Facts of the Case

The Petitioner, Sony India Pvt. Ltd., filed a writ petition challenging an intimation/order-cum-deemed demand notice dated 31 October 2021 issued under Sections 200A and 206CB of the Income Tax Act, 1961. The demand raised amounted to ₹1,84,78,190 for the second quarter of FY 2021–22.

The Petitioner contended that the issue involved was already covered in its favour by earlier judgments, including:

  • Concentrix Services Netherlands B.V. vs. ITO (TDS)
  • Petitioner’s own prior case (W.P.(C) 3876/2021)

Despite this, the Assessing Officer and CPC failed to dispose of the rectification application filed by the Petitioner.

Issues Involved

  1. Whether the demand raised under Sections 200A/206CB is sustainable when a rectification application is pending.
  2. Whether the Revenue authorities can proceed with recovery without deciding such application.
  3. Whether failure of the Assessing Officer to act on binding precedents is legally permissible.

Petitioner’s Arguments

  • The demand is unsustainable and arbitrary, as the issue is already settled in favour of the Petitioner.
  • The rectification application dated 22 November 2021 was not adjudicated.
  • Reliance was placed on binding precedent in Concentrix Services Netherlands B.V. and prior judgment in Petitioner’s own case.
  • Recovery proceedings should be stayed until rectification is decided.

Respondent’s Arguments

  • The Revenue acknowledged an error on the part of the Assessing Officer.
  • It was admitted that the rectification application had not been decided.
  • The Respondent assured the Court that the application would be decided within four weeks in accordance with applicable precedents.

Court’s Findings / Order

  • The Delhi High Court accepted the undertaking of the Revenue.
  • Directed that the Assessing Officer shall decide the rectification application within four weeks.
  • Held that till such decision is taken, the impugned demand shall not be given effect to.
  • The writ petition was disposed of with directions binding the Revenue authorities.

Important Clarification

  • The Court reaffirmed that administrative inaction cannot override binding judicial precedents.
  • Even where a demand is raised under statutory provisions like Sections 200A/206CB, procedural fairness (such as deciding rectification applications) must be ensured.
  • Revenue authorities are bound by their undertakings given before the Court.

Sections Involved

  • Section 200A – Processing of TDS statements
  • Section 206CB – Processing of TCS statements

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:4065-DB/MMH08122021CW138682021_113324.pdf

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