Excess surcharge demand corrected, with directions to withdraw the repeated demand and fix the software error preventing recurrence.

Excess surcharge demand was treated as resolved for the impugned assessment year after the Revenue stated that the amount had already been corrected and remitted. The Court nevertheless found that a similar excess surcharge demand had been generated for the subsequent year because the processing system mechanically applied surcharge at 37%, and held that a software-driven error could not justify repeated harassment of the assessee. It directed the Revenue to withdraw the excess surcharge demand immediately and required CBDT to ensure suitable correction of the software so the error would not recur.

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Issues: Whether the challenge to the excess surcharge demand survived after the Revenue stated that the amount had been remitted, and whether directions were required to prevent recurrence of the same surcharge error in the ensuing assessment year.

Analysis: The dispute relating to the impugned assessment year stood resolved on the Revenue's statement that the excess surcharge had already been corrected and the amount remitted. The Court nevertheless noticed that a similar excess surcharge demand had been raised for the next assessment year because the processing system continued to calculate surcharge mechanically at 37%. The Court held that a technological or software-driven impediment could not be a justification for repeated harassment of an assessee and directed the Revenue to take immediate steps to withdraw the excess surcharge demand, while also requiring the Central Board for Direct Taxes to ensure suitable software correction.

Conclusion: The challenge in relation to the impugned demand was effectively rendered resolved, and consequential directions were issued in favour of the assessee for correction and withdrawal of the excess surcharge demand for the subsequent assessment year.

Final Conclusion: The Special Leave Petition was disposed of with directions protecting the assessee against recurrence of the excess surcharge error and requiring corrective administrative action by the Revenue.

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