My client's assessment has become final and I now want the tax back because the levy was wrong. Can I run that argument as a refund claim, or in a writ petition based on Article 265?
No. In a claim under Chapter XIX section 242 forbids the assessee from questioning the correctness of an assessment or other matter that has become final and conclusive, or asking for a review of it; the authorities cannot go behind the assessment order while examining a refund. Article 265 is not violated where tax has been collected under a valid enactment and the 'wrong' order has become final — the remedy is to attack the order itself, in appeal, revision or a writ, and refund follows only as a consequence of that.
Decided by the High Court (Dipak Misra, Chief Justice, and Sanjiv Khanna J (judgment delivered per the Bench)) on 2011-06-03, reported as W.P. (C) Nos. 7127 of 2008 and 15639 of 2006, High Court of Delhi at New Delhi. It bears on section 237, section 239, section 240, section 242, section 139(9) of the Income Tax Act 1961, in Refunds, Interest & Condonation and How Tax Law Is Read matters.
This is the decision that separates the two things practitioners routinely run together. Where the client's grievance is that the assessment is wrong, the refund provisions are a dead end — you must displace the order. Where the grievance is that tax he never owed was collected or that a credit he was entitled to was not given, the refund provisions work, and the Court held they must be applied reasonably, liberally where warranted, and that substantial compliance is enough — a claim is not lost merely because it was not made in the prescribed form. The two writ petitions decided together make the distinction concrete: the assessee who had annexed his TDS certificate and computation to a return filed in time won a mandamus for the refund with interest even though the refund column of the return form was blank; the assessee who had declared the wealth himself, paid self-assessment tax, and never appealed or revised lost, because there was no order to go behind. Read with the caution below on section 239: the reasoning about annexures to the return belongs to the pre-2019 regime, and from 1 September 2019 a refund claim is made only by furnishing a return under section 139.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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Two writ petitions were heard together. In the first, Indglonal Investment & Finance Ltd. sought a refund of Rs 5,73,038 deducted at source on dividend from Asian Consolidated Industries Limited for assessment year 1994-95. Its return, filed on 29 November 1994 declaring a loss of Rs 4,56,994, showed NIL against the column for total tax deducted at source and left the refund column blank, and the return was processed under section 143(1)(a) on 28 February 1995. The Income Tax Officer rejected the refund claim by order dated 23 August 2007 on the ground that no refund had been claimed in the return and no revised return had been filed under section 139(5). On calling for the original departmental file the Court found that pages 5 to 8 of the ten-page return, being the pages relating to refund, had been removed with no explanation, but that the statement of assessable income on record showed TDS on dividend of Rs 5,73,038 as refundable and the original TDS certificate dated 14 July 1993 was on the file at page 21. The assessee had written to the Deputy Commissioner on 20 October 1999 claiming the refund with the return, TDS certificate and computation, and had followed it up with letters from 2004 onwards; the Revenue itself wrote on 23 April 2007 asking for evidence of the claim and raised no question of limitation. In the second petition, Taksal Theaters Private Limited sought a refund of Rs 1,49,536 of wealth tax paid on self-assessment for assessment year 1999-2000, on the footing that its theatre and commercial complex at Varanasi was exempt. It had itself declared that asset as taxable wealth in its return, no notice or assessment had followed, and it had neither appealed nor filed a revision.
A writ of mandamus was issued directing the Revenue to process Indglonal's claim on merits and refund Rs 5,73,034 with interest under the 1961 Act within eight weeks; the Taksal Theaters petition was dismissed. In a claim under Chapter XIX the correctness of an assessment that has become final cannot be questioned and the authorities cannot go behind the assessment order (para 11). Article 265 is not violated where an assessee does not claim refund as provided by the Act or where a wrong order becomes final and has the effect of denying refund; tax in such a case has been collected in accordance with law and nothing is refundable unless a refund can be claimed in terms of the enactment, though refund can be a consequence if the wrong order is itself challenged and the challenge succeeds (para 9). Refund provisions are to be interpreted reasonably and practically and, when warranted, liberally in favour of the assessee, and substantial compliance suffices even if the claim is not made strictly in the prescribed form (paras 12 and 17).
The Court began from Mafatlal Industries, separating claims that a levy is unconstitutional from claims that tax was wrongly collected or paid by mistake under a valid enactment, and placed both petitions in the second category (paras 6 to 8). For that category the entitlement to refund is created by the enactment itself and not by Article 265; any other view would saddle the Revenue with liabilities after assessments have become final and unchallenged, would be contrary to public interest and would make adjudication inchoate and uncertain, particularly since the Act itself fetters reopening by limitation and jurisdictional preconditions (paras 9 and 10). Assessment provisions are independent of refund provisions although refund may depend on the assessment, and section 242 is 'apposite': the assessment order cannot be challenged on merits while the authorities examine refund (para 11). Against that, the Court set the countervailing principle that tax authorities are administrators with a duty of fairness, must draw an assessee's attention to a relief or refund he has omitted to claim, and should act as facilitators and not occlude and obstruct (para 12), and it quoted Shelly Products for the proposition that an assessee who has deposited more than his liability on the returned income may claim refund of the excess in the course of the assessment proceeding or before the authority calculating the refund (para 13). Applying this, the Court held that for assessment year 1994-95 section 139(9) obliged an assessee to file specified annexures with the return and that the Revenue's contention that only the printed form and not the annexures counted could not be accepted; the computation and the original TDS certificate annexed to a return filed in time were a claim for refund, and the missing pages of the departmental record supported the assessee (paras 23 to 25). Delay and laches were rejected because once the assessee had applied and was entitled, the delay was the department's (para 27). Taksal Theaters failed because it had itself returned the asset as taxable wealth, paid self-assessment tax, and taken no step to have that quantification revised — there was no order to go behind and nothing had been paid in excess of what was chargeable on its own return.
The assessment order or the order quantifying the income or taxable wealth cannot be challenged on merits while the authorities examine the question of refund. The authorities cannot go behind the assessment order or the order quantifying net wealth/income.
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Handle my notice → Ask a CA on WhatsAppNo. In a claim under Chapter XIX section 242 forbids the assessee from questioning the correctness of an assessment or other matter that has become final and conclusive, or asking for a review of it; the authorities cannot go behind the assessment order while examining a refund. Article 265 is not violated where tax has been collected under a valid enactment and the 'wrong' order has become final — the remedy is to attack the order itself, in appeal, revision or a writ, and refund follows only as a consequence of that. This was decided by the High Court (Dipak Misra, Chief Justice, and Sanjiv Khanna J (judgment delivered per the Bench)) and bears on section 237, section 239, section 240, section 242, section 139(9) of the Income Tax Act 1961. It is reported as W.P. (C) Nos. 7127 of 2008 and 15639 of 2006, High Court of Delhi at New Delhi. This is the decision that separates the two things practitioners routinely run together. Where the client's grievance is that the assessment is wrong, the refund provisions are a dead end — you must displace the order. Where the grievance is that tax he never owed was collected or that a credit he was entitled to was not given, the refund provisions work, and the Court held they must be applied reasonably, liberally where warranted, and that substantial compliance is enough — a claim is not lost merely because it was not made in the prescribed form. The two writ petitions decided together make the distinction concrete: the assessee who had annexed his TDS certificate and computation to a return filed in time won a mandamus for the refund with interest even though the refund column of the return form was blank; the assessee who had declared the wealth himself, paid self-assessment tax, and never appealed or revised lost, because there was no order to go behind. Read with the caution below on section 239: the reasoning about annexures to the return belongs to the pre-2019 regime, and from 1 September 2019 a refund claim is made only by furnishing a return under section 139. If it applies to you, the first step is this: Ask first whether the client is attacking an order or claiming money he was never assessed to. If it is the former, section 242 blocks the refund route and the order must be displaced by appeal, revision under section 264, rectification, or a writ against the order itself.
Two writ petitions were heard together. In the first, Indglonal Investment & Finance Ltd. sought a refund of Rs 5,73,038 deducted at source on dividend from Asian Consolidated Industries Limited for assessment year 1994-95. Its return, filed on 29 November 1994 declaring a loss of Rs 4,56,994, showed NIL against the column for total tax deducted at source and left the refund column blank, and the return was processed under section 143(1)(a) on 28 February 1995. The Income Tax Officer rejected the refund claim by order dated 23 August 2007 on the ground that no refund had been claimed in the return and no revised return had been filed under section 139(5). On calling for the original departmental file the Court found that pages 5 to 8 of the ten-page return, being the pages relating to refund, had been removed with no explanation, but that the statement of assessable income on record showed TDS on dividend of Rs 5,73,038 as refundable and the original TDS certificate dated 14 July 1993 was on the file at page 21. The assessee had written to the Deputy Commissioner on 20 October 1999 claiming the refund with the return, TDS certificate and computation, and had followed it up with letters from 2004 onwards; the Revenue itself wrote on 23 April 2007 asking for evidence of the claim and raised no question of limitation. In the second petition, Taksal Theaters Private Limited sought a refund of Rs 1,49,536 of wealth tax paid on self-assessment for assessment year 1999-2000, on the footing that its theatre and commercial complex at Varanasi was exempt. It had itself declared that asset as taxable wealth in its return, no notice or assessment had followed, and it had neither appealed nor filed a revision. The matter was decided on 2011-06-03 by the High Court (Dipak Misra, Chief Justice, and Sanjiv Khanna J (judgment delivered per the Bench)). On those facts the High Court held as follows. A writ of mandamus was issued directing the Revenue to process Indglonal's claim on merits and refund Rs 5,73,034 with interest under the 1961 Act within eight weeks; the Taksal Theaters petition was dismissed. In a claim under Chapter XIX the correctness of an assessment that has become final cannot be questioned and the authorities cannot go behind the assessment order (para 11). Article 265 is not violated where an assessee does not claim refund as provided by the Act or where a wrong order becomes final and has the effect of denying refund; tax in such a case has been collected in accordance with law and nothing is refundable unless a refund can be claimed in terms of the enactment, though refund can be a consequence if the wrong order is itself challenged and the challenge succeeds (para 9). Refund provisions are to be interpreted reasonably and practically and, when warranted, liberally in favour of the assessee, and substantial compliance suffices even if the claim is not made strictly in the prescribed form (paras 12 and 17).
The Court began from Mafatlal Industries, separating claims that a levy is unconstitutional from claims that tax was wrongly collected or paid by mistake under a valid enactment, and placed both petitions in the second category (paras 6 to 8). For that category the entitlement to refund is created by the enactment itself and not by Article 265; any other view would saddle the Revenue with liabilities after assessments have become final and unchallenged, would be contrary to public interest and would make adjudication inchoate and uncertain, particularly since the Act itself fetters reopening by limitation and jurisdictional preconditions (paras 9 and 10). Assessment provisions are independent of refund provisions although refund may depend on the assessment, and section 242 is 'apposite': the assessment order cannot be challenged on merits while the authorities examine refund (para 11). Against that, the Court set the countervailing principle that tax authorities are administrators with a duty of fairness, must draw an assessee's attention to a relief or refund he has omitted to claim, and should act as facilitators and not occlude and obstruct (para 12), and it quoted Shelly Products for the proposition that an assessee who has deposited more than his liability on the returned income may claim refund of the excess in the course of the assessment proceeding or before the authority calculating the refund (para 13). Applying this, the Court held that for assessment year 1994-95 section 139(9) obliged an assessee to file specified annexures with the return and that the Revenue's contention that only the printed form and not the annexures counted could not be accepted; the computation and the original TDS certificate annexed to a return filed in time were a claim for refund, and the missing pages of the departmental record supported the assessee (paras 23 to 25). Delay and laches were rejected because once the assessee had applied and was entitled, the delay was the department's (para 27). Taksal Theaters failed because it had itself returned the asset as taxable wealth, paid self-assessment tax, and taken no step to have that quantification revised — there was no order to go behind and nothing had been paid in excess of what was chargeable on its own return. In the words reproduced by the source cited on this page: "The assessment order or the order quantifying the income or taxable wealth cannot be challenged on merits while the authorities examine the question of refund. The authorities cannot go behind the assessment order or the order quantifying net wealth/income." The decision followed or applied Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 — applied to classify the claim; CIT v. Shelly Products, (2003) 261 ITR 367 (SC) — relied on at para 13; CIT, West Bengal v. Central India Industries Ltd., (1971) 82 ITR 555 — relied on at para 11; Atmaram J. Haithsala v. Smt. S. Sarup, ITO, (1994) 209 ITR 456 — quoted at para 18 on the width of 'other proceedings' in section 240; Raj Kishore Prasad v. ITO, [1991] 188 ITR 765 (All.) — quoted within the passage at para 18.
It was decided by the High Court on 2011-06-03 and is reported as W.P. (C) Nos. 7127 of 2008 and 15639 of 2006, High Court of Delhi at New Delhi. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 237, section 239, section 240, section 242, section 139(9), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. A writ of mandamus was issued directing the Revenue to process Indglonal's claim on merits and refund Rs 5,73,034 with interest under the 1961 Act within eight weeks; the Taksal Theaters petition was dismissed. In a claim under Chapter XIX the correctness of an assessment that has become final cannot be questioned and the authorities cannot go behind the assessment order (para 11). Article 265 is not violated where an assessee does not claim refund as provided by the Act or where a wrong order becomes final and has the effect of denying refund; tax in such a case has been collected in accordance with law and nothing is refundable unless a refund can be claimed in terms of the enactment, though refund can be a consequence if the wrong order is itself challenged and the challenge succeeds (para 9). Refund provisions are to be interpreted reasonably and practically and, when warranted, liberally in favour of the assessee, and substantial compliance suffices even if the claim is not made strictly in the prescribed form (paras 12 and 17). It arises in Refunds, Interest & Condonation and How Tax Law Is Read matters, on section 237, section 239, section 240, section 242, section 139(9) of the Income Tax Act 1961, and was decided by Dipak Misra, Chief Justice, and Sanjiv Khanna J (judgment delivered per the Bench). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where the order is still open to revision, use section 264 rather than a bare refund application — the Court expressly preserves refund as a consequence of a successful challenge. Where the claim is for a credit or an excess that the return and its annexures already disclose, put the whole return on record including the computation, the tax audit report and the original TDS certificates, and argue substantial compliance; do not concede that only the printed form counts. Call for the department's original assessment file. In this case the pages of the return dealing with refund were missing from the record with no explanation, and the Court held that this supported the assessee. Answer a delay-and-laches plea by showing the correspondence: once the assessee has applied and is entitled, the delay in making the refund is the department's, not his. For any year from 1 September 2019 onwards, do not attempt a free-standing refund application — section 239(1) as substituted requires the claim to be made by furnishing a return under section 139, so the routes are a return, a revised or updated return where available, condonation under section 119(2)(b), or section 264.
Still good law. A citedby search returns 14 later decisions, several of them of the Delhi High Court itself and several of the CESTAT. The clearest application is Team HR Services Pvt Ltd v Union of India (Delhi High Court, 10 June 2020), where at para 13 the Bench states 'A Division Bench of this Court in Indglonal Investment and Finance Ltd. Vs. Income Tax Officer (2012) 343 ITR 44 has held that refund provisions should be interpreted in a reasonable and practical manner and when warranted, liberally in favour of the assessee' and uses that as a ground for granting mandamus for refund of Rs 2,38,00,000 with interest. The same Court applied the proposition again in GV Infosolutions Pvt Ltd v DCIT (24 January 2019), Goldy Engineering Works v Commissioner of Central Excise (14 July 2023) and Sethi Sons (India) v Assistant Commissioner (22 December 2023), and it has crossed into indirect tax through the CESTAT. Note what is and is not being carried forward: the later decisions take up the liberal-construction-of-refund-provisions passage, in the assessee's favour, and not the restrictive holding that s.242 forbids the assessee in a Chapter XIX claim from questioning the correctness of an assessment that has become final. That part has no confirmed later application. Nothing overruling, doubting or confining the judgment was found. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Read in full from the indiankanoon print view (47 pages). The judgment is a common decision in two petitions and the paragraph numbering restarts and overlaps in places: the general principles are at paras 9 to 13, the Indglonal facts at paras 14 to 15, the statutory provisions at para 16, the Indglonal reasoning at paras 17 to 30, and the Taksal Theaters matter at paras 31 to 47. The refund amount is stated as Rs 5,73,038 in the facts and as Rs 5,73,034 in the operative direction at para 47; both figures appear in the report and neither has been corrected here. The section 239 text quoted by the Court at para 16 is the pre-2019 text with the one-year limitation in sub-section (2)(c); sub-section (2) has since been omitted, which is set out in the validity note. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
A writ of mandamus was issued directing the Revenue to process Indglonal's claim on merits and refund Rs 5,73,034 with interest under the 1961 Act within eight weeks; the Taksal Theaters petition was dismissed. In a claim under Chapter XIX the correctness of an assessment that has become final cannot be questioned and the authorities cannot go behind the assessment order (para 11). Article 265 is not violated where an assessee does not claim refund as provided by the Act or where a wrong order becomes final and has the effect of denying refund; tax in such a case has been collected in accordance with law and nothing is refundable unless a refund can be claimed in terms of the enactment, though refund can be a consequence if the wrong order is itself challenged and the challenge succeeds (para 9). Refund provisions are to be interpreted reasonably and practically and, when warranted, liberally in favour of the assessee, and substantial compliance suffices even if the claim is not made strictly in the prescribed form (paras 12 and 17).
TaxSphere, “Indglonal Investment & Finance Ltd v ITO”, https://taxnotice.vittsphere.com/caselaw/case/indglonal-investment-242-correctness-of-assessment-in-refund-claim/ (validity last checked 2026-09-07)
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