The Kerala High Court held that the Central Board of Direct Taxes (CBDT) circular regarding deposition of assessed tax is applicable when appeal against assessment order under Income Tax Act, 1961 lies only before the Income Tax Appellate Tribunal (ITAT).
The assessment order has been finalised under the provisions of Section 143(3) read with Section 144C of the Income Tax Act. Against the assessment order finalised under Section 144C, the appeal lies only before the ITC and not before the Commissioner of Income Tax (Appeals) [CIT(A)].
The Counsel for the petitioner submitted that CBDT Circular No. 1914/1993 and para 4 of the OM with F. No. 404/72/93-ITCC dated 29.02.2016, which is amended in the year 2017, if an assessee deposits 20% of the assessed tax, till the decision of the appeal before the 1st appellate authority, the remaining amount should not be enforced.
The Counsel for the Income Tax Department, however, submitted that the above Circular is applicable only in case of the appeals filed before the CIT(A) and it is not applicable in respect of the appeals which are filed before the ITAT and, therefore, the petitioner, an assessee cannot contend that since he has deposited 20% of the assessed tax, penalty, interest etc., the remaining amount should not be realised as there is no interim order passed by the ITAT.
A Single Bench of Justice Dinesh Kumar Singh held that “The intent of the Circular is to grant protection to an assessee from further recovery till his stay petition is considered by the appellate authority, if the assessee deposits 20% of the assessed tax, penalty, interest etc. In the present case, the appeal against the assessment order lies only before the ITAT. Therefore, I am of the considered view that, considering the intent of the Circular No. 1914/1993 read with OM dated 29.02.2016 (amended in the year 2017), the Circular be applicable in the case the appeal against the assessment order lies only before the ITAT.”
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