Income Tax Refunds (Law & Procedure)

Book Details

Chapter 1. Introduction	�
What is Income-tax refund?	1
Who can claim refund?	3
When refunds arise	4
Wings within the Department which are responsible for processing of refunds	4
Tips for individual assessees claiming refund	5
Some legal principles & morals which are to animate levy of tax and refund of untaxable:	6
Tax Treatment of Income Tax Refund	6
Income Tax Department creates ‘Know Your Refund Status’ facility	6
Excess fee paid for filing appeal is liable to be refunded	8
Statistical Data on Refunds	9
Chapter XIX of Income Tax Act, 1961 : Refunds	9
Chapter 2. Interest on Excess Refund Granted to the Assessee [Section 234D]	�
Basic provisions [Section 234D(1)]	11
Adjustment under Section 234D(2) [Section 234D]	12
Provisions of section 234D would be applicable to any proceeding which is completed on or after 1st June, 2003, irrespective of the assessment year to which it pertains [Explanation 2 of Section 234D]	12
Manner of computation of interest under the Income -tax Act [Rule 119A]	13
Rate of interest	14
Period of levy of interest	14
Chapter 3. Refunds [Section 237]	�
Press Release, Dated 24.07.2017	21
Press Release, Dated 13.02.2017	22
Press Release, Dated 04.04.2016	22
Press Release, Dated 15.01.2016	23
Office Memorandum F. No. 312/109/2015-OT, Dated 14.01.2016	23
CBDT Letter F. No.312/109/2015-OT, Dated 02.12.2015	24
Press Release, Dated 14.12.2012	24
Press Release, Dated 03.11.2006	26
CBDT Instruction No. 1859/1990 [F.NO. 225/5/90-ITA.II] Dated 25.09.1990	28
CBDT Instruction No. 1820 [F.No. 212/232/89-ITA.II], Dated 24.05.1989	28
CBDT Circular No. 290 [F. No. 328/66/80-WT], Dated 31.03.1981	29
CBDT Circular No. 3-D (XXXI-20), Dated 30.03.1967	29
CBDT Circular No. 23 (LXXII-18), Dated 03.08.1962	30
Chapter 4. Person Entitled to Claim Refund in Certain Special Cases [Section 238]	�
Who can claim Income Tax Refund	44
Chapter 5. Income Tax Refund to Legal Heirs	�
Procedure for Legal Heir Registration on the New Income Tax Portal[Applicable in case of any deceased taxpayer]	48
Communication to Legal Heir and JAO:	49
Frequently Asked Questions (FAQs) on Legal Heir related matters	49
CBDT Letter F. No. 22(LXXII-17), Dated 08.08.1961	50
Chapter 6. Refunds to Representatives	�
Types of documents and information one has to submit and furnish while registering to act as a representative	53
Table gives portal access rights that each type of user will get when they are representing another person or being represented by another person:	57
Chapter 7. Form of Claim for Refund and Limitation [Section 239]	�
FORM NO. 30	64
CBDT Circular No. 9/2015, dated 09.06.2015	65
CBDT Circular No. 07/2011 [F. No. 500/135/2007-FTD-I], Dated 27.09.2011	67
CBDT Circular No. 7/2007, Dated 23.10.2007	67
CBDT Instruction No. 1910 [F. No. 225/175/93-ITJ], Dated 02.09.1993	70
Chapter 8. Refund for Denying Liability to Deduct Tax in Certain Cases[Section 239A]	�
Refund of grossed up tax on non-taxable payments	76
Form 29D to get refund of tax deducted under Section 195	76
Chapter 9. Refund on Appeal, etc. [Section 240]	�
High Court directs Assessing Officer to correct software glitches and grant refund due to assessee	82
Chapter 10. Power to Withhold Refund in Certain Cases [Section 241]	�
Power to withhold refund in certain cases	90
Chapter 11. Withholding of Refund in Certain Cases [Section 241A]	�
Till Assessment year 2016-17 : Grant of refund u/s 143(1):	91
From Assessment year 2017-18 & onwards, a different regime is prescribed by Parliament	91
CBDT Instruction No. 07 of 2022, Dated 06.12.2022	92
ITBA — ITR Processing Instruction No. 14 (DGIT(S)/ITBA/Instructions/Processing/2021-22/) Dated: 16.02.2022	93
“Withholding of Refund u/s 241A� or “Release of Refund� where corresponding scrutiny case is with “faceless� charge:	96
MIS regarding 241A: Faceless Charges:	100
Chapter 12. Correctness of Assessment not to be Questioned [Section 242]	110
Chapter 13. Interest on Delayed Refunds [Section 243]	�
Background	111
Date of assessment is crucial for assessee	113
Rate of Interest on refund	114
Interest granted only up to date of order of refund	114
Chapter 14. Interest on Refund where no Claim is Needed [Section 244]	�
CBDT Circular No. 209, [ F. No. 212/485/76 (A-II)], Dated 11.01.1977	119
Instructions for giving appeal effects promptly	119
Chapter 15. Interest on Refunds [Section 244A]	�
Insertion of a new Section 244A in lieu of Sections 214, 243 and 244	139
Rule 119A prescribes the procedure to be followed in calculating interest under the provisions of the Act. The same shall also apply in the case of calculating interest under section 244A	143
Rate of interest payable under section 244A	144
Tax paid on self-assessment would fall under section 244A(1)(b)	144
Additional interest under section 244A(1A) is attracted only if conditions of section 153(5) are breached	145
Interest on refund of TDS due to deductor [Section 244A(1B)]	145
Delayed for reasons attributable to the assessee, the period of delay was attributable shall be excluded [Section 244A(2)]	145
CBDT Circular No.11/2016 [F. No. 279/MISC./M-140/2015-ITJ], Dated 26.04.2016	145
Press Release, Dated 08.02.2014	146
CBFT Instruction No. 7/2013 [F. No. 312/54/2013-OT], Dated 15.07.2013	147
CBDT Instruction No. 2/2007, Dated 28.03.2007	148
CBDT Instruction No. 7, Dated 01.08.2002	149
Chapter 16. Interest Earned on Tax Refund	�
Expenditure on Interest on refunds of Taxes	173
Comparative chart of Interest received under sections 234A/234B/234C & 220(2) vis-a-vis interest paid under section 244A	173
No interest shall be payable if the amount of refund is less than 10% of the tax as determined under section 143(1) or tax determined under regular assessment [Proviso to Section 244A(1)(aa)]	174
Tax Treatment of Income Tax refund/Interest	174
How is the interest taxed?	175
No interest in certain cases	175
Chapter 17. Set off of Refunds Against Tax Remaining Payable [Section 245]	�
Silent features of Section 245 (1)	180
Silent features of Section 245 (2)	181
Procedure to withhold the refunds under Section 245(2) of the Income Tax Act, 1961 [Instruction No. 02/2023, dated 10.11.2023]	181
CBDT prescribes process, monetary & time limits for withholding refund [Instruction No. 02/2023, dated 10.11.2023]	182
CBDT Instruction No. 02/2023, Dated 10.11.2023	182
CBDT Instruction No. 1/2023, dated 13.06.2023	183
CBDT Instruction No. 01 of 2023 F. No.: DGIT(Systems)/Instruction/245/2023-24/2132-2142 Dated: 31.05.2023]	183
CBDT Instruction No. 01 of 2023, Dated: 31.05.2023	183
CBDT Instruction No. 06 of 2022, Dated 28.11.2022	185
Office Memorandum F. No. 312/109/2015-OT, Dated 07.03.2016	187
Office Memorandum [F. No. 312/109/2015-ot], Dated 29.01.2016	188
Letter [F. No. DIT(S)-III/CPC/2013-14/Refund Adjustment],Dated 22.10.2013	189
Letter [F. No. 380/1/2013-IT(B)], Dated 20.09.2013	189
CBDT Instruction No. 12/2013 [F. No. 312/55/2013-OT], Dated 09.09.2013	190
CBDT Instruction No. 6/2013 [F. No. 312/53/2013-OT], Dated 10.07.2013	191
Letter [F. No. DIT(S)-III/CPC/2012-13/ Demand Management], Dated 21.03.2013	192
Instruction [F. No. DIT(S)-III/CPC/2012-13], Dated 27.11.2012	193
CBDT Instruction No. 1919, Dated 29.09.1994	195
Power of tax Officers under Section 245 discretionary and not mandatory;mere liability to pay tax not sufficient to attract Section 245	212
When refund may be set off against tax remaining payable	212
Chapter 18. Refund of Excess TDS Deposited by Deductor	�
Refund of TDS to deductor - Where the deductor has furnished the statement of TDS	215
Refund of TDS to deductor - Where the deductor has not furnished the statement of TDS	216
How to claim the refund of excess TDS deposited by the deductor	216
Procedure for claiming the excess refund of TDS by the deductor	217
CBDT Circular Regarding payment of Interest on Refund under section 244A of Excess TDS Deposited under section 195	221
CBDT Circular No. 11/2016, dated 26.04.2016	221
CBDT Circular No - 07/2011, dated 27.09.2011	222
CBDT Circular On Procedure For Refund Of Excess TDS Deducted/Paid [CBDT Circular No. 2/2011, dated 27.04.2011]	223
Refund of TDS deducted on payment to non-resident— No interest under section 244A is admissible on refunds	224
CBDT’s Circular No. 7/2007, dated 23.10.2007	224
CBDT Circular : No. 790, dated 20.04.2000	227
DTAA provisions could not be invoked to claim refund of DDT paid at a rate exceeding that specified in DTAA	229
Chapter 19. Process of Issue of Paper Refunds & Manual Order	�
[1] ITBA - Assessment Instruction No. 11, Dated 18.06.2019	234
Subject: Modification in Approval process for issue of paper refunds and Manual Order Upload functionality in ITBA Assessment Module-Regarding	234
[2] CBDT Instruction No.12/2015 [F. No. 312/101/2015-OT], Dated 17.09.2015	236
Subject : Section 237 of the Income-tax Act, 1961 - Refunds - Custody of Refund Vouchers	236
[3] AST Instruction No. 136, Dated: 10.07.2015	237
Subject : Restriction on Issuance of Manual Refunds by Assessing Officers– Reg	237
[4] AST- Instruction No 79, Dated : 03.05.2010	239
Subject: On line approval of high value refunds AST Instruction No. 79	239
[5] CBDT Instruction No. 1/2005, Dated 18.03.2005	240
Subject : Discontinuance of Advice Notes issued with Income Tax Refund Orders for Refunds up to Rs. 24,999	240
[6] CBDT Instruction No. 15/2003, Dated 06.11.2003	241
Subject : Procedure for Issue of Income-tax Refund Orders simplified	241
[7] CBDT Instruction No. 1980 [F. NO. 212/34/2000-ITA.II], Dated 03.03.2000	243
Subject : Section 237 of The Income-tax Act, 1961 - Refund - General Proper Storage of Refund Books	243
[8] CBDT Instruction No. 1969, Dated 20.08.1999	243
Subject : Section 237 of the Income-tax Act, 1961 - Refund - General Issue of Refund Orders–Instruction Regarding	243
[9] CBDT Instruction No. 1946/1997 [F. No. 225/260/97-ITA.II], Dated 18.11.1997	244
Subject : Section 237 of the Income-tax Act, 1961 - Refund - General - Issue of Refund Order - Service by Registered Post - Instructions Regarding	244
[10] CBDT : Instruction No. 1815 [F. No. 225/244/88-ITA.II], Dated 04.12.1989	245
Subject : Section 237 of the Income-tax Act, 1961 - Refund - General-Issue of refund orders - Instructions regarding	245
Chapter 20. Refund when Assessment Order or Penalty Order is Set Aside or Nullified on Appeal	246
Chapter 21. Request for Refund Re-Issue	�
How to Conduct a Pre-validation Check of Bank Account?	249
How to Make a Refund Reissue Request Online?	249
How to Request for Refund Re-issue (in case of refund failure)?	250
How to Check the Status of the Submitted Refund Reissue Request?	250
Frequently Asked Questions (FAQs)	250
Chapter 22. Refund of Seized Cash in the Course of Search	�
Interest on refund of seized cash	251
CBDT Instruction No. 11/2006, Dated 01.12.2006	251
Chapter 23. Refund in the Case of Reorganization of Business Involving Amalgamation or Demerger or Merger of Business of one or More Persons	�
Successor company entitled to refund of tax-credit migrated pursuant to merger	261
Chapter 24. Refunds to Foreign Nationals and Entities	�
Non-residents can get tax refunds in their foreign bank accounts	262
CBDT clarification regarding furnishing of foreign bank account details in income-tax return in case of non-residents	262
Clarification by Central Board of Direct Taxes	263
CBDT Press Release, Dated 24.07.2017	263
Frequently Asked Questions (FAQs) : Non-residents and Foreign entities	263
Chapter 25. Condonation of Delay in Filing Refund Claim [Section 119(2)(b)]	�
‘Genuine hardship’ as occurring in section 119(2)(b) of the Income-tax Act, 1961	266
Procedure to claim the refunds	267
Authorities who can grant or reject such condonation applications	267
Conditions prescribed for Acceptance/Rejection of Income Tax Refund Claim	268
Supplementary (Additional) Claim of Income Tax Refund after completion of assessment	268
Remedy to an assessee against order under section 119(2)(b)	269
Time limit for filing Application	269
Time limit for processing Application [CBDT Circular No. 9/2015, Dated 09.06.2015]	269
Where to file return under section 119(2)(b)	270
Procedure of Condonation Request for filing ITR after time-barred	270
Specimen of Application for condonation of delay in filing of return claiming refunds exceeding Rs. 50,00,000	271
Petition for condonotion of delay in filing Return A.Y.	271
Norms to be adopted for Condonation of Delay	271
CBDT Circular No. 07/2023, dated 31.05.2023	272
CBDT Circular No. 9 of 2015 [F. No.312/22/2015-OT], Dated 09.06.2015	273
CBDT Instruction No. 13/2006, Dated 22.12.2006	274
CBDT Instruction No. 12/2003, Dated 30.10.2003	276
CBDT Circular No. 8/2001, Dated 16.05.2001	277
CBDT Circular No. 773, Dated 15.02.1999	278
CBDT Circular No. 670, Dated 26.10.1993	278
CBDT Order [F. NO. 225/208/93-IT(A-II)], Dated 26.10.1993	279
CBDT Order [F. No. 225/208/93-IT(A-II)], Dated 12.10.1993	280
Order [F. No. 225/208/93-IT(A-II)], Dated 12.10.1993	280
CBDT Instruction No. 1867, Dated 30.11.1990	281
CBDT Circular No. 670, Dated 26.10.1993	282
CBDT Instruction No. 1795, Dated 17.08.1988	282
Clarification 1 – CBDT Circular No. 521, Dated 17.08.1988	283
Clarification 2 – CBDT Circular No. 503, Dated 06.02.1988	284
CBDT Instruction No. 1782, Dated 05.02.1988	284
Clarification 4 – CBDT Circular No. 446, Dated 31.12.1985	285
Clarification 3 – CBDT Circular No. 379, Dated 10.04.1984	285
Chapter 26. CBDT Circulars & Instructions on Refunds	�
[1] CBDT Letter F. No. 225/132/2023/ITA-II, Dated : 01.12.2023 Order under section 119 of the Income-tax Act, 1961 Subject: Processing of returns of income validly filed electronically with refund claims under section 143(1) of the Income-tax Act, 1961 beyond the prescribed time limits in non-scrutiny cases-Regd	307
[2] CBDT letter F. No. 225/132/2023/ITA-II, Dated 16.10.2023 CBDT extends time for processing validly e-filed ITRs in non-scrutiny cases upto Assessment year 2017-18 to 31.01.2024	308
[3] CBDT letter F. No. 225/132/2023/ITA-II, Dated 16.10.2023 Subject: Processing of returns with refund claims under section 143(1) of the Income-tax Act,1961 beyond the prescribed time limits in non-scrutiny cases – Regarding	308
[4] CBDT letter F. No. 225/98/2020 - ITA-II, Dated 30.09.2021 Order under Section 119 of the Income-tax Act,1961 Subject: Processing of returns with refund claims under section 143(1) of the Income-tax Act, 1961 beyond the prescribed time limits in non-scrutiny cases - Regarding	309
[5] CBDT letter F. No. 225/98/2020/ITA-II, Dated 05.07.2021 CBDT further Extends ITR Processing Time Limit for Refunds in Non-Scrutiny Cases:	309
[6] Order under section 119 of the Income-tax Act, 1961 – [CBDT Letter F. No. 225/194/2019/ITA-II, Dated 05.08.2019] Subject: Processing of returns with refund claims under section 143(1) of the Income-tax Act, 1961 beyond the prescribed time limits in non-scrutiny cases–Regarding	310
[7] CBDT Circular No. 14 (XL 35) of 1955, dated 11.04.1955	311

About the Author

Ram Dutt Sharma

Ram Dutt Sharma was born on 27th June, 1958 in Narnaul, Haryana. He got his post-graduation from M.D. University, Rohtak in 1980. He joined the Income-tax Department in the year 1983 and retired as Income Tax Officer on 30.06.2018. He worked at various stations of North-West Region of Income-tax Department. He has wide experience of all wings of Income-tax Department such as Assessment Unit, Special Range, TDS Wing, Investigation Wing, etc. He has been Contributing articles and addressing on topics relating to Income Tax at NADT Regional Campus, Chandigarh & Bhopal. He has also addressed number of seminars organized by the Income-tax Department, Chartered Accountants, Advocates and various Trade Associations.

He is recipient of first-ever Finance Minister's Award 2017, the Income Tax Departments highest honour for sustained devotion, commitment to duty & promoting excellence in the field of Direct Taxation at National Level. The Hon'ble Union Finance Minister, Shri ArunJaitley conferred this Finance Ministers Award for Excellence for his meritorious services at VigyanBhawan, New Delhi on 24.07.2017.

Awarded by Hon'ble Member (Revenue& TPS), CBT, Special Secretary to the Government of India Certificate of Appreciation for his contribution recognized and included in the chapter Miscellaneous Orders in Let Us Share A compilation of Best Practices & Orders Vol. VIII released on 31stOctober, 2016.

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