Even if 65% of the tax demand has been modified by the CPC, the AO will give refunds in excess of 20% of the tax demand: HC

Assessed was a business with an Indian registration. It submitted a return of income, listing a total income of Rs. 43,01,51,910 for the assessment year 2012-2013. An assessment order was passed when the case was chosen for examination, increasing the assessee’s tax obligation. In opposition to the assessment order, the assessee appealed to the CIT(A).
Against the refund due to the assessee for several years, the Centralized Processing Center (CPC) modified the tax demand. The amount of the refund due was deducted from the total amount of demands made on the assessee, or 65.43%.
In order to release the refund of an amount modified beyond 20% of the tax demand, the assessee submitted an application to the AO. Assessee cited the CBDT memorandum, which mandates payment of 20% of the disputed amount in the event that the demand is contested before the CIT (Appeals). The application, however, was turned down by AO.
In search of assistance, the assessee went to the Gujarat High Court.
In cases where the outstanding demand is contested before the CIT (Appeals), the Gujarat High Court ruled that, in accordance with the CBDT’s rules, the AO must give a stay of execution until the First Appeal is decided, in exchange for payment of 20% of the contested demand.
All Assessing Officers are required to follow by the rules that have been published by the Board while also acting fast and in accordance with them. In a pending appeal, it is evidently to be applied to a request made by the assessee.
In the described situation, roughly 65% of the demand for the Assessment Year 2012–13 was modified with pending refunds. The percentage that was anticipated by the CBDT’s Memorandum was far higher than this.
The assessee’s request was denied, and the AO’s main justification for doing so was that the CPC system had already adjusted the refund in relation to the demand. AO’s haughty mannerisms were neither agreeable nor supportable.
The CBDT’s efforts to set regulations and standardise practises for the benefit of the public are concerning because they will be worthless if field officers do not adhere to them both literally and figuratively.
As a result, the writ petition was granted, and AO was instructed to restore any surplus funds that were adjusted over the 20% demand made for the assessment year 2012–2013.

Why Some Workers May Prefer a Pay Reduction Post-Budget!

The Union Budget 2023 increased the available limit of the rebate under Section 87A from the existing Rs. 5 lakhs to Rs. 7 lakhs in the new personal tax regime, with effect from January 1, 2023, in order to make the new personal tax regime under Section 115BAC more appealing and to encourage more people to switch to the new regime. This was done in order to reduce the perceived complexity in return filing and assessments arising out of the multitude of deduction claims of the taxpayers, applicable in the old regime.
The aforementioned relief must be understood to be a tax credit under Section 87A alone, not a rise in the fundamental exemption threshold for the various personal tax slabs. The basic exemption level has been raised from the previous Rs. 2.5 lakh to Rs. 3 lakh in the new personal tax regime, however the relief this represents for taxpayers in the form of higher personal tax slab thresholds only amounts to Rs. 50,000.