5.—General

Tax to be paid irrespective of appeal, etc.

369

Irrespective of the fact that an appeal has been preferred to the High Court or the Supreme Court, tax shall be payable as per the assessment made in the case.

Explanation

Section Summary:

Section 369 of the new income tax law clarifies that taxpayers are required to pay the assessed tax amount even if they have filed an appeal with the High Court or the Supreme Court. This means that the obligation to pay tax is not suspended or delayed merely because the taxpayer is contesting the assessment in court.

Key Changes:

• Prior Law: Under the previous income tax regime, there were provisions for staying the demand (i.e., temporarily halting the requirement to pay tax) during the pendency of an appeal, subject to certain conditions.
• New Law: Section 369 removes any ambiguity by explicitly stating that tax must be paid as per the assessment, regardless of whether an appeal is pending. This eliminates the possibility of delaying tax payments through appeals.

Practical Implications:

• For Taxpayers: Taxpayers must ensure that they pay the assessed tax amount on time, even if they are challenging the assessment in court. Failure to do so could result in penalties or interest charges.
• For Businesses: Companies and businesses must allocate funds to meet tax liabilities promptly, even if they plan to appeal the assessment. This could impact cash flow management.
• For Compliance Processes: Tax authorities can enforce tax collection without waiting for the outcome of appeals, streamlining the revenue collection process.

Critical Concepts:

• Assessment: This refers to the determination of the tax liability by the tax authorities based on the taxpayer's income, deductions, and other relevant factors.
• Appeal: A legal process where a taxpayer challenges the tax assessment in a higher authority (e.g., High Court or Supreme Court) if they believe the assessment is incorrect.

Compliance Steps:

1. Pay Assessed Tax: Ensure that the tax amount determined in the assessment is paid by the due date, even if an appeal is filed.
2. Maintain Records: Keep documentation of the tax payment and the appeal filed, as these may be required for future reference.
3. Monitor Appeal Status: Stay updated on the progress of the appeal, as a favorable outcome could result in a refund of the tax paid.

Examples:

• Scenario 1: A taxpayer is assessed for an additional tax liability of ₹10 lakhs. They believe the assessment is incorrect and file an appeal with the High Court. Under Section 369, they must still pay the ₹10 lakhs while the appeal is pending.
• Scenario 2: A company is assessed for a tax liability of ₹50 lakhs. They file an appeal with the Supreme Court but pay the ₹50 lakhs as required by Section 369. If the Supreme Court later rules in their favor, they may be eligible for a refund of the amount paid.

This section ensures that tax collection is not delayed due to legal disputes, maintaining the government's revenue stream while allowing taxpayers to pursue legal remedies.