Scope of words 'Existing Liability' in Sec.230A. - Income Tax - 1422/CBDT

INSTRUCTION NO. 1422/CBDT Dated: November 2, 1981 I am directed to invite a reference to the boards instruction No.481[F.No.358/11/72-IT(WT)], dated 25th November 1972 wherein clarification s to the scope of the words existing liability occuring in sec.230 A of the I.T.Act, 1961 were given. 2. Recently the Gujarat High Court in case of M/s. Gopal Industrial Estate Vs.ITO while considering the meaning of the words existing liability has held that unless and until there is a tax amount due and outstanding under an order of assessment already passed there cannot be an existing liability under clause a of sub-sec.1 of sec 230 A also.... Same interpretation is given to the words existing liability occuring in clause b of sec.230A(1). 3. The decision of the Gujarat High court has been accepted by the board. In the light of this decision as well as in consultation with the Law Ministry the board has decided to withdraw its Instruction No.481. 4. While considering an application u/s.230 A, the word existing liability should be constructed to be the demand created in pursuance of an order passed under respective taxation statues set out in sec.230A(1)(a). Since Sec.230A occurs in the group of sections dealing with the collection and recovery of Income-tax and other direct taxes, it should also be noted that besides demand created in pursuance of an assessment order, the demand created under those sections of the Income-tax and other Direct Taxes Acts such as Advance Tax. T.D.S. etc will also be taken into account through no order is required to be passed in their respect. 5. You are requested to bring these instructions to the notice of all the officers in your charge. 6. The receipt of these instructions may please be acknowledge.