Supreme Court asks IT Department to upgrade its software after computer error leads to wrong assessment

The Supreme Court recently urged the Income Tax Department (IT Department) to upgrade its software rather than resorting to blaming technology for wrong tax assessments [Sunil Bakht v Asst Director of Income Tax CPC and anr].

Technological impediments cannot be a ground to harass tax payers, the Court said.

A Bench of Justices PS Narasimha and Sandeep Mehta on September 24 called for immediate steps in this regard.

"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," the Court said.

The Bench was hearing a plea by one Sunil Bakht (assessee) questioning the excessive tax surcharge demanded.

The counsel for the IT Department submitted that the excess surcharge had been rectified and remitted.

However, the Bench noted that 'the story does not end here'.

During the pendency of the present proceedings, another demand notice with excess surcharge was issued.

The Counsel then contended that the error was on part of the Central Processing Centre (CPC), which had not adopted the mechanism of deleting excess calculations and demands, in its computer programming.

The top court took exception to the same. It asked the IT Department to take immediate steps and communicate the order of withdrawal of the excess surcharge amount within six weeks to the assessee.

It also ordered the Central Board for Direct Taxes to take steps to rectify its software.

"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 order said.

Advocates Robin Ratnakar David, Dhiraj Abraham Philip, Febin Mathew Varghese, Achalika Ahuja, and Nihar Baijal appeared for Sunil Bakht.

Additional Solicitor General S Dwarakanath with Senior Advocate Rupesh Kumar and advocates Raj Bahadur Yadav, HR Rao, Navanjay Mahapatra and Satya Prakash appeared for the Income Tax Department.

[Read order]