Clients never filed ITRs – how can old TDS be claimed?

Hi Everyone,

I need your guidance on an issue that I am facing with several clients.

Many of my clients are delivery partners, gig workers and daily wage earners. Their income in the earlier years was below the basic exemption limit. However, TDS was deducted from their payments (mostly under Section 194C).

The problem is that they were completely unaware of income tax compliance. They have never filed an ITR, many of them have never even registered on the Income Tax e-filing portal, and because of this, they have 3 to 4 assessment years of unclaimed TDS refunds.

While researching this issue, I came across a TaxGuru article which suggests that if the earlier year's income was never offered to tax and the TDS remained unclaimed, the taxpayer can disclose that income in the current year's ITR, manually enter the TDS details in Schedule TDS, and claim the TDS credit in the current assessment year.

I also went through Section 199 and Rule 37BA. They state that TDS credit shall be allowed in the assessment year in which the corresponding income is assessable. However, I could not find any express provision stating that claiming such TDS in a subsequent assessment year is prohibited.

This has left me confused about the correct legal position.

I would like to know:

Is the method suggested in the TaxGuru article legally sustainable?
Has anyone here practically claimed TDS of an earlier assessment year in a subsequent year's return by offering the corresponding income?
If yes, was the refund processed by CPC without any issue, or was the claim rejected or questioned?
Are there any CBDT circulars, judicial precedents or departmental instructions that support or reject this approach?
Since these taxpayers never filed ITRs for the earlier years and have now lost the normal time limit for filing, is there any other legal remedy available to claim the TDS refunds?

I am not looking for a shortcut. I am trying to understand the correct legal position as well as the practical experience of professionals who may have dealt with similar cases.

I would really appreciate your guidance.

Thank you.