ITAT allows Rs. 27 lakh refund claim under Section 240 after appellate order despite delayed filing

ITAT Kolkata allowed the assessee's appeal for refund claim of Rs. 27,04,767. The AO and CIT(A) had denied the refund under Section 239(2)(c) as the return was filed after one year from the assessment year's last date. ITAT held that since refund was determined pursuant to an order under Section 251/154/147/143(3) by ACIT, the case was covered under Section 240 (refund consequent to appellate orders) rather than Section 239 (self-assessment refunds). The lower authorities' orders were set aside.

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Issues:
Appeal against order u/s 250 of the Income Tax Act, 1961 for AY 2013-14 denying refund claim under Section 239(2)(c) and invoking Section 240 for refund consequent to appeal order.

Analysis:
The appeal pertains to the Assessment Year 2013-14 challenging the order passed under Section 250 of the Income Tax Act, 1961 by the Commissioner of Income-tax (Appeals)-NFAC, Delhi. The appellant filed the return declaring taxable income, which was later revised resulting in a refund claim. The Assessing Officer (AO) denied the refund claim under Section 239(2)(c) due to late filing of the return, which was upheld by the CIT(A). The appellant contended that Section 240 applies as the refund is consequent to the appeal order, citing the case law CIT vs. Royal Rags Pvt. Ltd. The Department supported the CIT(A)'s decision.

Upon review, it was noted that the AO denied the refund claim based on Section 239(2)(c) for late filing, while the appellant argued for Section 240 application due to the refund being a result of the appeal order. Referring to the Madras High Court judgment, it was clarified that Section 239 applies to self-assessment refund claims, whereas Section 240 covers refunds from appeal orders. Since the refund was determined post-appeal order, it was concluded that Section 240 is applicable, overturning the decisions of the AO and CIT(A). Consequently, the appellant's appeal was allowed, entitling them to the refund amount.

In conclusion, the Tribunal allowed the appellant's appeal, setting aside the orders of the AO and CIT(A) and granting the appellant the refund amount. The decision was based on the application of Section 240 for refunds resulting from appeal orders, as clarified by the Madras High Court judgment. The judgment was pronounced on 5th July 2024.

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