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2023 (9) TMI 694 - HC - Income TaxRecovery against the crystallized tax liability - stay on the demand pending the decision in the appeal will have to factor in TDS and TCS - As argued respondents/revenue could have recovered only 20% of the crystallized demand - HELD THAT - The order passed under the Act is the order framing the assessment i.e. the order dated 09.12.2022. As per the said order the crystallized tax liability of the petitioner/assessee was Rs. 44, 10, 05, 569/-. Therefore 20% can only be calculated against the said amount and not against the scaled-down amount i.e. Rs. 33, 05, 82, 936/-; which is a figure arrived at after giving credit to the petitioner/assessee in respect of tax deposited by the third parties. In other words contrary to the contention of respondents/revenue the amount that an assessee would need to deposit for the purposes of obtaining stay on the demand pending the decision in the appeal will have to factor in TDS and TCS. Given the foregoing reasons we are inclined to direct the respondents/revenue to refund the amount which is in excess of 20% of Rs. 44, 10, 05, 569/- after carrying out the requisite verifications. The amounts already collected by TDS and TCS will have to be adjusted against the amount arrived at by applying the rate of 20% against tax crystallised as per the assessment order. The amount payable if any will be remitted to the petitioner/assessee within the next four (4) weeks.
Issues Involved:
The interpretation of Central Board of Direct Taxes (CBDT) Office Memorandum dated 29.02.2016, with an amendment made on 25.08.2017. Comprehensive Details: The petitioner filed a Return of Income for Assessment Year (AY) 2021-22, declaring taxable income as Rs. 1,04,06,610. The Assessing Officer (AO) added Rs. 146,72,96,789, resulting in a total tax liability of Rs. 44,10,05,569. Adjustments for tax deducted at source (TDS) and tax collected at source (TCS) were made, reducing the liability to Rs. 33,05,82,936. A notice of demand was issued for this amount. A refund for AY 2022-23, Rs. 14,11,32,594, was adjusted against the AY 2021-22 demand. The petitioner claimed that the revenue recovered an amount exceeding 20% of the demand while the appeal was pending before the Commissioner of Income Tax (Appeals) (CIT(A)). The respondents argued that recovery should be 20% of the balance demand of Rs. 33,05,82,936, in addition to TDS and TCS amounts. They referred to the CBDT OM, stating that demand includes various payable sums under the Income Tax Act. The court noted that 57.04% of the tax liability was recovered, exceeding the 20% limit. The court found that the conditions in the OM for exceeding 20% recovery were not met. The respondents' argument that demand refers to the notice amount was deemed untenable. The court directed the revenue to refund the excess amount over 20% of the crystallized tax liability, adjusting TDS and TCS amounts. The refund was ordered to be made within four weeks, including applicable interest. The court disposed of the writ petition accordingly, with parties to act based on the digitally signed copy of the order.
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