TaxTMI 
TaxTMI 
TaxTMI 
Limits on Challenging Completed Assessments in Refund Proceedings : Clause 436 of Income Tax Bill, 2025 Vs. Section 242 of Income-tax Act, 1961
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....efunds to taxpayers who have paid tax in excess or wrongly. The legislative approach seeks to balance the finality of tax assessments with the equitable right to a refund, thereby maintaining the integrity and efficiency of the tax administration system. This commentary will provide a detailed analysis of Clause 436, exploring its objectives, detailed provisions, practical implications, and potential interpretative issues. It will then compare and contrast Clause 436 with the existing Section 242 of the Income-tax Act, 1961, highlighting similarities, differences, and the legislative rationale behind any modifications. The analysis will also draw on relevant legal principles and policy considerations to assess the adequacy and future traje....
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....Income Tax Bill, 2025, reads: "In a claim under this part, it shall not be open to the assessee to question the correctness of any assessment, or other matter decided which has become final and conclusive, or ask for a review of the aforesaid assessment or matter; and the assessee shall not be entitled to any relief on such claim except refund of tax wrongly paid or paid in excess." Key Elements of Clause 436 * Restriction on Reopening Assessment: The clause explicitly bars the assessee from questioning the correctness of any assessment or other matter that has become final and conclusive. This ensures that once an assessment is completed and has not been challenged within the statutory framework (appeal, revision, etc.) or has been uph....
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....e clause. Judicial interpretation may be required to determine whether this includes payments made under mistake of law, administrative error, or only computational errors. * Excess Payment: The provision clearly covers cases where the taxpayer has paid more than what was due under the assessment. The mechanism for determining the quantum of excess and the procedural requirements for claiming such refunds are addressed elsewhere in the statute. * Interaction with Other Provisions: The clause must be read harmoniously with provisions relating to appeals, rectification of mistakes, and revision powers of tax authorities. It does not preclude correction of errors under those provisions, but only restricts the refund process from being used....
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....id or paid in excess." The key elements-bar on questioning correctness, bar on review, limitation of relief to refund of tax wrongly paid or paid in excess-are preserved in both versions. The language is updated in Clause 436 for clarity and legislative style, but the substantive legal position remains unchanged. Structural and Contextual Differences * Location within Statute: Section 242 appears under the chapter on refunds in the 1961 Act. Clause 436 is similarly situated in the part of the 2025 Bill dealing with refunds, maintaining continuity in legislative structure. * Terminological Updates: The 2025 Bill uses more modern drafting language ("aforesaid assessment or matter"), but this does not alter the legal effect. * Legislat....
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....all administration of the income tax regime. * For Taxpayers: Taxpayers must be vigilant in pursuing any challenge to an assessment within the prescribed time limits and through the appropriate statutory channels. Once an assessment becomes final, their ability to seek relief is limited to obtaining a refund for tax paid in excess or by mistake, not for disputing the assessment's correctness. * For Tax Authorities: Tax authorities are protected from the administrative burden of reconsidering settled assessments through refund claims. This enables more efficient and predictable tax administration. * For the System: The provision upholds the principle of finality, which is essential for certainty in tax matters and for the effective....