₹17L tax refund denied after taxpayer missed ITR e-verification while caring for ill father: Here's what ITAT ruled

A Delhi-based taxpayer was denied a ₹17 lakh tax refund after he failed to e-verify his income tax return (ITR) within the prescribed time. The delay, he said, was because he was caring for his 83-year-old father, who was seriously ill and had to be hospitalised repeatedly, according to a report by The Economic Times.

Bhatia, a resident of Westend Colony in New Delhi, received ₹1.42 crore in rental income from various properties he owned. He filed his tax return on 3 September 2015, claiming a tax refund of ₹17 lakh based on the advance tax he had paid and the TDS (tax deducted at source) deducted from his rental income.

However, he could not e-verify the ITR within the stipulated one-month period as he was occupied with looking after his ailing father. As a result, the tax return was treated as invalid and deemed never to have been filed, leading to the rejection of his ₹17 lakh refund claim.

Taxpayer challenges I-T department

Feeling wronged by the decision, he decided to challenge the income tax department's decision before the Income Tax Appellate Tribunal (ITAT), the news publication reported.

When the matter reached the Delhi bench of ITAT, the tribunal said the only question before it was whether, given the facts and circumstances, the income tax department should deny the TDS refund merely on the technical ground that the filed ITR was not e-verified within a month, even though it was belatedly e-verified and the delay was condoned by the Centralised Processing Centre (CPC).

Why did ITAT say the refund could not be denied?

ITAT Delhi noted that under Article 265 of the Constitution of India, no tax shall be levied or collected except with the authority of law. In view of the constitutional mandate, as enshrined in Article 265, in case the refund is denied to Bhatia on technical grounds, it shall be tantamount to unjust enrichment on behalf of the income tax department and violate the constitutional mandate of Article 265 of the Constitution of India, the report further stated.

Based on the facts and circumstances of the case, ITAT Delhi held that the Assessing Officer's refusal to grant the ₹17 lakh TDS refund, and the subsequent dismissal of Bhatia's appeal by the JCIT(A), had resulted in a miscarriage of justice. Accordingly, the tribunal set aside the impugned order.

As a result, the ground raised by Bhatia in his appeal was allowed, clearing the way for him to receive the ₹17 lakh tax refund due to him.

Why is e-verification important?

As the income tax filing deadline is approaching, many taxpayers are getting ready to submit their income tax returns. But while most people focus on filing their return before the deadline, the process doesn't end there. The return is considered valid only after you e-verify it.

If a taxpayer fails to do that, their ITR is treated as not filed, which can delay refunds or even lead to penalties in some cases. The process is now fully digital and can be completed in a few minutes using multiple methods such as Aadhaar OTP, net banking and electronic verification code, among others.