Chapter XX - Refunds
Section 435
Section 435: refund on appeal, etc
Section 435 makes refunds arising from an appeal automatic: if an order passed in appeal or other proceeding results in a refund becoming due, the Assessing Officer must refund it without the assessee having to make any separate claim.
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Need advice on Section 435?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Where, as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessee, the Assessing Officer shall, except as otherwise provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf.
(2) Where, by the order as referred to in sub-section (1),— (a) an assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment; (b) the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee.
Introduction
When an appeal or other proceeding under the Act results in a refund, section 435 generally requires the Assessing Officer to pay it without a new claim by the assessee.
The timing or amount changes where an assessment is set aside for fresh assessment or annulled. These qualifications should be checked before treating the entire apparent amount as immediately refundable.
Key takeaways
No fresh claim generally
A refund arising from an appeal or other proceeding is paid without the assessee having to make a separate claim, unless the Act otherwise provides.
Fresh assessment first
If the earlier assessment is set aside or cancelled and a fresh one is directed, the refund becomes due only after that fresh assessment.
Annulment calculation
On annulment, the refund is limited to tax paid in excess of tax chargeable on the returned total income.
Automatic refund following an appellate order - Section 435(1)
"Where, as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessee, the Assessing Officer shall, except as otherwise provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf."
Fresh assessment after a set-aside order
If the original assessment is set aside or cancelled and a fresh assessment is directed, the refund becomes due only when that fresh assessment is made.
Annulled assessment
If the assessment is annulled, the refund is limited to tax paid in excess of the amount chargeable on the income returned by the assessee.
Step-by-step flow for a refund after an appeal under Section 435
- 1
Has a refund become due as a result of an order passed in appeal or other proceeding under the Act?
- No: Section 435 does not apply.
- Yes: Go to the next step.
- 2
Was the assessment set aside or cancelled with a direction to make a fresh assessment?
- Yes: Under Section 435(2)(a), the refund, if any, becomes due only when the fresh assessment is made.
- No: Go to the next step.
- 3
Was the assessment annulled?
- Yes: Under Section 435(2)(b), the refund is only of the tax paid in excess of the tax chargeable on the total income returned by the assessee. Go to the next step.
- No: Go to the next step.
- 4
Refund without a claim
Under Section 435(1), the Assessing Officer refunds the amount without the assessee having to make a claim, except as otherwise provided in the Act.
Practical checklist
Do
- Keep the appellate or other order and payment records.
- Check whether the order directs a fresh assessment or annuls the prior one before estimating when and how much becomes due.
Avoid
- Do not assume every appellate win creates an immediately payable refund.
Illustrative example
Worked example: an annulled assessment
Hypothetical facts (illustration only, not a real taxpayer): For a tax year, Beta Traders paid an assumed total of ₹4,50,000 in tax, including tax paid on an assessment. On appeal, the assessment is annulled. The tax chargeable on the total income Beta returned is assumed to be ₹3,10,000.
Refund arising from an appeal order
The refund results from an order in appeal, so Section 435 applies.
Annulment rule
Under Section 435(2)(b), the refund is limited to tax paid in excess of tax chargeable on the returned income.
Computation
₹4,50,000 − ₹3,10,000 = ₹1,40,000.
No claim needed
Under Section 435(1), the Assessing Officer refunds the amount without Beta having to make a claim, except as otherwise provided in the Act.
Outcome
- Refund due: ₹1,40,000.
- Had the order instead set aside the assessment and directed a fresh one, no refund would become due until the fresh assessment was made.
Frequently asked questions
Do I need to file a separate claim to get a refund after winning an appeal?
No - Section 435(1) requires the Assessing Officer to refund the amount due as a result of an appellate or other order without the assessee having to make any claim.
If my assessment is set aside and a fresh assessment is ordered, when do I get my refund?
Only once the fresh assessment is actually made, under Section 435(2)(a).
What refund do I get if my assessment is annulled entirely?
Only the amount, if any, of tax paid in excess of the tax chargeable on the total income you had returned, under Section 435(2)(b).
Need help applying this provision to your situation?
Get help with a refund following an appeal orderLast updated 9 October 2026