Voluntary disclosure scheme relief preserved where tax was timely paid and a minor interest shortfall was promptly cured

Under the Voluntary Disclosure of Income Scheme, 1997, a declaration is not invalid merely because there was a minor shortfall in interest payment when the declared tax was paid within time and the deficit was later cured. The scheme makes invalidity the consequence of failure to pay the tax within the stipulated period, but it does not expressly attach the same consequence to a small, bona fide deficit in interest. Where the declaration was timely and the shortfall was promptly rectified, relief under the scheme remained available.

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Issues: Whether a declaration under the Voluntary Disclosure of Income Scheme, 1997 could be treated as invalid for a small deficit in payment of interest, although the tax was paid within time and the shortfall was subsequently made good.

Analysis: Section 67(1) permits payment of the declared tax within three months along with simple interest and filing of proof of such payment within that period. Section 67(2) creates the consequence of invalidity only where the declarant fails to pay the tax within the stipulated period. The provision does not expressly prescribe the same drastic consequence for a shortfall or delay in payment of interest. The earlier Supreme Court decision relied on by the Revenue dealt with non-payment of tax within time and did not address a case where only interest was deficient. On the facts, the declaration was timely, the tax and interest were substantially paid within the scheme period, and the small deficit arose from a bona fide mistake and was promptly rectified.

Conclusion: The declaration was not liable to be treated as invalid for the minor deficit in interest. The relief under the Scheme was required to be extended to the assessee.

Ratio Decidendi: Where the scheme makes invalidity the consequence of non-payment of tax within the stipulated time but is silent as to a minor shortfall in interest, a bona fide and promptly cured deficit in interest does not by itself nullify a valid declaration.

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