Won your case at ITAT but still waiting for refund? Why Budget 2026 must end tax officers’ delays in giving effect to court orders

Whenever any taxpayer wins their case in the Income Tax Appellate Tribunal or other tax appellate authorities, the income tax department has the option to file an appeal. However, before they do that, they must give effect (implement) the taxpayer’s favourable order issued by ITAT and others. This process is called order giving effect (OGE) and is usually done automatically. Additionally, the income tax return (ITR) filing portal also has an online option where you can request the Assessing Officer (AO) to give OGE.

However, chartered accountants say that even after securing favourable appellate orders, taxpayers frequently encounter prolonged and unexplained delays in the issuance of OGE by the AOs.

Sandeep Bhalla, Partner, Dhruva Advisors, says: “As a result, refunds determined pursuant to such appellate relief often remain notional confined to records and computations, without actually being credited to the taxpayer’s bank account.”


Bhalla says these delays effectively nullify the benefit of appellate relief and amount to judicial indiscipline to a certain extent. It also perpetuates cash-flow constraints, and causes avoidable financial hardship, particularly where substantial amounts have been locked up for extended periods.

Mihir Tanna, associate director, S.K Patodia LLP, said to ET Wealth Online: CAG Report No. 14 of 2024 ("Outstanding Demand on Income Tax Assesses") mentioned that figures of outstanding demand as per income tax records continued to include nullified demands.

According to Tanna, delay in giving effect to appeal orders resulted in delayed issue of refunds; tax dept had to refund the inflated demands collected along with interest under section 244A of the Income Tax Act. CBDT in its Action plan 2025 gave target that Appeal effect orders to be passed preferably within one month and in no circumstances beyond the statutory time limit.

Tanna says: "In certain cases of our clients, we have received appeal effect order in 1-2 weeks. In some cases, refund is pending even after receiving appeal effect due to outstanding demand of earlier year wherein CPC has provided opportunity of being heard before adjustment of demand."

Vishwas Panjiar, Founder, SVAS Business Advisors, said to ET Wealth Online that in practice, delays in giving effect to favourable appellate orders are very common."

Panjiar says: "I have handled several cases where taxpayers succeeded before the CIT(A) or the ITAT, yet the refund remained pending for months. Although the dispute was resolved on paper, the money continued to remain blocked. This creates serious cash-flow issues, particularly where large amounts have been deposited during litigation."

According to Panjiar, once an appellate authority has ruled, the Assessing Officer should have no discretion left. When OGE is delayed, appellate relief becomes notional, judicial discipline is diluted, and confidence in the dispute resolution process suffers for taxpayers and the administration alike.

The problem is structural.

Panjiar says: "Taxpayers operate under strict timelines and face interest and penalty exposure for any delay, while there is limited accountability for delays in giving effect to appellate orders. The Income-tax Act, 2025 has been introduced with the stated objective of simplification and a trust-based regime, and the Finance Minister has repeatedly spoken about reducing avoidable litigation."

What should Budget 2026 do about the order giving effect?

Bhalla suggests that the government should come out with a system where passing of OGEs should be system-driven and done mandatorily within three months from receipt of the appellate order.

Bhalla says: “To ensure accountability, the interest payable under Section 244A(1A) for delays attributable to the Department may be made personally recoverable from the concerned AO, which would act as a strong deterrent against administrative inertia.”

Bhalla points out that while the Assessing Officer is required to prepare a scrutiny report disclosing, inter alia, the date of passing of the Order Giving Effect, this requirement does not seem to be followed in a consistent or effective manner.

Bhalla says: “It is therefore suggested that such reports be mandatorily uploaded on the income-tax portal and made accessible to the assessee. This transparency would serve as an indirect but effective deterrent against omission or delay in reporting, and would encourage greater accountability in the timely implementation of appellate orders.”

Panjiar says: "Budget 2026 should therefore mandate clear timelines for giving effect to appellate orders and ensure that refunds follow promptly. Appellate relief must translate into timely implementation."

Neeraj Agarwala, Partner, Nangia & Co LLP, said to ET Wealth Online that when a taxpayer succeeds before the ITAT, the tribunal typically decides only the eligibility of a claim or deduction—such as whether an addition is sustainable or income is taxable. It does not recompute the tax. That responsibility lies with the Assessing Officer.

Agarwala says: "The OGE is the order through which the Assessing Officer revises the tax computation in line with the appellate decision and determines the consequential tax liability or refund. A refund can be issued only after this order is passed."

According to Agarwala, under section 153(5) of the Income-tax Act, an OGE is required to be passed within three months from the end of the month in which the appellate order is received by the department.

Agarwala says: "However, in practice, refunds are often delayed even after the OGE. This may be due to the department filing an appeal before a higher court, the need for factual verification (for which an extension of up to six months may be taken), or administrative delays."

According to Agarwal, to address these issues, the Income-tax Department introduced the OGE request facility on the income-tax portal last year, allowing taxpayers to request and track OGEs online. While this is a step towards greater transparency and accountability, its long-terwm effectiveness remains to be seen.

What else can Budget 2026 improve in procedural aspects?

Bhalla from Dhruva Advisors suggests these changes:

Making rectifications against CPC adjustments meaningful

Adjustments made by the Central Processing Centre (CPC) under Section 143(1), particularly on account of alleged mismatches with tax audit reports, often give rise to unnecessary disputes. While the law provides for rectification under Section 154, in practice, the online rectification process has become largely mechanical and ineffective, with CPC frequently confirming additions without addressing the taxpayer’s reconciliation.

The portal should allow taxpayers to submit detailed reconciliations, and time- bound CPC orders under Section 154 must record clear reasons why such explanations are rejected. Plus, in all cases where the CPC, after considering the assessee’s submissions, is ready to confirm the proposed adjustments, an opportunity of personal hearing through video conference should be given to the taxpayer.

This would give the assessee a fair and meaningful opportunity of being heard, enhancing transparency, reducing mechanical confirmations, and fostering greater trust in the automated process. It would transform rectification from a procedural formality into a genuine grievance-redressal mechanism.

Time-bound disposal of high-pitched assessments

Once an assessment is identified as “high-pitched” and examined by the High-Pitched Assessment Committee, the matter should not be allowed to languish indefinitely.

To ensure fast resolution, the Board may consider assigning or transferring appeals relating to high-pitched assessments from the CIT(A) to the jurisdictional Principal Commissioner for close monitoring and administrative oversight.

The Principal Commissioner should be mandated to ensure disposal of such appeals within a defined timeframe of 6–9 months, failing which, the very objective of setting up a High-Pitched Assessment Committees gets defeated.

Direct access to the Tribunal for long-pending appeals

Ongoing disputes and delays in getting appellate relief lead to significant working-capital being tied up and management’s focus being pulled away from productive business activity. The scale of the issue is clear from the litigation backlog: around 5.4 lakh appeals pending before the Commissioner of Income-tax (Appeals) [CIT(A)], involving disputed demands exceeding Rs 18 lakh crore. This underscores the pressing need for structural reforms in dispute resolution.

Appeals pending before the CIT(A) for more than two years cause undue hardship to taxpayers, particularly where disputed demands continue to remain outstanding. In such cases, the assessee should be given an option to approach the Income-tax Appellate Tribunal (ITAT) directly, without being compelled to await disposal at the first appellate level.

A structured mechanism could be set up where the taxpayer approaches the Range Head (Additional / Joint CIT), who then creates a brief factual and legal factsheet of the case. This factsheet, along with the appeal records, may then be submitted directly to the Tribunal for adjudication. This approach would help reduce the workload at the CIT(A) level and ensure quicker resolution of cases that have been pending for a long time.

At the same time, we need to make sure that institutional accountability is part of the system to speed up the hearing of appeals that have been sitting for over two years without any delay caused by the assessee. This way we can ensure that long wait times are not seen as just a normal administrative outcome but rather as something we can measure in terms of performance.

Avoiding repetitive appeals by the Income Tax Department

Even with clear rulings from the Supreme Court and High Courts, the income tax department often continues to file appeals on issues that are already settled. This leads to avoidable litigation and shakes taxpayer confidence.

To tackle this, the CBDT should issue authoritative “Position Papers” on key recurring issues, particularly those that affect specific industries. Once a higher court has settled an issue and the Department has accepted it, field officers should be prevented from taking opposing stances or filing further appeals, with accountability resting on the AO and PCIT to ensure they comply with binding precedents.