The Delhi High Court has held that the government cannot levy tax twice on the same income merely because an assessee inadvertently offered it to tax in two different assessment years following a revision of Form 26AS by the deductor.
The Bench of Justice Dinesh Mehta and Justice Rajneesh Kumar Gupta observed that paying tax twice on the same income was, by itself, sufficient to establish genuine hardship for granting relief under Section 119(2)(b) of the Income Tax Act, 1961.
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The Court quashed an order passed by the Commissioner of Income Tax (International Taxation)-3, Delhi, which had refused to permit the assessee to file a belated revised return for Assessment Year 2016-17.
The petitioner/assessee had earned interest income amounting to ₹7.58 crore. Since the income was initially reflected in Form 26AS for Assessment Year 2016-17, the company included the amount in its return of income for that year and paid the applicable tax.
However, the deductor subsequently revised Form 26AS and shifted the same interest income from Assessment Year 2016-17 to Assessment Year 2018-19. Acting on the revised tax statement, the petitioner again offered the identical income to tax in its return for Assessment Year 2018-19.
The company later discovered that the same income had consequently been taxed in both Assessment Years 2016-17 and 2018-19.
After noticing the mistake, the petitioner filed three rectification applications under Section 154 of the Income Tax Act on March 4, June 7 and July 31, 2019. These applications remained pending before the Assessing Officer for approximately three years.
On December 26, 2022, the Assessing Officer rejected the rectification application dated July 31, 2019, holding that the officer did not have the power to reduce the gross total income disclosed in the return.
In the meantime, the petitioner had also filed a revision application under Section 264 of the Income Tax Act. The Commissioner rejected the application on March 30, 2021, describing it as premature because the rectification proceedings were still pending before the Assessing Officer.
Following the rejection of its rectification request, the petitioner filed another revision application under Section 264. This application was rejected on March 28, 2024, on the ground that it was barred by limitation. The petitioner was advised to seek condonation of delay under Section 119(2)(b) for filing a revised return.
Consequently, the petitioner submitted an application dated July 31, 2024, under Section 119(2)(b), requesting permission to file a revised return for Assessment Year 2016-17 and exclude the interest income of ₹7.58 crore, since tax on the same amount had already been paid for Assessment Year 2018-19.
The Commissioner of Income Tax rejected the application on December 9, 2025. The authority held that permission to file a revised return after more than six years could be granted only in extraordinary circumstances and that the petitioner had failed to demonstrate any special circumstances.
The Commissioner further concluded that the delay was unexplained and that the case was not covered by CBDT Circular No. 9/2015 dated June 9, 2015.
Challenging the decision before the High Court, the petitioner argued that the tax authority had adopted a revenue-oriented and subjective approach instead of considering the matter from a justice-oriented perspective.
It was submitted that the same amount had been offered to tax in two assessment years solely because the deductor revised Form 26AS without informing the petitioner. The petitioner maintained that it had continuously pursued available remedies since 2019 and had not remained inactive.
The Income Tax Department defended the rejection, arguing that the petitioner had repeatedly invoked incorrect remedies and was responsible for the delay. The Department also contended that the petitioner had failed to produce sufficient evidence showing that the income did not relate to Assessment Year 2016-17 or that genuine hardship had arisen.
After examining the record, the High Court found that the interest income of ₹7.58 crore had, in fact, been offered to tax in two assessment years because of the deductor’s revision of Form 26AS.
The Court noted that the petitioner had bona fide filed its return for Assessment Year 2018-19 in accordance with the revised Form 26AS and only subsequently realised that tax had already been paid on the same income for Assessment Year 2016-17.
The Bench criticised the rejection of the application on the ground that no special circumstances existed. It held that special circumstances could not be confined to a predetermined formula or restrictive definition and must be understood from the facts and surrounding circumstances of each case.
The Court described the matter as “one of the better cases” for exercising discretionary power under Section 119(2)(b).
It emphasised that tax is payable only once on a particular income and that even the government cannot collect tax twice on the same income in two different assessment years.
The Bench further held that refusal to grant relief would result in unjust enrichment of the Union of India, as the petitioner would remain subjected to tax twice on the same sum of ₹7.58 crore.
The Court also rejected the Department’s contention that the petitioner had not established genuine hardship. It remarked that it was “preposterous” to claim that no hardship had been demonstrated, observing that payment of tax twice on the same income was itself a hardship.
The High Court additionally found that the petitioner had acted promptly by filing three rectification applications during 2019. According to the Bench, the six-year delay in resolving the dispute resulted from the delay and non-cooperative approach of the tax authorities, which forced the petitioner to move from one authority to another.
Allowing the writ petition, the Court quashed the Commissioner’s order dated December 9, 2025, and allowed the petitioner’s application under Section 119(2)(b).
The petitioner was permitted to file an online or offline revised income-tax return for Assessment Year 2016-17 on or before October 31, 2026.
The Assessing Officer was directed to verify the facts, consider the revised return in accordance with law and pass an appropriate order within three months from the date on which the revised return is filed.
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