Section 434 — Refund for denying liability to deduct tax in certain cases. Successor to s.239A of the 1961 Act.
Section 434 is in Chapter XX — Refunds, which runs from section 431 to section 438.
Sub-section (1) allows a person who, under a written agreement or arrangement, bears the tax deductible on an income other than interest in section 393(2) (Table: Sl. No. 17), and who has paid that tax to the Central Government but claims no tax was required to be deducted, to apply to the Assessing Officer for refund within thirty days from the date of payment of the tax, in the prescribed form and manner. Sub-section (2) requires the Assessing Officer to allow or reject the application by an order in writing. Sub-section (3) forbids rejection without an opportunity of being heard, and sub-section (4) permits any inquiry he considers necessary before passing the order. Sub-section (5) requires the order to be passed within six months from the end of the month in which the application is received.
Where the payer has contracted to bear the tax, it is the payer and not the recipient who is out of pocket if tax was deducted and paid when none was due; the section gives that payer a direct refund route instead of leaving the money with the Department. The short application window and the fixed disposal period keep the claim close to the payment.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time to apply for the refund | 30 days | From the date of payment of the tax to the credit of the Central Government, in the prescribed form and manner | Sub-section (1) |
| Time for the Assessing Officer to pass the order | 6 months | From the end of the month in which the application under sub-section (1) is received | Sub-section (5) |
The thirty-day window is the trap: it runs from the date the tax was paid, not from any assessment, notice or discovery that the deduction was unnecessary, so a claim identified later has no route under this section. Two conditions gate the claim and both come from the arrangement rather than from the tax position — the agreement or arrangement must be in writing and it must place the burden of the tax on the payer. Interest of the kind in section 393(2) (Table: Sl. No. 17) is carved out. If the Assessing Officer proposes to reject, sub-section (3) entitles you to be heard first, and the order is due within six months from the end of the month of the application.
A company has agreed in writing to bear the tax on a payment, deducts and pays Rs. 20 lakh to the credit of the Central Government, and then concludes that no tax was required to be deducted on that income at all. Because it bore the tax under a written arrangement, it — not the payee — may apply to the Assessing Officer for refund; but the window is thirty days from the date of payment of the tax, so a realisation arrived at six months later has no route under this section, however sound the claim. Discovering that too much rather than nothing was deductible does not help either, since clause (b) requires the claim to be that no tax was required to be deducted. Applied for in time, the application must be allowed or rejected by an order in writing within six months from the end of the month in which it was received, and cannot be rejected without an opportunity of being heard.
In an application in the prescribed form and manner filed with the Assessing Officer by the payer who bore the tax, and in the Assessing Officer's order allowing or rejecting it. Interest of the kind referred to in section 393(2) (Table: Sl. No. 17) is outside the section altogether.
he may, within thirty days from the date of payment of such tax, file an application before the Assessing Officer for refund of such tax in such form and such manner, as may be prescribed
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.
