'Technological Impediment Can't Be A Reason To Harass Assessee' : Supreme Court Asks Income Tax Dept, CBDT To Resolve Software Issues

Technological impediment cannot be a reason to harass an assessee, said the Supreme Court while asking the Income Tax Department to upgrade its software to ensure that mistakes do not occur in the future.

The Court directed that the Central Board for Direct Taxes should also take necessary steps for rectifying the software.

A bench comprising Justices PS Narasimha and Sandeep Mehta was hearing an appeal filed by an assessee questioning the imposition of surcharge on Rs. 1.57 Crores and demanding Rs. 2.01 Crores for the Assessment Year 2022-23.

The bench noted that for the previous Assessment Year 2021-2022 also, a similar imposition of surcharge was challenged and the Revenue agreed to remit the amount of Rs. 1.33 Crores.

The counsel appearing for the Revenue submitted that even in the present proceedings (Assessment Year 2022-2023), there is rectification of the excess surcharge and the amount was remitted to the petitioner on 06.06.2024.

However, during the pendency of the proceedings, there was yet another demand notice dated 28.05.2024 raised for the Assessment Year 2023-2024, as per which surcharge computed at 37% and a demand of Rs. 62,85,070/- has been raised.

The Revenue submitted that this error is occurring as the Central Processing Centre (CPC) has not adopted the mechanism of deleting excess calculation as it is programmed to so calculate and raise a demand.

In this backdrop, the bench observed :

"The technological impediment cannot be a reason for harassing an assessee year after year. Immediate steps must be taken by the Revenue to upgrade the software or take such other steps as may be necessary to ensure that such mistake does not occur in future."

For the Assessment Year 2023-2024, the Revenue was directed to take immediate steps and communicate the order of withdrawal of the excess surcharge amount within six weeks from the date of the receipt of the order.

"The Central Board for Direct Taxes shall also take necessary steps for rectifying the software as the issue may not be resolved by the Jurisdictional Assessing Officer," the Court observed.

Case Title : Sunil Bakht v. Asst. Director of Income Tax, CPC and another

Citation : 2024 LiveLaw (SC) 751

Click here to read the order