D B ENGINEERING P. LTD.,DELHI vs. ACIT CIRCLE 7(1), DELHI, DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’:NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER ITA No.2347/Del./2026 (ASSESSMENT YEAR : 2019-20) D.B. Engineering P. Ltd., vs. ACIT, Circle 7 (1), 81, Jor Bagh, Delhi. Delhi. (PAN : AAACD0622Q) (APPELLANT) (RESPONDENT)

ASSESSEE BY : Shri R.S. Singhvi, CA Shri Satyajeet Goyal, CA Shri Rajat Garg, CA REVENUE BY : Shri Tarun Sharda, Sr. DR Date of Hearing : 25.06.2026 Date of Order : 11.08.2026 O R D E R PER S. RIFAUR RAHMAN, AM : 1. This appeal by the assessee is directed against the order of ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [for short ‘ld. CIT (A)] dated 30.01.2026 for the Assessment Year 2019-20 raising the following grounds of appeal :- “1.1 That on the facts and circumstances of the case, the Ld. CIT(A) has erred in upholding the action of the Assessing Officer in denying the refund of Rs.5,31,680/- claimed by the Appellant in the return of income filed in response to notice under section 148 of the Act.

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1.2 That the Ld. CIT(A) has failed to appreciate that once the assessment has been completed accepting the returned income and determining total income at Nil, the excess tax paid by way of TDS/ advance tax necessarily results in a refund under section 237 of the Act, and withholding of such refund of contrary to purpose and scheme of the Act. 1.3 That Ld. CIT(A) has failed to appreciate that section 239 does not bar a claim of refund in a return filed under section 148, and the denial of refund on hyper-technical interpretation defeats the object of sections 237 and 240 of the Act. 1.4 That the denial of refund is contrary to the principles laid own by various High Courts and the Hon'ble Supreme Court and would result in unjust enrichment and in teeth of Article 265. 2. That the orders passed by lower authorities are not sustainable on facts and same are bad in law.” 2. Brief facts of the case are, the assessee company had not originally filed its return of income for the year under consideration i.e. AY 2019-20. Based upon information available on the Insight Portal relating to certain high value transactions, proceedings under section 147 of the Income-tax Act, 1961 (for short ‘the Act’) were initiated after passing an order u/s 148A(d), and notice u/s 148 dated 27.03.2023 was issued. 3. In compliance with the said notice, the assessee filed its return of income on 21.04.2023 declaring a business loss of Rs.1,38,29,756/- and claimed refund of Rs.5,31,680/- representing tax deducted at source. The return disclosed Nil taxable income after adjustment of losses. The assessment was completed u/s 147 read with section 144B accepting the returned income substantially and determining the total income at Nil. However, while framing the assessment, the Assessing Officer denied the refund solely on the ground that such refund

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could not be claimed in a return filed u/s 148 since no return had been filed u/s 139. 4. The ld. CIT(A) upheld the action of the Assessing Officer by observing that proceedings u/ s 147 are intended for the benefit of the Revenue and not for conferring a fresh right upon the assessee to claim refund. The ld. CIT(A) relied principally upon the judgment of the Hon'ble Bombay High Court in K. Sudhakar S. Shanbhag following the decision of the Hon'ble Supreme Court in Sun Engineering Works Put. Ltd. 5. Aggrieved, the assessee is in appeal before us. The sole issue requiring adjudication is whether the assessee is entitled to refund of Rs.5,31,680/- representing excess TDS, where the reassessment proceedings culminated in acceptance of the returned income and assessment of Nil taxable income, merely because the return claiming refund was filed in response to notice issued u/s 148 and not u/s 139 of the Act? 6. At the time of hearing, the ld. AR of the assessee submitted that once a valid return has been filed pursuant to notice u/s 148, the provisions of the Act require such return to be treated as a return furnished u/s 139 for the purposes of making the assessment. He submitted that consequently, if the assessment results in Nil taxable income, refund necessarily follows u/ s 237. It was argued that neither section 237 nor section 239 prohibits grant of refund in reassessment proceedings. The ld. AR placed reliance upon the decision in the case of CIT v. Vali Brothers 282 ITR 149 (All.), Kalindee Rail Nirman (Engineers) Ltd. v. CIT394ITR 684 (Raj.) and Ajit Kumar v. ACIT in ITA No.

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449/Bang/25 (ITAT Bangalore) holding that refund cannot be denied merely because the return was filed pursuant to notice u/s 148. He submitted that the judgment in the case of Sun Engineering Works Pvt. Ltd. 198 ITR 297 (SC) is not relevant as the same is not in context of issue of refund pursuant to order u/s 147 of the Act 7. On the other hand, ld. DR of the Revenue relied upon the orders of the lower authorities. 8. Considered the rival submissions and the material placed on record. The controversy before us is purely legal and the facts are undisputed. As noted above, the assessee filed its return of income in compliance with notice issued u/s 148 declaring loss and claiming refund of Rs.5,31,680/- on account of taxes deducted at source. The copy of ITR acknowledgement is placed at paper book page 1. The assessment has ultimately been completed accepting the returned income and determining the taxable income at Nil. Thus, there remains no tax liability against the assessee. The only dispute is regarding entitlement to refund. 9. The Assessing Officer has denied the refund solely on the reasoning that section 239 permits refund only where the return is filed u/s 139. We are unable to subscribe to such interpretation. Section 237 provides that where the Assessing Officer is satisfied that the amount of tax paid by an assessee exceeds the amount with which he is properly chargeable under the Act, the assessee shall be entitled to refund of such excess. The provision is substantive in nature and confers a statutory right to refund whenever excess tax has been

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collected. 10. Further, once proceedings u/s 148 culminate in an assessment order accepting the returned income and determining Nil taxable income, the inevitable consequence is that taxes already deducted at source become refundable unless specifically barred by law. No such statutory prohibition has been pointed out by the Revenue. 11. The Hon'ble Allahabad High Court in CIT v. Vali Brothers (supra) considered an identical question where the assessee had claimed refund in a return filed pursuant to notice u/s 148. The High Court held that once reassessment proceedings culminate in an assessment and the tax paid exceeds the tax chargeable, refund becomes mandatory u/s 237. The Court categorically held that an order dropping reassessment proceedings amounts to completion of assessment and refund cannot be denied merely because the claim arose in proceedings initiated u/s 148. 12. Similarly, the Hon'ble Rajasthan High Court in Kalindee Rail Nirman (Engineers) Ltd. (supra) has recognized that the statutory obligation to refund excess tax cannot be defeated on hyper-technical considerations once the assessment determines the correct tax liability. 13. We also find that the Bangalore Bench of the Tribunal in Ajit Kumar v. ACIT (supra) has recently held that refund claimed in a return filed pursuant to notice u/s 148 cannot be denied merely because no original return had been filed u/s 139, once reassessment proceedings culminate in determination of the correct taxable income.

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the Act. The Assessing Officer is directed to grant the refund and allow consequential interest in accordance with law. Accordingly, the grounds raised by the assessee are allowed. 18. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on this 11th day of August, 2026.

Sd/- sd/- (RAJ KUMAR CHAUHAN) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 11.08.2026 TS