax Department. The tribunal set aside the orders of the assessing officer and the lower appellate authority and directed the department to issue a refund of Rs 17 lakh to the taxpayer as per law.

Tax experts believe that this decision is important for those taxpayers whose valid refund amount gets stuck only due to technical or procedural reasons. This order makes it clear that the department cannot deny refund merely on technical grounds once there is a valid reason and the delay is condoned.