Tax Paid Twice On Same Income Is 'Unjust Enrichment' By Government: Delhi High Court

The Delhi High Court has held that refusal to allow an assessee to correct an inadvertent double taxation of the same income would amount to “unjust enrichment” on the part of the Union of India.

The Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta added that the Government can charge tax only once on a particular income.

The Court made the observation while allowing a petition where Petitioner had inadvertently offered the same interest income of ₹7,58,90,455 to tax in two assessment years.

The Court quashed the order of the Commissioner of Income Tax (International Taxation) which had rejected the company's application under Section 119(2)(b) of the Income Tax Act, 1961, seeking permission to file a revised return for AY 2016-17.

The dispute arose after the company's deductor initially reflected the interest income of ₹7.58 crore in Form 26AS for AY 2016-17, following which the company offered it to tax in that year.

The deductor subsequently revised Form 26AS and reflected the same income in AY 2018-19. The company, unaware that the amount had already been taxed, again offered the income to tax for AY 2018-19.

The company later realised that it had effectively paid tax on the same income twice.

It thereafter filed three rectification applications under Section 154 of the Act in March, June and July 2019. These remained pending for around three years before the Assessing Officer rejected the final application in December 2022, holding that he lacked the power to reduce the returned gross total income.

The company's subsequent revision applications under Section 264 were also rejected, including on the ground of limitation.

It then approached the authorities under Section 119(2)(b) seeking permission to file a revised return excluding the income from AY 2016-17, since tax had already been paid on it in AY 2018-19.

The application was rejected in December 2025 on the ground that the company had failed to demonstrate any “special circumstances” warranting exercise of the discretionary power under Section 119(2)(b), and that the six-year delay remained unexplained.

In this background, the High Court observed,

“Special circumstances cannot be confined in a predefined formula or limited expression,” the Bench observed, adding that “Tax is required to be paid only once qua one income,” and that even the Government can charge tax only once in one assessment year on a particular income.

It further held that refusal to grant relief had resulted in “unjust enrichment on the part of the Union of India”.

It noted that the assessee had acted with “utmost promptitude” after discovering the mistake, and it was only because of the respondents' “delay dallying tactics or non-cooperative attitude” that the assessee had been forced to “roam from pillar to post” for about six years.

The court accordingly allowed the petition, quashed the December 9, 2025 order and permitted the petitioner to file an online or offline revised return for AY 2016-17 on or before October 31, 2026.

It directed the Assessing Officer to consider the revised return in accordance with law and pass an appropriate order within three months of its filing

For Petitioner: Advocates Vishal Kalra, Ankit Sahini and Amit Kumar

For Respondent: Siddharth Sinha, SSC with Easha Gurung, JSC and Advocates Nring Chamwibo Zeliang and Anu Priya Nisha