Gujarat High Court's ruling on "existing liability" u/s 230A of Income Tax Act now guides tax assessments and demands.
The circular clarifies the interpretation of "existing liability" in Section 230A of the Income Tax Act, 1961. Following a Gujarat High Court decision, it is established that "existing liability" refers to tax amounts due and outstanding under an assessment order. The Board has accepted this interpretation and, in consultation with the Law Ministry, withdrawn its previous instruction. When considering applications under Section 230A, demands created by assessment orders and other tax demands like Advance Tax and T.D.S. should be considered, even if no specific order is required. Officers are instructed to note and acknowledge these guidelines.
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