1. Who should claim Refund of Tax ?
Where an assessee has submitted any return of income and any refund of tax is due, such refund shall be granted by the Assessing Officer on his own. The assessee is not required to file any claim for such refund. Similarly, if any refund arises due to an order of appeal, rectification of mistakes, revision by CIT or appeal to the High Court, the refund shall be granted by the Assessing Officer himself. In this case also, the assessee is not required to file any claim for refund of tax.
However, in any other case, for example, where the tax has been deducted at source from the income of a person not liable to pay tax, the assessee is required to file a claim of refund. Such claim must be submitted in Form No. 30 and should be verified in the prescribed manner. Form No. 30 must be accompanied by a return of income, if such return has not been submitted earlier.
2. [Section 237]- Who is entitled to Refund of Tax ?
If any person satisfies the Assessing Officer that the amount of tax paid by him or on his behalf or treated as paid by him, or on his behalf for any assessment year exceeds the amount which he is properly chargeable under the Income-tax Act for that year, he shall be entitled to a refund of the excess.
3. [Section 238]- Can a person other than the assessee claim Refund of Tax?
Although only the assessee is entitled to claim refund, however, in the following cases the refund can be claimed by a person other than the assessee:
(i) where the income of one person is included under any provision of the Income-tax Act in the total income of any other person, the latter alone shall be entitled to a refund in respect of such income;
(ii) where the value of fringe benefits provided or deemed to have been provided by one employer is included under any provisions of Chapter XII-H in the value of fringe benefits provided or deemed to have been provided by any other employer, the later alone shall be entitled to a refund under this Chapter in respect of such fringe benefits;
(iii) where through death, incapacity, insolvency, liquidation or other cause, a person is unable to claim or receive any refund due to him, his legal representative or the trustee or guardian or receiver, as the case may be, shall be entitled to claim or receive such refund for the benefit of such person or his estate.
4. Form for claim for Refund of Tax and period within which Claim for Refund of Tax should be made [Section 239 and Rule 41]
Every claim for refund should be made in the prescribed form i.e. Form No. 30 and it should be verified in the prescribed manner. The claim of refund should be made within one year of the last day of the relevant assessment year.
Refund can now be claimed only by filing the return of income. The return can be filed before the end of the relevant assessment year. Otherwise, he will have to get the delay condoned as per section 119(2)(b).
5. [Section 240]- Refund of Tax on Appeal, etc.
Where, as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessee, the Assessing Officer shall, refund the amount to the assessee without his having to make any claim in that behalf.
Provided that where, by the order aforesaid—
(b) the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee.
6. [Section 241A]- Withholding of Refund of Tax in certain cases
For every assessment year commencing on or after the 1st day of April, 2017, where refund of any amount becomes due to the assessee under the provisions of sub-section (1) of section 143 and the Assessing Officer is of the opinion, having regard to the fact that a notice has been issued under subsection (2) of section 143 in respect of such return, that the grant of the refund is likely to adversely affect the revenue, he may. for reasons to be recorded in writing and with the previous approval of the Principal Commissioner or Commissioner, as the case may be, withhold the refund up to the date on which the assessment is made.
In other words, for the returns furnished for assessment year commencing on or after 1.4.2017, where refund of any amount becomes due to the assessee under section 143(1) and the Assessing Officer is of the opinion that grant of refund may adversely affect the recovery of revenue, he may, for the reasons recorded in writing and with the previous approval of the Principal Commissioner or Commissioner, withhold the refund upto the date on which the assessment is made.
7. [Section 245]- Set off of Refund against Tax / Demand Outstanding
Where under any of the provisions of the Income-tax Act, a refund is found to be due to any person, the Assessing Officer, Commissioner (Appeals) or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under the Income-tax Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken.
8. Procedure for Filing a Delayed Refund Claim of Tax
In supersession of all earlier Instructions / Circulars / Guidelines issued by the Central Board of Direct Taxes (the Board) from time to lime to deal with the applications for condonation of delay in filing return claiming refund under section 119(2)(h) of the Income-tax Act, (the Act), the CBDT has issued Circular No. 9/2015 dated 9.6.2015 containing comprehensive guidelines on the conditions for condonation and the procedure to be followed for deciding such matters.
1. Principal Commissioner or Commissioner vested with the power of acceptance / rejection of delayed application of refund provided claim is not more than Rs. 10 Lakh for any Assessment Year:
The Principal Commissioners of Income-tax / Commissioners of Income-tax shall be vested with the powers of acceptance/rejection of delayed applications of refund if the amount of such claims is not more than Rs. 10 Lakhs for any one assessment year.
2. Principal Chief Commissioner or Chief Commissioner vested with the power of acceptance / rejection of delayed application of refund provided claim is more than Rs. 10 Lakh but does not exceed Rs. 50 Lakh for any Assessment Year:
The Principal Chief Commissioners of Income-tax / Chief Commissioners of Income-tax (Pr.CCsIT/CCsIT) shall be vested with the powers of acceptance / rejection of delayed applications of refund if the amount of such claims exceeds Rs. 10 Lakhs but is not more than Rs. 50 Lakhs for any one assessment year.
3. Claim of refund exceeding Rs. 50,000 :
The applications/claims for amount exceeding 5O lakhs shall be considered by the Board.
4. Application for condonation of delay in making refund claim cannot be entertained beyond a period of 6 rears
No condonation application for claim of refund shall be entertained beyond six years from the end of the assessment year for which such application is made. This limit of six years shall be applicable to all authorities having powers to condone the delay as per the above prescribed monetary limits, including the Board.
5. Time limit for disposal of condonation application of refund
A condonation application should be disposed of within six months from the end of the month in which the application is received by the competent authority, as far as possible.
6. Exclusion of certain period while calculating period of 6 Years
In a case where refund claim has arisen consequent to a Court order, the period for which any such proceedings were pending before any Court of Law shall be ignored while calculating the said period of six years, provided such condonation application is filed within six months from the end of the month in which the Court order was issued or the end of financial year whichever is later.
7. Conditions for acceptance / rejection of the application
The powers of acceptance / rejection of the application within the monetary limits delegated to the Pr.CCsIT/CCsIT/Pr.CsIT/CslT in case of such claims will be subject to following conditions:
(i) At the time of considering the case under section 119(2)(b), it shall be ensured that the income/loss declared and/or refund claimed is correct and genuine and also that the case is of genuine hardship on merits.
(ii) The Pr.CCIT/CCITIPr.CIT/CIT dealing with the case shall be empowered to direct the jurisdictional assessing officer to make necessary inquiries or scrutinize the case in accordance with the provisions of the Act to ascertain the correctness of the claim.
8. Belated application for supplementary claim of refund
A belated application for supplementary claim of refund (claim of additional amount of refund after completion of assessment for the same year) can be admitted for condonation provided other conditions as referred above are fulfilled.
9. Additional conditions applicable for claim / supplementary claim of refund of tax
The powers of acceptance/rejection within the monetary limits delegated to the Pr.CCsIT / CCsIT / Pr.CsJT / CsIT in case of returns claiming refund and supplementary claim of refund would be subject to the following further conditions:
(i) The income of the assessee is not assessable in the hands of any other person under any of the provisions of the Act.
(ii) No interest will be admissible on belated claim of refunds.
10. Time limit of 6 years for making refund claim not applicable in case of interest from 8% Saving Taxable Bonds, 2003 if accounted on mercantile basis:
In the case of an applicant who has made investment in 8% Savings (Taxable) Bonds, 2003 issued by Government of India opting for scheme of cumulative interest on maturity but has accounted interest earned on mercantile basis and the intermediary bank at the time of maturity has deducted tax at source on the entire amount of interest paid without apportioning the accrued interest / TDS, over various financial years involved, the time limit of six years for making such refund claims will not be applicable.